The Canadian Federation of Independent Business has withdrawn its complaint against Moneris Solutions Corp., which it had lodged with a federal regulatory agency, after the payment processor agreed to give thousands of retailers more time to assess the impact of coming credit-card fee changes and exit their contracts without penalty.
The parties announced their truce on Thursday, just days after The Globe and Mail revealed that Moneris was being investigated by the Financial Consumer Agency of Canada over a possible violation of Ottawa's new code of conduct for the payments industry.
Moneris, which is Canada's largest payment processor, had previously rejected the CFIB's request to extend the penalty-free period for merchants. Its about-face comes after the two sides recommenced talks this week, while the FCAC heeded a request by Finance Minister Jim Flaherty to expedite its probe.
"We're pleased with the outcome of this process. I think that this will close the matter from CFIB's perspective," said Daniel Kelly, CFIB's senior vice-president of legislative affairs.
David Ades, senior vice-president of sales and marketing with Moneris, said the company voluntarily reconsidered CFIB's request but maintains it never breached the code.
"There wasn't any pressure. It was in consultation with the CFIB," said Mr. Ades.
It was not immediately known, however, whether the withdrawal of the CFIB's complaint would halt the FCAC's investigation. The agency did not immediately respond to a request seeking comment on the matter.
Annette Robertson, Mr. Flaherty's press secretary, declined comment on the investigation's status but said: "We are pleased both parties worked together and that we could help facilitate dialogue to ensure the code's continued success."
The FCAC'S investigation began last week after the CFIB formally complained to the FCAC and Mr. Flaherty's office about the way Moneris was notifying merchants about coming changes to the fees it charges for processing credit cards.
Moneris had issued a letter to retailers on Dec. 30, 2010, informing them that it planned to introduce a new "interchange differential" fee and reduce an existing fee for Visa and MasterCard credit card transactions on April 1.
Retailers argued the letter was incomprehensible, filled with jargon, and left them guessing whether the changes would amount to an increase in their overall processing fees for credit cards.
Under the code, merchants are entitled to a minimum 90 days' notice of fee changes to give them enough time to understand the modifications and exit their contracts without penalty.
A separate provision also requires "increased transparency and disclosure" for merchants about their costs, especially easy-to-understand details in agreements with processors and monthly bills.
But industry sources have said the code fails to spell out how much detail payment processors are required to provide retailers when notifying them of fee changes.
While Moneris has no plans to rewrite or reissue the letter, it has now agreed to give merchants an extra 90 days - or until June 30 - to assess the financial impact of the fee changes and to decide whether they want to exit their contracts without incurring any penalties.
By that time, merchants will have seen how the changes have affected at least two months of bills and can make an informed decision whether to shop around for a new provider.
The CFIB says Moneris's decision to give merchants an extended deadline is actually a better outcome than if the payment processor had simply rewritten its letter in plainer language.
"The best test for a business owner is going to be when they see their statement. It is very hard for a small merchant, particularly if you've got a half -dozen employees, to figure out what the impact of some fairly significant changes are on your bill - whether fees go up, down or stay the same," said Mr. Kelly.
Moneris is owned by Bank of Montreal and the Royal Bank of Canada and handles payments for more than 350,000 stores in North America, according to its website.
Mr. Ades conceded that credit card processing fees are a "complex" issue even though he maintains the company's original letter gave merchants a detailed explanation of the planned changes.
"Upon further reflection we felt that for our valued merchants, we would give them the benefit of the doubt and give them that extra 90 days," he said.
Fern Glowinsky, senior vice-president and general counsel for Moneris, said the company received very few calls from retailers seeking clarity about the pricing changes, which will "better align" merchants' processing costs with the types of cards they accept.
Both Mr. Ades and Ms. Glowinsky noted, however, that payment processors are generally facing higher costs because of the growing popularity of premium credit cards which cost more to process because of their fatter rewards.
"We don't control the amount of [premium]cards that are in the marketplace and what interchange is tagged to them," Mr. Ades said.
Visa and MasterCard set interchange rates, which are base fees, to process credit cards. Payment processors, which supply payment terminals and software to merchants, also factor in other costs before determining a retailer's final bill.
Nonetheless, Moneris is mulling whether to make permanent changes to the way it notifies merchants about fee changes in the future. That may involve giving merchants advance notice of a fee change and then a full 90 days from the time those changes are implemented to make a decision about breaking their contracts without penalty.
Rita Trichur