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Results: 1 - 15 of 130
View Dave MacKenzie Profile
CPC (ON)
View Dave MacKenzie Profile
2015-04-21 13:30
Thank you.
All in favour?
Some hon. members: Agreed.
The Chair: On Motion No. 574.
Dara Lithwick
View Dara Lithwick Profile
Dara Lithwick
2015-04-21 13:30
This is from Monsieur Giguère regarding small and medium-sized businesses. In summary, this motion calls on the government to reduce transaction fees charged to merchants and to allow merchants to disclose to the consumer the transaction costs relating to the payment method chosen at the point of sale in order to help make the cost of living more affordable for the middle class.
Just as a bit of background, section 91.15 of the Constitution Act of 1867 allocates to the federal Parliament legislative power in relation to banking, the incorporation of banks, and the issuance of paper money. This is the federal connection.
Of note is that in 2010, the government passed the Payment Card Networks Act, which gave the Minister of Finance the authority to regulate national payment card networks and the commercial practices of payment card network operators. As well, it gave the Financial Consumer Agency of Canada a mandate to supervise payment card network operators to determine their compliance with the act and its regulations. Section 6 of the act and section 7 of the act regarding regulations and enforcement conditions have never entered into force, so the subject matter doesn't overlap exactly.
As well—you might have noticed this in the news recently—in 2010 the government established a voluntary code of conduct with the credit and debit card industry in Canada, which was recently updated in April, this month, to include mobile payment. It added a provision that says mobile users must be given full control of the default settings on their virtual wallets. It also allows merchants to exit their contracts with credit card processors without penalty and gives new protection to retailers who decide to stop accepting mobile payments.
All of this is background to say that there are things out there on this issue. They're not exactly the same. They actually might even flow well together.
This motion does not concern issues that are outside of federal jurisdiction. It does not clearly violate the Constitution acts, including the Canadian charter. It does not concern questions that are substantially the same as ones already voted on by the House in the current session or preceding it in the order of precedence. It does not concern questions that are currently on the order paper or notice paper as items of government business.
View Nathan Cullen Profile
NDP (BC)
Thank you, Chair.
To Mr. Wilkes and Mr. Brakel as well, thank you for your comments at the opening of your statements. I think they're well received, certainly by myself and my colleagues.
The work continues. So now we've heard from the restaurant association, from Mr. Wilkes and his association, as well as from Ms. Pohlmann, on these merchant fees, these pesky merchant fees. Help us understand exactly the prescription that we need to write.
Ms. Pohlmann, maybe you can start us off. Why is this such an intractable problem? Why is it so hard to stand up to these credit card companies and the banks that collect the fees, and help Canadian consumers out? Why has the government struggled with this?
Corinne Pohlmann
View Corinne Pohlmann Profile
Corinne Pohlmann
2014-10-28 15:58
Well, I think it's something small businesses have been facing now for about seven to eight years. With the introduction of premium cards into the market back in 2008, we suddenly saw pretty significant increases in the merchant fees being collected by small business merchants, as well as larger merchants. It was pretty much overnight. There is a total dominance in the industry by MasterCard and Visa in this particular area. Small business is known as price takers, not price makers. It's very difficult for them to push back. Basically, it's difficult to say no to accepting credit cards today. The response we often get from the credit card companies is that, well, businesses don't have to accept credit cards, but many small business owners have no choice. Their consumers demand it, so they basically have to take it.
View Nathan Cullen Profile
NDP (BC)
To be clear, does the law now allow them—these small businesses or even some of the large ones represented by Mr. Wilkes—to charge differential rates for consumers if they're...because some of these credit card fees have very, very high merchant rates? Is that essentially being absorbed by those small and medium businesses? Can they not just simply charge a different amount for a product depending on which card the customer swipes? Is that not an option?
Corinne Pohlmann
View Corinne Pohlmann Profile
Corinne Pohlmann
2014-10-28 15:59
No. That's not an option. They have to honour all cards regardless of the type of card they accept, even if they can recognize which card is actually a higher rate or a lower rate. That's a problem in and of itself; it's often difficult. What you may think is a rewards card is actually sometimes a lower merchant rate card.
View Nathan Cullen Profile
NDP (BC)
We have a free market here. Why is this the responsibility of government?
Corinne Pohlmann
View Corinne Pohlmann Profile
Corinne Pohlmann
2014-10-28 15:59
Well, it's because there's such a market dominance by these two industry players, and in fact we need to have some oversight of those industry players. We felt the code of conduct was a great first step, and it helped to sort of bring them into the—
View Nathan Cullen Profile
NDP (BC)
Corinne Pohlmann
View Corinne Pohlmann Profile
Corinne Pohlmann
2014-10-28 16:00
It's a voluntary code of conduct. Yes, and it at least started to bring some fairness into the system, for example, by allowing merchants to get out of contracts when they change rates, which was not really allowed previous to this, but obviously we need more. We see the rates continue to go up, and we'd like to see more movement by the industry to recognize that this is time to pull back a little bit on increasing rates, going forward.
View Nathan Cullen Profile
NDP (BC)
You're going to find support from us.
Mr. Wilkes, did you find anything to add in there?
David Wilkes
View David Wilkes Profile
David Wilkes
2014-10-28 16:00
Yes, I do, and thank you very much for the question.
The last part of your question is why this is a government responsibility. I think there are two key points I'd like to raise there. The Competition Tribunal, approximately a year and a bit ago, ruled that the market practices of Visa and MasterCard—I'll paraphrase here—were distorting the market and that the normal influences that would be in place to regulate prices were not functioning within the Canadian economy. That's first. The evidence that was brought forward to the tribunal really resulted in that conclusion. Second, we look at international experience. More than 37 countries around the world have chosen to cap and regulate fees because they recognize that the normal indicators, the normal price functions, do not work in this market because the fees are hidden.
View Nathan Cullen Profile
NDP (BC)
So is that a market failure, in a sense? I don't want to be judgmental about what's happening, but you suggest that other countries have realized that there's a distortion in the market, as has been realized here, and that in the market, as of right now, the to and fro between consumer and supplier has not been able to capture the realities of this market distortion.
David Wilkes
View David Wilkes Profile
David Wilkes
2014-10-28 16:01
I would agree with that statement, and let me give a couple of examples of the type of action that has been taken.
David Wilkes
View David Wilkes Profile
David Wilkes
2014-10-28 16:01
Okay, and I'll be very quick.
France has limited interchange fees to 0.25%, and the EU is looking at a 0.30% cap, so we do believe that there is opportunity to move in that direction.
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