Senate report short changes consumers

OTTAWA– Consumers will once again bear the burden of higher credit card costs if the government adopts recommendations from a Senate committee released last week.

The report of the Senate Banking, Trade and Commerce committee includes a recommendation that would allow merchants to charge consumers an extra fee at the cash register for using certain credit cards.

“The Liberal/Conservative Senate is falling in step with the Harper government’s practice of siding with the Credit Card companies over Canadian families,” said Glenn Thibeault, the New Democrat consumer protection critic. “Credit card companies are still gouging retailers with these fees, and now the suggestion is that they dig even deeper in to the pockets of the already hard hit consumer.”

The problem lies with the recently released ‘premium’ cards from VISA and MasterCard, who occupy 94% of the Canadian credit card market. These cards charge a higher interchange rate, which the credit card companies describe as the cost of a transaction. What many did not know, including up until recently the retailers themselves, was that these costs are incurred by the seller (often small businesses). In return, VISA and MasterCard use these funds to offer cardholders luxury rewards packages.

In other countries where surcharging has been permitted, merchants have turned surcharging into profit generation. In Australia where no regulations are in place, companies have charged up to 3 per cent of the value of the purchase, far more than the cost of accepting premium credit cards.

“While businesses and grocery stores will go bankrupt if there are no limits or regulations on these hidden fees; consumers shouldn’t be forced to give even more of their hard-earned money to pad the profits of the Credit Card giants,” said Thibeault. “What is needed is government regulation. Retailers and credit card companies can’t be trusted to regulate the system themselves.”