If you are Canadian, and you use a credit card, chances are you are paying for that privilege — even if you don’t carry a balance and use your Canadian credit card interest-free. The fees charged to merchants in Canada for accepting credit cards are among the highest in the world.
Canada’s Competition Bureau is arguing that the high fees that Canadian merchants pay for accepting credit cards is unfair, especially since the cost of the fees are passed on to consumers. Even those who use cash end up paying, in some way, for these high fees. Canadian Business reports on the impact of high fees:
Presenting the case for the competition commissioner, Kent Thomson argued that restrictive contracts put in place by Visa and MasterCard allow the two credit card companies — which represent 92 per cent of the market — to essentially dictate terms to merchants.
“Most Canadians are unaware of the high cost of fees” that are part and parcel of credit card usage, he said. “And these are not borne by merchants alone, they are reflected in higher prices paid by customers.”
Indeed, Canadian credit card use costs everyone, no matter how responsible you are. Some think that the credit card issuers are behaving in a draconian fashion, forcing high costs on everyone, whether they are using premium cards or not, because merchants aren’t allowed to charge different prices for cash-pay customers, regular card holders, and premium credit card holders.
Tribunal Hearing Evidence on the Subject of Credit Card Fees
Because of the high fees, a complaint has been filed against credit cards, and the Competition Bureau is holding a tribunal on the subject. Retailers want to be able to use a surcharge on credit purchases, in an effort to raise awareness of the costs associated with using credit cards. They want to make it clear that everyone pays higher prices when credit cards are accepted at a store.
Due to the popularity of credit cards as a payment method, most retailers have little choice but to accept them. But they wish that they could show consumers the cost — even those who pay cash and have low interest credit cards pay the price — of credit cards. Additionally, they claim that they want to be able to account for the costs associated with credit cards without passing the higher prices on to customers paying cash, or customers that don’t use the premium credit cards.
On top of that, it seems as though the fees also cost the Canadian government $60 million over the course of five years. This news indicates that it’s not just consumers that pay the price; you could avoid stores altogether, and you would still be paying credit card fees through your taxes. While many understand that credit card fees are necessary for the major issuers and the credit card companies to make money, there are questions about why the terms have to be so inflexible, and why Canada has to pay some of the highest fees in the world.
What do you think? Should credit card companies and issuers be forced to change the fee structure?