This article was migrated from our previous website and, due to its age, some content, images, links, or details may be incomplete or unavailable.
For general inquiries, please contact info@cfig.ca. For questions regarding press releases or media content, please contact marketing@cfig.ca.
Swipe fee reduction of 10% is deemed insignificant as fees have increased over 25% the last two years
CFIG and the Small Business Coalition say the announcement falls short of the rate relief requested, but is a step in the right direction
TORONTO–Today, the Minister of Finance announced a reduction of 10% in credit card interchange swipe fees paid by retailers every time a customer uses a credit card.
The Canadian Federation of Independent Grocers (CFIG) urged the government to bring in a regulatory approach to controlling these fees, and to look closely at the capped rates that exist in other jurisdictions. While the decision today does not give us all we asked for, it is a step in the right direction and addresses some of our concerns.
With an upcoming federal election on the horizon, it falls to us to ensure this issue remains high on the public policy radar of all three major parties.
As CFIG members know, the concerns with high credit card fees became more pronounced starting from about 2008 to the situation today, with the proliferation of high end premium cards and of course, corresponding higher swipe fees.
CFIG will continue to make swipe fee reduction a top public policy priority.
We’ve played a leading role in the formation of the Small Business Matters coalition, which now has 23 association members representing well over 90,000 businesses in Canada. CFIG chairs this association and as such, has been on the leading edge of the advocacy efforts to begin the process of moving fees in the opposite direction from which they have been steadily moving in the last few years.
Here’s a closer look at what today’s decision means:
- The government said this ‘resets the clock’ to 2008, rolling fees for all cards back to “an average effective rate of 1.5%
- The fee reduction is in effect for five years and will be rolled out April 2015
- There will be an independent monitoring mechanism put in place to keep track of fees over the next five years
- Additional changes will be forthcoming to the existing Code of Conduct that will tighten up policies and practices in the payments industry, that will better protect retailers
- There will be a preferential rate offered to independent and small businesses, details will vary between MasterCard and Visa, but the objective will supposedly be the same—to provide extra relief for small business. These details will be released in “operational bulletins” from the two card companies in the next few weeks
It is the position of CFIG and the Small Business Coalition, that we welcome the first fee reduction in six years, but it does fall short of the rate relief we feel is necessary for small business operators. The recent agreement between MasterCard and Costco, is a perfect example of the preferential rates that can be negotiated by those with the leverage to do so.
But smaller retailers, without that leverage, in essence end up subsidizing those special corporate deals that offer a myriad of bells and whistles to the consumer.
While the Canadian Federation of Independent Business (CFIB) has come out in complete support of the announcement by the government and say that “consumers should also breathe a sigh of relief,” we at CFIG are not of the same view.
As well, we expect the government to deal very shortly with the other parts of the payments industry.
Last week for example, Chase Paymentechsent out letters to many retailers increasing their processing fees, at the same time that the Minister was negotiating rate reductions with the card companies.
Both CFIG and the Small Business Coalition look forward to working with the Government of Canada, and others, in the months ahead as we continue our campaign to achieving a fair, transparent and accountable payments industry for small business retailers in Canada.
As well, here are the links to reviewing the statements on this issue by MasterCard and Visa.
Link to MasterCard statement: Click HERE
Link to Visa statement: Click HERE
As always, CFIG welcomes the comments and feedback from our members on this issue.
CFIG thanks you for your continuing support.
