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Two weeks ago, the Federal Minister of Finance, Bill Morneau, held a news conference to announce further measures were being implemented to address ongoing retailer/merchant concerns with respect to credit card interchange fees. As members will be aware, the push to have further action taken was led by the Small Business Matters Coalition (SBMC), which CFIG chairs. In recognition of those efforts, it was the Coalition alone, that Minister Morneau met with on this issue—and he also decided to make the announcement at one of our members stores, at a Farm Boy in the Ottawa area.
The previous Harper government brought forward a 5-year agreement, expiring in 2020, that was comprised of a voluntary reduction in interchange fees charged by Visa and MasterCard to an overall average of 1.5%. While other groups heralded this reduction, the SBMC alone indicated clearly those measures were not sufficient. Over the past two years, the Coalition has pushed the current government for the following:
- The inclusion of American Express in the reduction agreement. (Amex had argued, successfully, to the previous government that they had a different business model and should not be included.)
- That the reduction to an overall average of 1.5% was not sufficient. Especially when compared to the preferential rates that companies such as Wal-Mart and Costco receive.
- That the reductions must pass the fairness and transparency test by being subject to independent third party audits.
- That it did not matter that Visa and Mastercard said they would provide an overall average of 1.5%, because the rates for premium cards were still too high and made achieving that target not possible for many retailers.
The Minister announced the following at Farm Boy:
- The inclusion of American Express in the new reduction agreement.
- A further reduction in the overall average to 1.4%.
- The reductions must be subject to an independent third party audit.
- Further reductions in the premium card rates to ensure that the overall average of 1.4% would in fact, be achieved.
The Coalition and CFIG welcomed and supported those measures that addressed our concerns. And any rate reductions are certainly steps in the right direction. However, CFIG feels that the drop to an overall average of 1.4% is still not adequate—nor fair when compared to the rates that are provided to companies such as Wal-Mart. While independent grocers have also been promised rates of 1.22% by MasterCard and 1.23% from Visa, our cumulative buying power is greater than Wal-Mart’s.
So why should an American multi-national chain receive better rates than Canadian small businesses. Favouring the American Wall Street over our Canadian Main Street is something that should not be left unchallenged. So our fight on this issue will continue next year as we head into the federal election. There will be more to say about this and our strategy at Grocery Innovations Canada in October! We look forward to seeing you there.
