Senator Pierrette Ringuette

Senator calls for credit probe; Pierrette Ringuette says rising fees hurt consumers during current economic situation

New Brunswick Senator Pierrette Ringuette is calling for a federal probe and stronger regulations on fees charged by credit card companies.

"These issues are not about the Senate, this is not about party politics, this is about regulation, and this is about accountability and oversight. This is about our economy," Ringuette told the Senate Tuesday in presenting a motion for a full investigation into rising credit card fees. "We must make sure that the voices of Canadians are heard and pressure the government to intervene if needed."

Ringuette's motion follows up on lobbying by the Retail Council of Canada, the Canadian Federation of Independent Businesses and other groups who are worried about rising fees charged by credit card companies to businesses, non- profit groups and even government agencies who accept credit cards for payment on goods and services. Lobby groups say the rising fees will almost certainly be passed on to consumers.

Ringuette is a Liberal senator, appointed in 2002. She served as an MLA for Madawaska-South from 1987 to 1993 and MP for Madawaska-Victoria from 1993 to 1997.

She proposed an investigation that would expose the impact of rates and fees on businesses and consumers -- focusing on rising interchange and interest rates. Interchange rates are the percentage of the purchase price that businesses pay in order to provide credit card services to their customers, which have risen substantially in 2008.

Canadians hold 64.1 million credit cards, and 80 per cent of them are issued by the two main players in the industry, Visa and MasterCard.

Consumers already pay an average of over 24 per cent interest.

Ringuette said Canadians are growing more dependant on credit and fair rates should be available, especially during the current financial situation.

"We must all acknowledge the aggressive marketing strategies used by credit card issuers to give consumers premium cards and, therefore, directly increase interchange rates on the business community," she said. "In addition to being unsolicited, those cards bring a different interchange rate when the card has been deemed "high spend" or when the bank detects that a certain amount has been reached."

In 2007, 64.1 million credit cards were used in Canada. Almost 65 per cent of Canadian consumer payments for $294 billion of goods and services are done using credit and debit cards. Visa and MasterCard have about 80 per cent of the national credit card market. Credit card companies are, therefore, extremely wealthy and powerful.

Is this a 'collusion' situation because of this 'quasi monopoly' situation?"

Ringuette also raised the concern felt by business and retail lobby groups that rates for debit card transactions could increase.

There has been concern that the Interac Association, the non-profit group which administers debit and direct payment, could change to a "for-profit" organization.

If this happens, the retail council is concerned that the private corporation could be purchased by the credit card companies and therefore create an even greater monopoly over plastic in Canada.

Increasing rates don't just affect businesses, since government agencies like Service New Brunswick accept credit and debit cards for payment for services and tax bills.

"Being from New Brunswick, my office was in contact with Service New Brunswick and we have discovered that they have a blended 1.813 per cent interchange rate."

Charities that accept credit cards as payment for donations also get dinged on higher service charges.