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."
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