PIAC comments on Reducing Credit Card Transaction Fees

PIAC urges government to ensure consumers are not collateral damage in the fight between merchants and credit card companies

In September, PIAC commented on the Department of Finance Canada’s Consultation on Reducing Credit Card Transaction Fees.

In brief, we recommended that the federal government:

  1. Develop a regulatory framework for credit card transaction fees that includes not only interchange rates, as the Consultation suggests, but also merchant surcharging and acquirer network and service fees. Merchant surcharging, despite being a likely source of significant strife for consumers, is absent from the Consultation. Similarly, acquirer fees despite being regularly charged as a blended rate with interchange fees are also not referenced and we, therefore, asked the government to clarify whether these fees are to be included in an interchange rate cap or a surcharge cap or subject to their own restrictions.
  2. Develop a rate setting scheme for interchange, surcharge, or acquirer fees that is subject to regular review ideally carried out by a regulatory board, which will collect evidence from stakeholders and base its decision on explicitly stated factors.
  3. Develop a mechanism whereby consumers are able to report misconduct through a free and easy-to-use complaint system.
  4. Take steps towards proactive regulation, rather than allow voluntary agreements and settlement agreements negotiated behind closed doors by merchants and credit card companies to continue to dictate the parameters of the credit card transactional rates regime.

Read our full submission here

 

In September, PIAC commented on the Department of Finance Canada’s Consultation on Reducing Credit Card Transaction Fees. PIAC urged the government to ensure consumers are not collateral damage in the fight between merchants and credit card companies. We recommended that the federal government develop a regulatory framework for credit card transaction fees that includes not only interchange rates, but also merchant surcharging and acquirer network and service fees. We also suggested that the government should develop a rate setting scheme for interchange, surcharge, or acquirer fees that is subject to regular review, and develop a mechanism for consumers to report misconduct and also take steps towards proactive regulation.