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Outrage rising over credit card fees

SOURCETAG 09013144532546
PUBLICATION: The Brantford Expositor
DATE: 2009.01.31
SECTION: Business

Outrage rising over credit card fees

Calls are rising for government action to scrutinize and control fees charged on credit cards.

The Retail Council of Canada said Friday the system "is failing many Canadians," while the Canadian Community Reinvestment Coalition accused the federal Conservatives of "negligence" in bank regulation.

"At a time when many Canadians are struggling and businesses are challenged to decrease costs while still providing value to their customers, the fees charged by credit card companies and the banks that issue their cards are increasing," stated Diane Brisebois, president of the Retail Council, representing more than 40,000 store operators.

The merchants' group endorsed Senator Pierrette Ringuette's call for an investigation by the upper house's committee on banking, trade and commerce.

There were signs that bankers have heard the clam-our, as TD Bank (TSX:TD) promised Friday there will be "no new fees and no fee increases" for the rest of 2009 on credit cards and other personal and small-business products. TD also aborted a $35 fee it was planning to impose on inactive lines of credit.

"We've been listening to the concerns our customers and employees have been expressing, and we believe that this commitment is the right response in the current environment," stated Tim Hockey, president of TD Canada Trust.

But the retailers' group says existing card fees include an enormous hidden cost for average Canadians, amounting to $4.5 billion or more annually.

Among other things, they're demanding to know why the fees merchants pay on credit card transactions - as much as two per cent -increase proportionately with the size of the purchase, when a large transaction and a small one cost about the same to process.

The left-leaning Community Reinvestment Coalition, meanwhile, called this week's Conservative budget proposals on credit cards and bank lending weak and negligent. Coalition chairman Duff Conacher noted that credit cards have become an essential service -- it's hard to buy an airline ticket or rent a hotel room without one, for example.