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Senator Pierrette Ringuette agrees with Banking Committee witnesses that credit card fees charged to Canadian universities and municipalities are too high

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.”