(May 22/12) Credit card fees are under fire again.
The Competition Bureau began its long-anticipated case earlier this month against MasterCard and Visa. The case before a federal tribunal is in response to complaints by CRFA and other business groups about restrictive merchant contracts. We consulted with the Bureau as it prepared to argue that these two companies – representing 92 per cent of the market – should not be permitted to dictate terms to merchants and engage in anti-competitive behaviour.
As the case began, CRFA Chair Donna Dooher appeared on CBC’s The National to discuss the impact of unfair credit card fees. Click here to see the interview.
CRFA also urged Minister of Finance Jim Flaherty to implement the Payment Task Force recommendations on credit card fees, submitted in January 2012. CRFA and our members participated in consultations with the Task Force – established to study Canada’s payment system – but government has taken no further action to protect Canada’s low-cost debit system or to implement the report’s recommendations.
Click here (PDF) to read CRFA’s letter to Minister Flaherty.
Why credit card fees are still costly
Previously, CRFA and other organizations representing retail businesses had spoken out about the ballooning costs of credit card fees related to premium cards, and fears of rising debit card fees. In response, government introduced a voluntary Code of Conduct for the debit and credit card industry and established a Task Force to study the payment system in 2010.
The Code of Conduct has prevented MasterCard and Visa from introducing reward-based debit cards with much higher fees; for normal transactions, however, they are making inroads in the mobile and online payment areas. Additionally, the Code of Conduct has not contained the rising cost for merchants on credit cards fees as cardholders gravitate toward high-cost premium credit cards that offer consumer rewards.