ACTA Discusses Merchant Fee Reform

In our last newsletter, ACTA reported participating in an initial meeting to assess the prospect of joining a newly formed coalition known as the Small Business Matters Coalition addressing the need for fairer credit card fees for independent businesses.

In order for ACTA to confirm our involvement in this coalition, your feedback on this matter would be appreciated. You can download the backgrounder that was provided to us prior to last week’s meeting.

As we understand, the “ask” of government is not to pass on the credit card fees to consumers but rather make the charges more fair, especially in comparison to other jurisdictions.

Please voice `your views to ccfees@acta.ca.

The following article from www.blacklocks.com touches on the topic....
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Independent gas retailers are appealing to the Commons finance committee for regulation of Visa and MasterCard charges, saying fee-ridden businesses now make less on a litre of fuel than a can of Coke.

“Credit card fees in Canada are among the highest in the world,” said Tricia Anderson, president and CEO of the Canadian Independent Petroleum Marketers Association; “Our organization is advocating for more regulation.”

Some $5 billion is collected each year in transaction fees by Visa and MasterCard, which account for 90 percent of credit card purchases, by federal estimate. The unregulated fees averaging 1 to 3% are collected from retailers for processing customers’ credit transactions.

“Close to fifty percent of customers use credit cards for purchases,” Anderson told MPs. “It’s estimated that up to a third of their operating margin on these sales just go to cover the costs of processing the cards”; “Frankly you make more money on a can of Coke than you do on a litre of fuel any day.”

Finance Canada has declined to regulate the fees, opting for a voluntary 2010 Code of Conduct. Terms include 90 days’ notice of fee increases; plain disclosure of all contract terms and conditions; and authority for merchants to cancel contracts without penalty. The Financial Consumer Agency of Canada in a report last November 13 cited numerous violations of the code, but refused to name offenders.

“A voluntary code of conduct is simply not enough,” Anderson said. “Many of our retailers have expressed that the current code is not working for them; they are not being protected from the burden of high credit card fees, which threaten their very existence.”

Credit card executives earlier testified that regulation would upset the “balance” of the system. And bank executives have told MPs the fee schedules are none of their doing. “The fees that were noted are actually set by the networks,” said Todd Roberts, CIBC senior vice-president of payments strategy, prompting questions by MP Murray Rankin (Victoria), New Democrat revenue critic:

ROBERTS: “We, the bank, do not set any of those fees…”
RANKIN:  “So, your bank will not take any responsibility. You’re leaving it to the networks and the acquirers, this issue.”
ROBERTS: “It’s not that we’re not taking any action. It is the responsibility of the networks to actually set rates. We do not set those rates.”
The Competition Tribunal last July 23 ended a three-year investigation of MasterCard and Visa  by dismissing complaints of unfair trade practices. Merchants had accused the two companies of violating the Competition Act with random increases in acceptance fees and rules that oblige retailers and restaurateurs to accept all cards by contracted issuers, including high-fee rewards cards.