CRA finds that a company which negotiated agreements between credit card companies and merchants was supplying a GST/HST-exempt service

“Acquirers,” who used funds from the customer’s credit card issuer to provide funds to pay merchants for their customers’ purchases, retained the Company to find merchants and negotiate agreements with them to receive such services of the Acquirer, in consideration for a fee based on the number of merchant transactions processed by the Acquirer. After indicating that the service of the Acquirer was an exempt financial service under para. (a) or (i) of the definition, and after ruling that the supply of the Company to the Acquirer was a single supply that was exempted under para. (l), CRA stated:

[T]he purpose of the Company’s supply is to act as an intermediary to bring together the Acquirer and prospective merchant customers of the Acquirer with the view to causing supplies by the Acquirer of its Acquirer Service to occur. The Company is involved in the entire negotiation process for the supply of Acquirer Services by the Acquirer to merchants. In that process, it appears that in each case the Company is relied upon heavily by the merchant and the Acquirer. The Company delivers to the Acquirer a fully negotiated Merchant Agreement to which the merchant will be bound, subject to the Acquirer’s approval.

Zomaron and 207227 are similar.

Neal Armstrong. Summary of 9 March 2023 GST/HST Ruling 244638 under ETA s. 123(1) – financial service – (l).