Liberals call for tough rules to curb credit-card industry
Published Tuesday November 3rd, 2009
OTTAWA - Liberal politicians lined up Monday to denounce the Harper government's protections against gouging by the credit- and debit-card industry as toothless and to demand immediate action.
Liberal consumer affairs critic Dan McTeague and finance critic John McCallum were joined at a news conference by New Brunswick Senator Pierrette Ringuette, Madawaska-Restigouche MP Jean-Claude D'Amours and small business critic Navdeep Bains.
McTeague said for more than a year, merchants have been sounding the alarm about rising fees charged to merchants and about Visa and Mastercard entering the debit-card system.
A voluntary code of conduct for the industry, as proposed by Finance Minister Jim Flaherty, "is a thoughtless, and in our view, quick fix to a serious problem," said McTeague.
And with rapid changes to the debit payment system, "the government must clue in to adopting serious rules and regulations to ensure competition in this market."
"We must recognize that merchants and consumers are helpless in negotiating fairness in their costs" of using cards, said Ringuette.
On behalf of consumers, the Liberals called for:
*"‚the federal government to force an end to double-cycle billing, by which interest payments are calculated on the previous month's total balance rather than the balance after payments are made;
*"‚credit-card companies to allow cardholders to opt out of their contracts when interest rates are increased;
*"‚companies to account for payments immediately, including those made on weekends.
On behalf of merchants, they called for government to:
*"‚stop the companies from issuing Infinite, a new Visa product, and other premium cards to consumers who have not asked for them. This is because the cards carry much higher fees charged to the merchants who accept them.
*"‚ensure merchants have a choice as to what debit-card network they join;
*"‚prevent both credit and debit services from existing on one card.
McTeague also raised the issue in question period, where Flaherty's parliamentary secretary fielded his question.
Ted Menzies said the government has been listening to the concerns of Canadian consumers and merchants and will act on them.
"The best way to ensure fair pricing of financial services is to encourage disclosure, competition and choice," said Menzies.
"We will be rolling out changes in the very near future.
"Stay tuned."
Visa and Mastercard have told parliamentary committees their cards offer merchants and consumers ample choice, value and options.
The Liberal parliamentarians were joined by Jane Savage, president of the Canadian Independent Petroleum Marketers Association.
Savage said the fees retailers in her sector have to pay have risen unilaterally and by up to 30 per cent.
"No longer is there value for cost, no longer is there discussion, no longer is there choice," she said. "And no longer is there even any say."
Credit-card fees are charged to merchants as a percentage of sales, so independent gas retailers - who have a markup of only five to six cents a litre - make less money when the price of gas goes up.
The credit- and debit-card industry has been given plenty of scrutiny in the last few months.
The Senate banking, trade and commerce committee issued a unanimous report calling for reforms and Ringuette has tabled two bills stemming from its recommendations.
A joint committee of the Commons finance and industry committees has also examined the issues.
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