Retailers welcome hearings on credit card and debit fees

Groups representing companies that pay credit and debit card fees are welcoming separate decisions by parliamentary and Senate committees to look into Canada's card businesses.

Catherine Swift, president of the Canadian Federation of Independent Business (CFIB), said Friday that "unprecedented" jumps in credit card fees "are an enormous extra cost" paid by small- and medium-sized businesses struggling to deal with the recession.

"Our members are not opposed to paying fees, but these costs need to reflect the services provided," she said in a news release.

The Senate committee on banking, trade and commerce announced March 3 that it would study the credit and debit card systems "and their relative rates and fees," starting on March 25.

The Commons standing committee on industry, science and technology weighed in March 5, but it is focusing on a proposed change to the Interac debit card system, said committee vice-chairman Anthony Rota, a Liberal MP.

Interac is in talks with the Competition Bureau of Canada about changing from a not-for-profit structure to a for-profit operation, and the committee wants to look at the impact on debit card fees paid by retailers.

It will also consider credit card fees paid by retailers, but won't be studying the rates and fees card companies charge consumers, he said.

"I'm not going in with a preconceived notion," Rota added.

The Commons committee announcement is a victory for Canadian retailers and their customers, said Diane Brisebois, president and CEO of the Retail Council of Canada (RCC).

The council is particularly worried about the proposed Interac restructuring.

"We must not allow debit card services to end up like the credit card market, where rates are jacked up to provide ever-more profit for the card issuers and the card companies," Brisebois said in a news release.

The Canadian Council of Grocery Distributors and the Canadian Federation of Independent Grocers welcomed the hearings.

"Costs associated with credit card fees have been dramatically increasing over the course of the last 18 months," said Nick Jennery, president and CEO of the group representing distributors.

The new premium or Infinity credit cards companies have been mailing to consumers cost merchants more every time a shopper uses them, he said. Those charges are passed on to customers.

System is defended

MasterCard president Kevin Stanton defended the card system.

"The many benefits Canadian merchants receive from card acceptance continue to be downplayed," he said.

Cards provide credit for consumers and are a secure, reliable, guaranteed payment system for merchants. Competition in the business is vigorous, and there are continual product improvements, Stanton said.

Mastercard said it is looking forward to a "full and fair discussion" before the Senate committee.

The two announcements follow mounting pressure from politicians, consumer and business groups.

New Brunswick Senator Pierrette Ringuette has repeatedly called for a study of the card business. 

Ringuette has said she'd like Canada to adopt a cap on fees banks can charge businesses and consumers, similar to legislation already adopted in Australia which sets fees based on actual costs and a reasonable return.

Swift said the Australian system may be worth a look to see whether it would be relevant for Canada.