May 14, 2009
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News: Canada Takes on Visa and MasterCard
Top executives of Visa and MasterCard appeared before a Commons Committee in Ottawa, Canada Thursday, in an attempt to justify the high interchange fees they charge merchants for accepting their credit cards. Retailers across the country have been complaining to Canadian lawmakers about the dramatic increases in interchange fees and say they are unfair. Justin Taylor, a spokesperson for the 33,000-member Canadian Restaurant and Foodservices Association (CFRA), said although the fee is paid through the lender, eventually it is passed on to the end consumer. The association is part of a coalition that represents over 250,000 businesses in the retail, grocery, restaurant, hotel and independent businesses. The coalition is aimed at shielding the merchants from increased debit and credit card transaction fees as well as protect the end consumer from higher prices. The coalition of businesses that has waged the war against credit card companies call their movement "Stop Sticking It To Us."
Visa and MasterCard representatives made a futile attempt to convince the committee they were only looking out for the best interest of the businesses and end consumer. MasterCard Canada’s President, Kevin Stanton, maintained the end consumer would only suffer additional hardships if the government placed any added regulation on Canada’s $500 billion debit and credit card systems. Further Mr. Stanton said the government would only be hurting consumers if they seriously considered the outcries of the “special interest groups.” He reminded the committee of Australia’s attempt in 2003 to regulate interchange fees which not only reduced the rewards and benefits but credit card interest rates and fees went up. Committee members and political party members didn’t buy the weak almost threatening arguments of the Visa and MasterCard executives.
The coalition is also speaking out against the newest wave of premium credit cards that lenders are offering. The premium cards offer greater rewards for consumers but often come with higher interest rates and interchange fees. Since the businesses pass the fee onto the consumer, the consumer actually ends up paying for the reward in the end.