In the context of receiving audited statements from Visa and MasterCard on their level of compliance with “voluntary” interchange fee reductions announced on November 11, 2014, the Minister of Finance announced yesterday his intention to conduct a further assessment of the fees charged by credit card networks and review the effects of the fee reductions.
The announcement is found here.
The audited statements were not released. MasterCard has publicly posted its average rate for the year ending March 31, 2016, at 1.5187%. Visa has privately confirmed that its rate was 1.5183%.
Having long been the leading advocate for a regulated solution to the credit card fee problem, Retail Council of Canada welcomes this new opportunity from the Minister of Finance to shine a light on the multi-billion dollar costs imposed on all Canadians, including merchants, by Visa and MasterCard.
Simply stated, credit card interchange fees are far too high, with the credit card duopoly charging merchants in Canada – and ultimately Canadian consumers – five times what they charge in other markets (e.g. the United Kingdom and the European Union) for the same services.
Canadian businesses and ultimately, Canadian consumers, pay $4.5 billion more for credit purchases each year than they would if our rates were comparable to the 0.30% cap in the EU. At the current 1.50% average rate, over the four remaining years of the voluntary agreement, Canadians would pay at least $18 billion more than they should.
As to Visa’s and MasterCard’s statements on their level of compliance with “voluntary” interchange fee reductions, Retail Council of Canada considers the variance of a few basis points from the Networks’ existing cap of 1.50% to be of only minor importance when compared to the rate level overall.
The real issue isn’t compliance with the voluntary agreement. It is an absence of both competition and regulation in the credit card industry.
Retail Council of Canada is undertaking an advocacy campaign to convince the Government of Canada of the need for a regulated solution to excessive interchange rates. We are engaged on two private members’ bills that will be in parliament this fall and have mounted a letter-writing campaign to all MPs. The Minister’s commitment to assess the market, including fee levels, provides an opportunity to address the issue directly with the primary decision-makers.
If you have any questions or concerns, please don’t hesitate to contact: Karl Littler, Vice President, Public Affairs at: firstname.lastname@example.org or 416-467-3783