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Jean-Guy Côté
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Jean-Guy Côté
2021-05-21 12:37
Thank you very much, Mr. Chair.
My name is Jean-Guy Côté, and I am the chief executive officer of the Conseil québécois du commerce de détail (CQCD).
First, I would like to thank the members of the committee for inviting me to appear today. This will allow me to present some of the vision and analysis of Quebec retailers on Bill C-30 and on the budget tabled a month ago.
As you may know, the Conseil québécois du commerce de détail is an organization that represents the majority of Quebec retailers. The CQCD is Quebec's leading retail industry association. The CQCD's mission is to represent, promote and enhance this sector and to develop resources to foster advancement for its members.
Given the limited time available for my presentation, I will focus on only a few points.
As you know, the past 14 months have been challenging for retailers. The pandemic has accelerated a number of transformations already under way in the industry, including the shift to e-commerce. In some sectors, such as fashion, retailers have closed up shop and jobs have been lost.
The various programs announced by the federal and provincial governments as well as by the municipalities have addressed some of the needs of retail entrepreneurs. The speed with which they were implemented is to be commended, although we believe they should have been adapted as early as the fall of 2020.
The federal budget extends the duration of various programs, including wage support, income support and rent support that were put in place during the pandemic. These programs will be phased out over the summer. While the recovery, confirmed by the very positive retail sales figures from Statistics Canada this morning, appears to be well under way, some retail sectors are still very much affected by the revenue losses incurred during the pandemic. We hope that the phase-out of the various measures will be monitored and that government support measures will be provided again at the first sign of further economic stress.
This brings me to my main topic, interchange fees. These are fees charged to retailers by large credit card companies on all in-store and online credit card transactions. These fees are sometimes very high and are used to fund, in part, the credit card companies' generous rewards programs. As a result, all in-store and online credit card transactions are subject to an additional charge, usually paid by the retailer.
Canada has the unfortunate but justified reputation for having some of the highest interchange fees. In 2019, research conducted by the Federal Reserve Bank of Kansas City, the FED, showed that Canada was among the top countries for interchange fees. Interchange fees typically hover around 1.4% per transaction. In comparison, Australia has reduced its interchange fee to less than 1%, but the example to follow is the European Union, which has capped it at 0.5%.
The significant expansion of e-commerce in recent months has led to a sustained use of credit cards to pay for purchases. This practice will not disappear, but it needs to be controlled. Such control would be welcomed by the retail industry, but more importantly it would be a gesture of fairness. The credit cards with most rewards are often supported by the revenues from regular credit cards of those with fewer financial means. In addition, charities are regularly charged interchange fees on donation transactions. A cap would have no impact on the federal government's finances, but it would be welcome for the finances of the retailers.
We are pleased to see that the budget opens the door to a consultation on introducing concrete measures in the budget update. This was an election promise made by the current government. We are ready and willing to work together to propose innovative and positive solutions for retailers.
Our request is simple: cap interchange fees at 0.5%, as the European Union has done, and eliminate fees charged on the GST or other taxes on transactions.
In closing, I would like to thank the members of the committee for their welcome today, and I look forward to their questions.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Ms. Cardona, thank you for your testimony, which was very poignant. Let's hope the situation changes.
Good afternoon to all the witnesses. My thanks to them for joining us today.
My questions are for Mr. Côté.
Mr. Côté, thank you for your presentation, which was very clear. First, I would like to come back to the interchange fees imposed on retailers by the credit card companies. This rate is 0.5% in Europe, whereas it is 1.4% and can even reach 2.5% here in Canada.
You are asking the government to take action in that area. Is that correct?
Jean-Guy Côté
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Jean-Guy Côté
2021-05-21 13:13
We have actually been asking the government to reduce these fees to 0.5% for a few years. The European Union has demonstrated in practice that it is possible to do so without automatically destroying the payment system.
It is important to understand that, in Canada, debit card payments use a fixed cost system. The fee charged to the retailer is a single cost, regardless of the quantity purchased or the amount of the bill.
For credit cards, the fee is a percentage. For large transactions, the fee charged to the retailer becomes quite substantial.
For small and medium-sized retailers, who don't really have the leeway to negotiate with the two large credit card providers that we are very familiar with, it's a little difficult to have the negotiating power to reduce those fees.
Large retailers, such as the major U.S. chains, have been able to secure attractive rates over the years. However, this negotiating power is not available to small and medium-sized retailers.
Given that the banking system is federally regulated, there is clearly room to control [technical difficulties] more creatively, and at zero cost to the government. This would still help retailers and purchasers, especially since the fees are imposed on charitable donations.
When a donation is made to any charity in Canada, a percentage of that donation goes into the pockets of credit card providers. In a sense, it is as if a hidden or private tax is attached to the transaction.
Transactions have become much simpler over the years because of the computer and digital systems in place whose costs have probably already been absorbed. So it's hard to understand why we could not have those interchange fees reduced.
View Gabriel Ste-Marie Profile
BQ (QC)
Your message is clear. Let's hope you are being heard.
Another point stood out for me. You said that large American chains are able to negotiate lower rates that give them an advantage over our retailers, which are often family businesses.
I also wish it had been implemented more quickly, because I feel that credit card payments, especially online payments, have multiplied with the pandemic.
Have you noticed an increase in credit card payments to the members of the Conseil québécois du Commerce de détail compared to before the pandemic?
Jean-Guy Côté
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Jean-Guy Côté
2021-05-21 13:17
We are seeing it a lot with e-commerce.
In stores, people can use both payment methods. Debit card payments should always be preferred, because they are more beneficial for both the consumer and the retailer. However, it is more difficult to pay online with a debit card.
Due to the substantial shift of purchases from physical locations to online purchases, credit cards have become a much more widely used payment method. The gradual disappearance of—
Jean-Guy Côté
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Jean-Guy Côté
2021-05-21 13:18
In closing, I would just like to say that people are using cash less and less. The same bills end up staying in wallets for a few weeks.
As credit cards are being used more and more, it's a good time to regulate everything for everyone's benefit.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2021-05-20 16:54
Okay. Great.
Thank you for that, Mr. Kelly. All of our agents worked really, really hard across all the agencies, but I know that CRA has done a phenomenal job.
I have a question for Restaurants Canada with regard to lower credit card interchange fees.
Can you comment on how these measures are expected to lower the cost of doing business, especially for businesses that are increasingly reliant on e-commerce?
Chris Elliott
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Chris Elliott
2021-05-20 16:55
Good afternoon.
It's a great question. I know that interchange fees have been such a critical issue for a lot of restaurant operators. The big challenge, of course, is that a lot of times, those interchange fees exceed what the profit would be off of the sale of that receipt. Sometimes those fees can be so extraordinary that operators actually spend more money and go into a loss because of that. It's a situation where, especially at this time, with most operators operating at a loss, it's become a much more critical issue.
View Peter Julian Profile
NDP (BC)
Thanks to our witnesses for being here today. We appreciate your service during this pandemic.
I want to come back to the issue that hit so many small businesses in my riding and right across the country: the issue of payment fees as part of retail payments. Small businesses are just being relentlessly gouged. There has been a move for some kind of voluntary capping of these fees.
Within the scope of the legislation, or within what the finance ministry is looking at in terms of regulation, is any due consideration being given to capping those fees? Small businesses often end up, through retail payments, with huge percentages of their sales actually going to the big credit card companies rather than to their bottom line when they're trying to get community businesses going.
Erin O'Brien
View Erin O'Brien Profile
Erin O'Brien
2021-05-17 11:35
With respect to the RPAA, there's nothing in this legislation that would give the government authority to address fees. However, there is a separate budget commitment that the government made within budget 2021, whereby it will negotiate lower fees with the credit card networks. It wants to ensure that small and medium-sized businesses enjoy the benefit of that fee reduction and, as well, that any fee reduction would not adversely affect the value of loyalty points associated with credit cards. That does fall under my area of responsibility, but it is not part of the RPAA legislation.
View Peter Julian Profile
NDP (BC)
Where do you see that in terms of timelines? Small businesses are really struggling, as we all know. A lot of them in my riding and across the country have closed their doors. There's no other way to put it, with the gouging that is taking place with credit card companies that are taking 10% of the sales, sometimes higher. It makes the small business folks really struggle for the bottom line, both to establish themselves and also to maintain themselves.
Where do you see the timelines in terms of those discussions and negotiations? What is the deadline that the government has set on that?
Erin O'Brien
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Erin O'Brien
2021-05-17 11:37
As stated in the 2021 budget, the government intends to come forward with next steps in time for the fall economic statement. We will be conducting consultations and will be studying this issue over the spring and early fall, and will come forward with a plan in time for the fall economic statement.
View Pat Kelly Profile
CPC (AB)
Thank you. My questions are right in the same vein as Mr. Julian's.
If I heard what you said correctly, that there's a plan to have a plan in the fall economic statement, that's as far as the government has gone in fulfilling the promise of reducing credit card merchant fees and their cost to small businesses.
Erin O'Brien
View Erin O'Brien Profile
Erin O'Brien
2021-05-17 11:39
The government intends to outline the plan in the fall economic statement. That's correct.
View Pat Kelly Profile
CPC (AB)
Okay. It's a plan, as opposed to tabling legislation that would implement the commitment it made in the budget.
Results: 1 - 15 of 20 | Page: 1 of 2

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