And if Australia’s experience with allowing credit card surcharges is anything to go by, Canadians could pay as much as 10 per cent more on some purchases, Bruce Cran of the Consumers’ Association of Canada told the Vancouver Sun.
“Consumers who have been blissfully unaware of the implications [of the tribunal] may be in for a severe shock when they awake to find any payment they make with a credit card will be surcharged,” the group said in a statement released this week.
At issue is a Competition Bureau challenge to a rule put in place by Visa and MasterCard that forbids retailers from passing on credit card fees to consumers, and another rule that forbids them from declining “premium” credit cards that charge larger fees to retailers.
If the Bureau -- whose ruling is expected to come down any day -- chooses to overturn the rules, Canadian consumers could see additional charges on credit card purchases immediately, the Consumers’ Association says.
On this issue, the consumers’ group is allied with the major credit card issuers, who have warned that eliminating the rules could mean price shock at the cash register.
“If these changes were implemented by the Competition Bureau, the result would be to enrich merchants at the expense of consumers,” MasterCard Canada president Betty DeVita said in a statement.
But some retailers argue that the current rules are anti-competitive and harmful to businesses, who have to pass on the costs to consumers anyway in the form of higher prices for all customers, regardless of how they pay.
“Canada has among the highest Card Acceptance Fees in the world,” the Competition Bureau noted in a briefing on the case. “Canadian merchants that accept Visa and MasterCard credit cards pay a card acceptance fee from 1.5 to more than 3 percent of each purchase. Meanwhile, processing fees in most other countries are significantly lower.”
And even higher fees for “premium” cards, such as gold and platinum cards, are a particular sticking point for some retailers.
Writing in the National Post, Dan Kelly, the head of the Canadian Federation of Independent Business, argues that the higher costs of those premium cards are being shouldered by all consumers.
“In the past three years, Visa and MasterCard and their bank partners have introduced several premium cards and in so doing have hiked fees 30 per cent to 40 per cent. ... [P]remium cards have added nothing but new costs, which in turn are worked into prices and paid by everyone, including those who pay cash or use Interac debit,” he wrote.
He notes that the banks issuing the cards take 80 to 90 per cent of the money collected through fees to retailers.
Kelly also argues that allowing fees doesn’t mean fees will actually happen.
“Small businesses are unlikely to impose fees on consumers very often. Nor are they likely to refuse a premium card from a customer. Merchants — particularly small ones — do not have the market clout and would not want to risk losing the customer to the shop down the street,” he wrote.
But Bruce Cran of the Consumers’ Association points to the example of Australia, which recently brought back rules forbidding credit card fees “after a nightmare decade of abuse.”
He points to the example of Cabcharge, which offers cards specifically for the taxi industry, and charges a 10 per cent fee.
Cran notes that some Australian retailers charged a flat fee for purchases, which in the case of some small purchases could add nearly 100 per cent to the cost.
“In Australia it’s become a huge profit centre for them, as opposed to just recovering the cost,” he told the Vancouver Sun.
Forty U.S. states recently started allowing "checkout fees" for credit card users, which could be up to four per cent of the purchase price.
The new rules are the result of a settlement in the U.S.'s largest-ever anti-trust lawsuit, in which a group of merchants accused credit card companies and banks of price-fixing the fees charged to retailers.
Original Article
Source: huffingtonpos t.ca
Author: Daniel Tencer
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