Ottawa begins credit, debit card inquiry
May 12, 2009 – This week, representatives of hundreds of thousands of Canadian businesses will attend House of Commons Committee hearings focused on the runaway fees merchants are forced to pay to accept credit cards.
May 12, 2009 – This week, representatives of hundreds of thousands of Canadian businesses will descend on Ottawa for the start of House of Commons Committee hearings focused on the runaway fees merchants are forced to pay to accept credit cards.
The joint House Finance/Industry Committee inquiry, which begins tomorrow, comes on the heels of hearings held on the issue by the Senate Banking Committee that concluded last week. The hearings signal the first time that credit and debit card issues have been examined by Parliament.
"Parliamentary hearings on the abuse of Canadian merchants and consumers by credit card companies represent an historic opportunity for Canada to craft its own financial future," said Diane J. Brisebois, President and CEO, Retail Council of Canada and Chair of the StopStickingItToUs Coalition. "American credit card companies say that deregulation is best, but in the midst of a financial crisis largely caused by a lack of appropriate oversight, we hope that Canadian law makers will see the folly of that approach."
At the centre of the inquiry are the fee practices of Canada's two major credit card companies, Visa and MasterCard, who have hiked merchant charges over the past year. Merchants have asked Parliament to examine the uncontrolled escalation in credit card fees as well as the imminent destruction of Canada's low-cost and efficient debit system as Visa and MasterCard prepare to enter the Canadian market with their own debit products.
Merchants have also been alarmed by the explosion of premium cards into the Canadian market – cards that carry an increased cost for merchants. In year's past these more expensive cards would typically represent a small percentage of a merchant's credit card transactions, but they've jumped to more than 30% for many merchants in less than a year.
"Most Canadians don't know there are hidden costs attached to credit card transactions," Brisebois explained. "VISA and MasterCard unilaterally set those fees and increase them when they chose. In recent months merchants have witnessed a flood of 'premium cards' in Canada, which carry significantly higher fees. These costs end up on every consumer's bill, whether they pay with credit, cash or debit."