Two credit-card giants are slashing their fees in a move hailed by the federal finance minister, but decried by his critics.

Visa Canada Corp. and MasterCard Inc. have submitted proposals to the federal government that they will cut the fees they charge merchants to an average, effective rate of 1.5 per cent for the next five years.

Depending on the type of card, those fees currently range between 1.5 and 3 per cent. And according to the Canadian Federation of Independent Businesses (CFIB), the fees add between $5- and $7-billion to the prices of goods and services.

For entrepreneurs like Habib Hashemi, that adds up to thousands per month.

“We're only a small business, we're not making tons of money,” the owner of Cheezy Pizza and Pasta in Ottawa told CTV News.

Customers using Visa and Mastercard to pay for their pies cost Hashemi more than $3,600 in one month alone. “We pay all these fees and there's nothing left for us."

In a statement Tuesday, Finance Minister Joe Oliver welcomed the proposals, which he said effectively amount to a 10-per-cent cut in credit-card fees and "should ultimately result in lower prices for consumers." He also said the move would preclude the need for government intervention.

"These commitments represent a meaningful long-term reduction in costs for merchants that should ultimately result in lower prices for consumers," Oliver said. "As a result of the voluntary proposals, there is no need for the government to regulate the interchange rates set by the credit-card networks."

In 2013, the federal Competition Tribunal ruled that the excessive fees charged by the two credit-card giants were anti-competitive, and should be reined in by government regulation. Instead, after the cuts come into effect next April, a third party will review the companies’ compliance on an annual basis.

That amounts to a "shameful climb-down" from the government's budget promise to clamp down on credit-card fees, according to NDP small business critic Glenn Thibeault.

"In the case of merchant fees, there is a clear case for public interest regulation to lower prices for consumers, and help struggling small businesses grow," Thibeault said.

In its reaction, however, the CFIB applauded the cut to so-called "swipe fees."

This first-ever reduction, CFIB president Dan Kelly said, will be a boon to merchants as well as consumers.

"Merchants have been forced to embed these rising fees in the cost of everything they sell, so reducing the cost pressure should help small businesses keep prices down," Kelly said.

Corinne Pohlmann, also from the CFIB, said the length of the agreement is a positive for merchants.

“The great thing about this announcement today is that it’s a five-year mandate, meaning for the next five years those prices cannot go up,” she said on CTV’s Power Play.

And Pohlmann said at least some of the money businesses save will be passed along to patrons.

“It’s a very competitive industry; they’re going to do whatever they can to maintain the consumer base, and they’re going to do what they can to keep their prices low.”

All retailers are expected to see reductions in the amount they pay the companies every time customers make credit-card purchases, though Oliver says small- and medium- sized enterprises and charities should benefit most.

Regulation advocate Senator Pierrette Ringuette said, considering that Visa and MasterCard fees have gone up 25 per cent in the past two years, the fee-cutting announcement shows the government is "unwilling to take any real action" and does little to bring the costs in line with those charged elsewhere.

"Canada will continue to have some of the highest fees in the world," Ringuette said. "Visa and MasterCard are laughing all the way to the bank."

With files from The Canadian Press and a report from CTV News’ Richard Madan