Canadian authorities to probe debit, credit card fees

Canadian authorities to probe debit, credit card fees

Canadian authorities are to launch a probe into credit card interchange fees and the debit payment system.

The catalyst for the hearings - initiated under the authority of the House of Commons Standing Committee on Industry, and by a separate Senate Committee measure - is a forthcoming shake-up in the national payments industry stemming from plans to switch the bank-owned Interac umbrella body to a for-profit entity.

Interac has been in talks with the country's competition bureau over the proposed restructuring which is intended to fight off increased competition from credit card companies like Visa, which are entering the debit market in Canada.

The hearings will likely lead to popular and political pressure for legislative measures to stimulate competition and depress fees at a time of economic depression.

The move has been applauded by the Retail Council of Canada, which has been fearful that the overhaul of Interac will lead to a rise in debit card tariffs.

Diane Brisebois, president and CEO, Retail Council of Canada, says: "We must not allow debit card services to end up like the credit card market, where rates are jacked up to provide ever-more profit for the card issuers and the card companies. We hope the committee will use its hearings to look for a future structure for the debit card market that is innovative, low cost, and above all focused on the needs of cardholders and merchants, not card issuers."

Comments: (1)

A Finextra member
A Finextra member 10 March, 2009, 01:24Be the first to give this comment the thumbs up 0 likes

Canada has needed a probe into these matters for years. It is great to see Senator Ringuette lead the charge along with the Canadian Federation for Independant Business.

The Senate committee will begin probing fees charged by the credit card and debit card industry in Canada on March 25th 2009.

The Senate committee on banking, trade and commerce made the decision on the urging of New Brunswick Liberal Senator Pierette Ringuette.

The hearings will investigate among other things, the extent to which credit-card companies and banks benefit from transaction fees. 

Online merchants and billers also welcome this probe and have been looking for lower transaction costs and more customers to transact with. Our company, UseMyBank Services has been providing online merchants and billers the ability to transact with their customers with online banking in real time with great success since 2002. We have proven this technology with a 99.999999% good funds rate.