When cardholders of RBC credit cards used their cards for purchases from a foreign merchant, RBC would earn an “interchange fee” from the foreign bank or other “merchant acquirer” of the foreign merchant for accepting the charge. Upon such acceptance, the cardholder discharged their purchase obligation to the merchant, RBC advanced the amount charged (less its interchange fee) to the merchant acquirer for crediting to the merchant’s account, and RBC would then request payment of the balance from the cardholder at the end of the applicable billing cycle.
Smith J stated (at para. 87):
It must also be remembered that the interchange fee is paid by the merchant acquirer and not by the cardholder. The merchant acquirer is the
“recipient”of the authorization and payment service at issue because it pays for the service although the cost is ultimately borne by the merchant who receives a discounted payment.