Senator Pierrette Ringuette

Watchdog investigating credit card fees

The Competition Bureau of Canada is investigating whether credit card networks such as Visa and MasterCard are violating the law by charging high fees to businesses for transactions following thousands of complaints across the country.

"If we find evidence that the [Competition Act] is being violated we will not hesitate to take action," Richard Taylor, deputy commissioner of competition, told the Senate committee on banking, trade and commerce on Parliament Hill yesterday.

Taylor could not say how long the investigation will take but said the bureau will look at whether the large credit card companies have violated Section 79 of the act, which deals with the abuse of a dominant position.

The bureau launched the investigation after receiving hundreds of complaints from retailers and small businesses concerned about skyrocketing fees from Canada's banks and credit card companies.

"Many of those merchants that have to pay those fees have complained to us at one time or another," he said. "We have been concerned, very concerned by the volume and significance of the complaints we have received."

The committee is examining the credit and debit card systems in Canada, and in particular the impact of their rates and fees on businesses and consumers.

The motion to review the fees was tabled by Liberal New Brunswick Senator Pierrette Ringuette.

She wants legislation similar to Australia where interchange rates are capped at 0.45 per cent for businesses, 0.33 per cent for governments and zero for charities.

Interchange fees are the percentage of the total purchase price that businesses pay so that their customers can make credit card purchases.

Ringuette, who attended the committee meeting yesterday, notes that interchange rates in Canada average two per cent while regulated rates are 0.45 per cent in Australia and 0.78 per cent in the United Kingdom.

Jeremy Rudin, assistant deputy finance minister, said Canada's Ministry of Finance continues to meet with stakeholders on both sides.

"We have not intervened in it and we are considering what our next role in it should be," he told the committee yesterday.

A website run by the Retail Council of Canada, stopstickingittous.com, said Canadian consumers paid over $4.5 billion in hidden credit card fees last year.

The council's campaign, which is backed by more than 200,000 businesses from across Canada, is aimed at getting credit card companies to put a stop to skyrocketing fees.

According to the council, an estimated $2 out of every $100 goes to the credit card companies and the issuing banks in fees.