Credit/Debit Card Merchant fees - Since 2008
Background
The Stop Sticking It To Us Coalition has been actively engaging government to get them to address these troubling trends in the credit card industry and provide solutions for merchants and all Canadians. The coalition has been actively involved in the proposed re-structuring of Interac, Canada's efficient and cost-effective debit system. Interac has applied to the Competition Bureau to re-structure and join the big credit card companies in charging higher fees.
Coalition members intend to act as interveners in the process and have pledged to fight to keep Interac from moving ahead with this change as it will be detrimental to merchants and all Canadians.
Development of a Draft Code of Conduct
Over the past year, both the Senate Committee on Banking, Trade and Commerce and the Competition Bureau examined the fees paid by Canadian merchants to accept credit card payments from customers. In late 2009, the federal government unveiled a draft Code of Conduct to govern the Canadian debit and credit card markets. The coalition had advocated in recent years for the government to intervene in order to provide merchants with greater transparency and greater choice, both in transaction routing and card acceptance.
The purpose of the Code is to demonstrate the industry's commitment to:
1. Ensuring that merchants are fully aware of the costs associated with accepting credit and debit card payments thereby allowing merchants to reasonably forecast their monthly costs related to accepting such payments.
2. Providing merchants with increased pricing flexibility to encourage consumers to choose the lowest-cost payment option.
3. Allowing merchants to freely choose which payment options they will accept.
For full details on the Code, please visit the Department of Finance webpage.
Next Steps
While a regulatory regime overseeing the credit and debit card sector may have been preferable to some, the current government is hesitant to begin with this option. However, Minister Flaherty did indicate that if the card issuers and processors were not willing to sign on to the Code of Conduct, the government would be left with little choice but to introduce legislation that would introduce a regulatory regime.
The ultimate success of a voluntary Code of Conduct will depend greatly upon the ability of some entity to oversee compliance with the Code. As of yet, it is not clear whether if that level of oversight will come from within the Department of Finance, Industry Canada or some other entity.
The Payments Accountability Council
The Stop Sticking It To Us Coalition has formed the The Payments Accountability Council, which has vowed to continue to fight on behalf of Canadian merchants.
The Payments Accountability Council will:
• Provide education about merchants' rights under the Code, both to retailers and to the general public.
• Monitor and publish information on accession to the Code by the various actors in the payments industry, including the card companies, issuing financial institutions and acquirers/processors.
• Monitor compliance with the Code by those who have acceded to its provisions. Monitoring will be based both on any observations and complaints received and on proactive surveys of the membership of 20-plus merchant associations, representing over 200,000 merchants.
• Prepare a detailed report card for Government, including specific areas where the Code is succeeding or not
