This site will look much better in a browser that supports web standards, but it is accessible to any browser or Internet device.

Skip to Content

Senator Ringuette urges Senate to follow the European Union and take action on excessive credit card interchange fees

For Immediate Release


October 28th, 2013


Senator Ringuette urges Senate to follow the European Union and take action on excessive credit card interchange fees


Senator Pierrette Ringuette spoke Friday in support of her bill S-202, An Act to amend the Payment Card Networks Act (credit card acceptance fees); the official transcript is attached.

For more information:

Tim Rosenburgh

Office of Senator Pierrette Ringuette

(613) 943-2248



Senator Pierrette Ringuette: Dear colleagues, I would like to say that I am honoured, but in reality, I am disappointed that this is the sixth time I have had to introduce a bill in this chamber to lower the excessive fees that are charged to merchants and, as a result, passed on to Canadian consumers, by card issuers and the entire credit card system.

On October 6, 2009, I introduced Bill S-241, which died on the Order Paper at second reading, as a result of prorogation in December 2009. Later, in 2010, I introduced Bill S-201. It was sent to committee in 2011, but it died in committee before the committee was able to start its study, because of the election.

Then, last December I introduced Bill S-215, which was sent to committee at the end of June. The committee did not have time to start its study before there was another prorogation. Dear colleagues, this means that this is the sixth time I have introduced a bill to bring in what I would consider to be reasonable fees for the Canadian economy.

Many times in this chamber I have spoken about the burden facing Canadian merchants and the fact that they did not have any opportunity to negotiate with the giants. Here are some facts.

A total of 90 per cent of credit cards in Canada are either Visa or MasterCard. The first time I spoke to you about this issue, it was 82 per cent.


Since last December, when I tabled the fifth edition of this bill, a few major events have occurred. First, excessive fees collected from merchants in our economy exceed $5.5 billion.


Do you realize that since December 15, 2012, these giants collected more than $5.5 billion in excessive fees from merchants and consumers in the Canadian economy? Last April, Visa announced a 30 per cent increase in fees for merchants and MasterCard did the same on July 1.


As you will recall, last year I informed you that the Competition Bureau was bringing Visa and MasterCard before the Competition Tribunal. In May and June of 2012, the tribunal held 23 days of hearings.

In July 2013, a year later — a year later, on this very important issue — the tribunal made public its decision, saying essentially that according to the mandate of the tribunal as per section 76 of the Competition Act and the Competition Tribunal Act, the resale of product was necessary in order for them to have jurisdiction.

However, they also said that because of the severity of the issue in the marketplace in regard to credit card fees, they decided to pursue their hearings and their analysis of the situation, which is phenomenal. They knew that, on the jurisdiction side of the issue, they had no mandate, but because of the severity of the issue, their conscience said, "We have to analyze this," which is a lot more than we did here, so far.

They said that the currently operating credit card regime does not meet the product resale definition but, in their analysis and in their conclusion that they made public, they clearly said that this issue required — "required" is a very important word in the context here. A body that does not have jurisdiction says publicly that the issue requires regulation. I have been saying that.


That is what I am telling you. That is what I told Minister Flaherty in 2009. This is not a political issue for me. This is about improving the situation for our merchants and consumers. We need to look at the big picture.


Senators, with my bills, I have been demonstrating this to you since October 2009. Had this chamber, or the other place — we don't have the monopoly on thinking, especially not now — adopted my Bill S-241 in 2009, Canadian merchants and consumers would have saved over $20 billion at a time when the former Governor of the Bank of Canada, Mark Carney, was saying to every Canadian that we have too much household debt. That was repeated by Minister Flaherty. We have too much debt in our households. Canadians are paying too much for the same goods in comparison to the U.S. This is an essential element, and I would even dare say that it is a central element, in regard to household debt and consumer pricing.

I have demonstrated to you in this chamber, time and time again, that other Commonwealth countries have realized this a lot sooner than we have. Australia moved over 10 years ago on this issue, and 16 European countries have been doing so since 2006.

I have researched this issue, not with tunnel vision. We cannot, as a trading country, look at this issue with tunnel vision. I have looked at what is going on out there in the world in regard to credit card fees and how it's being dealt with, fairly. That's the keyword here. The keyword is "fair." I understand that banks and credit card companies, in order to provide service, need to make a profit, but what is reasonable in regard to Canadian consumers and Canadian merchants?

Other countries have managed to regulate this issue in a fair way. For instance, in its legislation, Australia has a mandatory review of the maximum merchant fees for credit cards. They have, as of today, reviewed the caps on merchant fees twice. The first time, they reduced the fees because they decided that they were too high after three years. Their second review maintained the fees that had been put in place after the first review.

Another major event happened in July, which should also have your interest.


A major event took place on July 24, involving our new trade partner, the European Union. On that date, the European Commission signed a regulation requiring that the European Union's 28 countries limit merchant fees to 0.2 per cent for debit cards and 0.3 per cent for credit cards.


After many years of review and consultation with its 28 countries, last July the European Union introduced legislation and regulation at the EU commission, including maximum merchant fees on debit cards at 0.2 per cent and on credit cards at 0.3 per cent—even lower than what my bill is proposing.

Now, there's a law of averages here, which I will explain.


Basically, when our Prime Minister received high praise, or bought ads to seek praise, on, say, the agreement with the European Union, he created an obligation. There is also a business obligation in terms of what follows from that.


There is a level playing field in as many sectors as possible. The fees to consumers and merchants, either in Canada or in the 28 EU countries, must be on a level playing field. I honestly believe that we have to proceed, as soon as possible, to put the bill that I'm proposing to you in place.

To be fair, the EU has a 22-month window from last July 24 allowing all the 28 countries in their own legislative power to legislate the exact regulation. Therefore, we have a very small window here in order to attain that level playing field for our merchants and our consumers.


On average, in most EU countries, the maximum rate to date — and I pointed this out in December — was 0.9 per cent. The new EU regulation is very similar to the bill before you. Each of the 28 countries has 22 months to ratify this agreement. In addition, this rate is subject to review every four years.


Remember, honourable senators, I've told you that the Australian legislation has a regular, systemic review of the fees. Within the European Union regulation, there is also an automatic mechanism for review of the fees every four years.

My bill that is in front of you does not specify a time frame for reviews. It leaves it to the discretion of the Minister of Finance. From my perspective, that is a lot more flexible and can be adapted rapidly by the Minister of Finance in case of high fluctuation in relation to the Canadian dollar, the marketplace, inflation and so forth. This bill gives the Minister of Finance flexibility to review, on a need-be basis, the rates that would be adopted in Canada.


The EU estimates its merchants will realize savings of 6 billion per year.


It's about US$8 billion per year. Taking into consideration that only 60 per cent of consumers and merchants in those 28 EU countries use credit cards, you will remember that in Canada we have, on average, 2.2 credit cards per Canadian consumer. In Canada the use of credit cards is a lot higher than the use in the EU. The European Commission has already identified that the measures of putting maximum merchant fees for credit card use will save their economy, with regard to consumers and merchants, $8 billion a year.

Now, try to identify for me, since 2006, what government measures have been put in place in order to financially help small- and medium-sized businesses and Canadian households to the tune of $5 billion a year in savings. What government legislation has been put in place?

Colleagues, let me remind you, this would not remove one penny from government revenues for government spending. This would save $5 billion a year. I'm tempted to use the same words that the government leader has been using since we've started here on October 17, after the Speech from the Throne.


Listen. Think carefully.


This is a no-brainer to save, in our Canadian marketplace, for consumers, for households, $5 billion a year without costing the government coffers anything; zero dollars.


Listen. Listen.


Honourable senators, with the Canada-EU proposed trade agreement, or MOU, you should understand how important it is to also level the playing field for Canadian merchants and Canadian consumers, as the EU Commission established for its merchants and consumers.


Dear colleagues, notwithstanding the importance of this issue and notwithstanding that there seems to be a lot more politics in here than I was anticipating when we closed this place in June, if the issue in regard to this bill and putting it on hold—like it has been put on hold since 2009—is that it is being introduced by a Liberal senator, I would be willing and very supportive, today or very early next week, to give the full intent and support for the same bill introduced by any Tory senator.

Some Hon. Senators: Oh, oh!

Senator Ringuette: This is not a political issue to me.

Senator Mercer: It's about Canadians.

Senator Ringuette: It's about household debts. It's about small merchants having a very tough time to survive, and it's about the fact that very few in this country benefit from this. It is not a political issue; it's an issue for the people.

So if the problem to move forward with this bill is a political one for you or your government, I will gladly give you this bill and remove my name from it. I have four or five bankers boxes of data in my office that you can use, but pass this bill. Move forward with it.

When I introduced this bill last December, the fact that you've been putting it on the shelf since 2009, Visa and MasterCard jumped at it and said, "They won't move this. They'll put it on a shelf." They didn't mind at all that our Competition Bureau had sent part of this issue to the tribunal. They raised those fees by 30 per cent without any explanation whatsoever to justify it. There's a major abuse.

Other countries have moved ahead for many years now. With regard to the EU, individually, as I said earlier, 18 countries had already legislated about a maximum of 0.9, merchant fees. Now they're doing it as a bloc.

For your understanding, I have with me the full regulations tabled at the EU Commission. I will read the European Commission press release from Brussels, dated July 24, 2013. The headline is "New rules on Payment Services for the benefit of consumers and retailers." It reads:

In order to adapt EU payments market to the opportunities of the single market and to support the growth of the EU economy, the European Commission adopted today a package including:

A new payment Services Directive ("PSD2")

A proposal for regulation on interchange fees for card- based payment transactions

Internal Market and Services Commissioner Michel Barnier said: "Today, the payment market in the EU is fragmented and expensive with a cost of more than 1 per cent of EU GDP...

A cost of more than 1 per cent of EU GDP.


"... or 130 billion a year. These are costs our economy cannot afford...."

If the EU economy cannot afford these costs, why should the Canadian economy afford them? Please.

It continues as follows:

"Our proposal will promote the digital single market by making internet payments cheaper and safer, both for retailers and consumers. And the proposed changes to interchange fees will remove an important barrier between national payment markets and finally put an end to the unjustified high level of these fees."

Vice President Joaquín Almunia added: "The interchange fees paid by retailers end up on consumers' bills. Not only are consumers generally unaware of this, they are even encouraged through reward systems to use the cards that provide their banks with the highest revenues. Complementing the enforcement of antitrust rules, the regulation capping interchange fees will prevent excessive levels of these fees across the board. A level playing field will be created for payment services providers, new players will be able to enter the market and offer innovative services, retailers will make big savings by paying lower fees to their banks, and consumers will benefit through lower retail prices."

The revised Payment Services Directive brings a number of new important elements and improvements to the EU payment market:

It facilitates and renders more secure the use of low cost internet payment services by including within its scope new so-called payment initiation services. These are services that operate between the merchant and the purchaser's bank, allowing for cheap and efficient electronic payments without the use of a credit card. These service providers will now be subject to the same high standards of regulation and supervision as all other payment institutions. At the same time, banks and all other payment service providers will need to step up the security of online transactions by including strong customer authentication for payments.

Consumers will be better protected against fraud, possible abuses and payment incidents (e.g. in case of disputed and incorrectly executed payment transactions). Consumers may be required to face only very limited losses — up to a maximum of 50 EUR (vs 150 EUR currently) - in cases of unauthorised card payments.

The proposal increases consumer rights when sending transfers and money remittances outside Europe or paying in non-EU currencies.

It will promote the emergence of new players and the development of innovative mobile and internet payments in Europe for sake of EU competitiveness worldwide.

The Regulation on interchange fees, combined with the revised PSD, will introduce maximum levels of interchange fees for transactions based on consumer debit and credit cards and ban surcharges on these types of cards. Surcharges are the extra charge imposed by some merchants for the payment by card and are common notably for purchases of airline tickets. When interchange fees are capped for consumer cards, retailers' costs for card transactions will be substantially reduced and surcharging will no longer be justified.

It continues:

During a transition period of 22 months —

— that is, as of last July 24 —

— caps on interchange fees for debit and credit cards will apply to cross-border transactions, i.e. when a consumer uses his card in another country, or when a retailer uses a bank in another country. Thereafter these caps will also apply to domestic transactions.

Senator Gerstein, I see I have your attention. Thank you very much.

Senator Gerstein: You always do.

Senator Ringuette: It says:

Thereafter these caps will also apply to domestic transactions. The caps are set at 0.2 per cent of the value of the transaction for debit cards and 0.3 per cent for credit cards. These levels have already been accepted by competition authorities for a number of transactions with cards branded MasterCard, Visa and Cartes Bancaires.

To pause here, nine years ago, when Australia put a cap on interchange fees, Visa and MasterCard did not flee the country and are still providing the high quality secure service that they say they do in Australia. Visa, MasterCard and Carte Bancaire have already said to the EU commission that they have no problem abiding by these caps. Why should they have a problem with the caps that I'm introducing in Bill S-202 in Canada? Why should they?

To continue:

For the cards that are not subject to the caps (mainly commercial cards issued to businesses and three party schemes such as American Express or Diners), retailers will be able to surcharge for them or to refuse to accept them. In this way, the costs imposed by these expensive cards can be passed directly on to those who benefit from them rather than being borne by all consumers.

Interchange fees are included in the retailers' costs of receiving card payments and are ultimately paid by consumers through higher retail prices. They are unseen by consumers but cost retailers and ultimately consumers tens of billions of euros every year. The level of the interchange fees varies widely between the Member States, which suggests that they do not have a clear justification and create an important barrier between the national payment markets. Capping the interchange fees will reduce costs for retailers and consumers and help to create a EU-wide payments market. This should also encourage innovation and give more scope for payment providers to offer new services.


They give a background to their conclusion in capping interchange fees as a resumé, but, if you want, I can give you the entire study; I have no problem with that.

The background:

The review of the EU payments framework, especially the Payment Services Directive (PSD), and the responses to the Commission's Green Paper `Towards an integrated European market for card, internet and mobile payments' in 2012...

— didn't take them that long to put in legislation —

led to the conclusion that further measures and regulatory updates, including adjustments to the PSD, are required. This would help the payments framework to better serve the needs of an effective European payments market, fully contributing to a payments environment which nurtures competition, innovation and security. Modernisation of the legislative framework for retail payments was also defined as one of the key actions of the Commission Single Market Act II.

This package responds to major changes in the way Europeans shop and pay. Almost every account holder in the EU possesses a debit payment card and 40 per cent also own a credit card. 34 per cent of EU citizens already shop on the internet and more than 50 per cent possess a smartphone1, which allows them to access the world of mobile payments. Some economy sectors — like the travel industry — even make most of their sales on the internet2.

At the same time, the EU market for cards, internet and mobile payments remains fragmented and faces important challenges that hinder its further development and slow down the EU growth potential (such as divergent cost of payments for consumers and merchants, differences in technical infrastructures or the inability of payment providers to agree on the implementation of common technical standards).

Furthermore, while card payments are becoming more and more widespread, the still prevailing "interchange fees" (fees paid by banks to each other for each card payment) business model promotes high inter-bank fees and impacts costs for retailers and ultimately prices for consumers. It also prevents the emergence of new players.

This is the press release issued by the European Community, Brussels, July 24, 2013.

So, basically, dear colleagues, in regard to this issue, and in market terms, we're laggers, big-time laggers — big big-time laggers. collectively, if we want to play and be seen as a serious player, a market economy country, why are we going to be — if not acting rapidly — the last one?

Senator D. Smith: He who hesitates is lost.

Senator Ringuette: Why are we not moving forward? There's been $20 billion in excessive fees since 2009. Never mind reasonable fees. How many mortgage payments would that give to low- and medium-income families?


The Hon. the Speaker: Honourable senators, I regret to inform you that the 45 minutes allocated to —

Senator Ringuette: Could I have five more minutes, please?

Hon. Senators: Agreed.

Senator Ringuette: Gee whiz. I would renege my five minutes if you would agree to move it to committee. Can we have an agreement?

Some Hon. Senators: No.

Senator Ringuette: I suspected that.

I honestly believe that since the last time that I spoke to you in this chamber about this issue two major events have happened. The first one was the decision of the tribunal clearly saying that this issue requires regulation.

The second, even more important thing in the last two weeks is the fact that the European Commission, 28 European countries, are capping merchant fees, are capping that abuse into the economy by a very select few.

In Canada, we have Visa and MasterCard, and at times they co- brand with Canadian Tire and other major retailers. In Canada they spend a billion dollars a year to market their cards, because the more you use the card, the more profits they make. They are not satisfied with that, because they've increased their fees by 30 per cent in the last year.

Senator D. Smith: They're greedy.

Senator Ringuette: Is Canada going to be a laggard on this issue? I believe we already are. But how far down the list do you want to be, in order to really take the action necessary to protect Canada's small and medium-sized businesses and to protect Canadian consumers against these abuses in the system?

Senator D. Smith: Even the middle class.

Senator Ringuette: So please, colleagues, please.


Listen, listen, listen...and then refer this bill as soon as possible to the Standing Senate Committee on Banking, Trade and Commerce so it can get the consideration it deserves, for the benefit of all Canadians. This bill should then proceed to third reading in the Senate, which, as the supposed chamber of sober second thought, should then send it the other place. If there is indeed a consumer-oriented approach in the other place, this bill should be given priority consideration.