Competition Commissioner Melanie AitkenBlair Gable
The head of the Competition Bureau has lashed back at the credit card industry, calling attempts by Visa Inc. and MasterCard Inc. to paint themselves as pro-consumer "self-serving" and "neither fair nor accurate."
The harsh words from competition commissioner Melanie Aitken come after the credit card giants said recently that rules they impose on merchants forcing stores to accept all cards - including those that come with higher transaction fees - are for the good of the consumer, since it prevents merchants from selectively turning away cards that cost more to process.
Ms. Aitken alleges the costs associated with higher-fee cards, such as rewards cards that offer points or air miles, filter through into the price of goods. The bureau also argues that merchants have little flexibility since Visa and MasterCard hold most the market.
In a sternly worded response filed to a federal competition Tribunal Monday, Ms. Aitken alleges the real purpose the credit card companies impose such rules is to "preserve the now approximately $5-billion in card acceptance fees paid each year by merchants in Canada, by preventing those merchants from taking steps to effectively foster competition."
The Competition Bureau had two weeks to respond after Visa and MasterCard argued in a previous submission that their policies are designed to ensure consumers can be confident all cards will be accepted at the cash register.
The bureau believes retailers should have the right not to accept premium cards if they so choose, or to collect surcharges to cover their higher transaction costs. But Visa argues this will result in merchants taking advantage of consumers.
"Fundamentally, what we believe they are proposing is anti-consumer and anti-competitive," Tim Wilson, head of Visa Canada, said recently.
The Competition Bureau launched its case against Visa and MasterCard in December. Both credit card companies require merchants to accept all cards issued by them, regardless of fees, and prevent retailers from adding surcharges to cover transaction costs. The credit card companies charge between 1 per cent and 3 per cent on each purchase.
Together, Visa and MasterCard hold about 90 per cent of the market for credit cards in Canada. The bureau began looking at the issue in 2009. Similar changes have been introduced in Australia, and Visa argues that new surcharges have reached as high as 10 per cent in that country.
Last week, Toronto-Dominion Bank also entered the debate, saying consumers would question the usefulness of their credit card if stores are allowed not to accept all versions of Visa or MasterCard. In documents filed with the Tribunal, TD said the rule changes will shake consumer confidence and "would cause a migration" to cash, cheques, gift cards, private label cards or other payment cards.
Grant Robertson