OTTAWA
– Senator Pierrette Ringuette responds to supportive witness testimony in front
of the Senate Banking Committee regarding bill S-201, An Act to amend the
Office of the Superintendent of Financial Institutions Act (credit and debit
cards)
Bill
S-201 implements one of the key recommendations of the Senate Banking, Trade
and Commerce Committee report which called on the Minister of Finance to
appoint an oversight body to closely monitor the debit and credit card industry
in Canada. The Office of the Superintendent of Financial Institutions
already provides some oversight into Canada’s financial services sector; this
new legislation would grant the Superintendent the specific authority to
oversee the rates and fees charged by banks for the use of credit and debit
cards.
Of
particular interest was the witness testimony of Richard Florizone,
Vice-President Finance, University of Saskatchewan and Ken Hughes, Deputy
Treasurer Corporate Revenue for the City of Ottawa and President of the Association
of Municipal Tax Collectors of Ontario. Both of these individuals described
their concerns over the costs to university and city budgets of high credit
card merchant fees.
Merchant
fees are charged to the merchant on every purchase made with a credit card,
usually around 1% to 4% of the purchase amount.
The
costs to the University of Saskatchewan in terms of merchant fees have
escalated from $140,000 in 2000 to $900,000 in 2010.
“As we
and our partner universities across the country watched the system grow, we
realized that the cost was no longer sustainable, “said Mr. Florizone. “A
survey by the Canadian Association of University Business Officers reported in
2009 that approximately 70 per cent of universities either do not accept credit
cards for tuition or were considering discontinuing the acceptance of credit
cards.”
The situation is similar for municipalities, as
noted by Mr. Hughes; “Last year, the City of Ottawa accepted $63 million in
credit card payments. For the convenience of some of the customers of the
City of Ottawa, all of the taxpayers of the City of Ottawa had to pay almost
$1.4 million in fees for credit cards. The situation would be similar in
other municipalities across the country.”
Mr. Hughes went on to talk about the additional
costs imposed on municipalities and universities of Payment Card Industry
standards compliance which is required by the credit card companies for use of
their systems; “These standards require a detailed review of credit card
practices and a continued certification by an independent party of the
organizational compliance with these new standards and practices. To obtain PCI
compliance, the City of Ottawa has spent $2.5 million to date and will require
an additional expenditure of $800,000 each and every year to remain compliant.
“
In response to this testimony, Senator Ringuette
has said the following; “These costs are unreasonable and hurting municipal
taxpayers, universities, and students while VISA and MasterCard are reporting
historic profits. The Government of Canada should act as the Government of
Australia did 7 years ago by imposing a cap on credit card merchant fees for
municipalities and universities at 0.33% instead of the gouging that we are
witnessing in Canada. The facts are that credit card fees for merchants,
universities, governments, and non-profit organizations in Canada are the
highest in the world and this is unacceptable. I urge my fellow Senators to
help pass this bill and ensure that the fees charged by credit card companies
to our most important intuitions are fair and reasonable.”