10 February 2016

Canada opens inquisition into card fees

09 May 2012  |  4724 views  |  0 cash

Canadian anti-trust chiefs have fired the opening salvos in a Competition Tribunal hearing into the fees imposed on retailers by Visa and MasterCard.

The country's competition watchdog filed an application with the Competition Tribunal in 2010 in a bid to "strike down" the rules imposed on merchants by Visa and MasterCard, which between them processed more than 90% of all credit card transactions by Canadians in 2009.

The rules prohibit merchants from encouraging consumers to consider lower cost payment options like cash or debit, and stop them from applying a surcharge to a purchase on a high cost card.

Kent Thomson, lead counsel for the Competition Bureau, told the tribunal in Ottawa that the charges imposed by the card schemes are in contravention of anti-trust rules and add up to $5 billion in fees for the credit card industry annually.

Canada has among the highest credit card fees in the world, with merchants that accept Visa and MasterCard paying a fee ranging between 1.5% and three per cent a purchase, nearly twice as much as counterparts in Europe, although slightly less than in the US, says the Bureau. In contrast an Interac debit transaction has a flat fee of around 12 cents.

Visa and MasterCard have denied the charges, claiming the rules that prevent merchants from picking and choosing which cards shoppers can use are an "important consumer protection" measure.

Says MasterCard: "If successful, the Competition Bureau's actions could expose Canadian consumers to unfair checkout fees or gouging when they use their cards to pay. Under our rules, merchants are free to encourage consumers to use other forms of payment and even to offer discounts for cash, cheque or any other payment option the merchant prefers."

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