Evidence of meeting #13 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was card.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Kirkland Morris  Vice-President, Enterprise Strategy, Interac Association
  • Jim Roche  President and Chief Execuive Officer, CANARIE Inc.
  • Diane Brisebois  President and Chief Executive Officer, Retail Council of Canada
  • Terry Campbell  President and Chief Executive Officer, Canadian Bankers Association
  • Harry Sharma  Policy Analyst, CANARIE Inc.
  • David Revell  Senior Vice-President, Business Support and Strategic Initiatives, Canadian Imperial Bank of Commerce, Canadian Bankers Association

5:20 p.m.

Conservative

The Chair David Sweet

Thank you very much, madam.

We'll move on.

Mr. Caron, you have five minutes. Go ahead.

5:20 p.m.

NDP

Guy Caron Rimouski-Neigette—Témiscouata—Les Basques, QC

Thank you, Mr. Chair. I will be sharing my time with Mr. Thibeault.

I want to come back to the 12¢ it costs per transaction when the customer pays by Interac. We take for granted that that fee is not reflected in the selling price, but is instead absorbed by the retailer. Is that true? More and more, we are seeing—some consumers have come to see me about it and I, too, have experienced it—that retailers are beginning to charge different prices based on the payment card used. Do you think that is a direct result of this policy? What can we do to counter this phenomenon? If the selling price does not reflect the cost of the transaction and the consumer realizes this, it puts small and medium-sized businesses that use differential pricing at a competitive disadvantage.

5:20 p.m.

President and Chief Executive Officer, Retail Council of Canada

Diane Brisebois

It puts them at a huge competitive disadvantage. While everyone does not always agree, there is a consensus that overcharging is not a good business practice. Actually, even when the customer pays 5¢ instead of 1%, that cost is always included in the product's selling price, just as the employer's rent and labour costs are. What is worrisome is the percentage.

Mr. Caron, it is all the more worrisome because small businesses do not have the sales volume needed to negotiate better rates. Just imagine I am a small business owner and I charge my customers 10¢ a transaction when they pay with card X. If I had to compete with a very big company that benefits from a much lower rate, I would go out of business. So there is that issue. New technologies will probably be too expensive for small businesses. That is what worries us.

I am not saying they should not have to pay; the technology has to be paid for. But we need to have merchants at the table when new technologies and products available to consumers are being discussed.

5:25 p.m.

NDP

Guy Caron Rimouski-Neigette—Témiscouata—Les Basques, QC

Thank you.

5:25 p.m.

Conservative

The Chair David Sweet

Mr. Thibeault.

5:25 p.m.

NDP

Glenn Thibeault Sudbury, ON

Thank you.

How much time do I have?

5:25 p.m.

Conservative

The Chair David Sweet

You have a little under three minutes.

5:25 p.m.

NDP

Glenn Thibeault Sudbury, ON

Perfect. I'll get right to it then.

I'll start with Mr. Morris. I think most of us here know what debit card co-badging is all about. Can you give me your views on that? Why does the current voluntary code of conduct for the credit and debit card industry prohibit debit card co-badging? Can you talk to that?

5:25 p.m.

Vice-President, Enterprise Strategy, Interac Association

Kirkland Morris

Sure. You're right that the code tackles the issue of co-badging directly. For clarity, co-badging is the co-residency of competing payment brands on a card targeting the same transaction. So two debit brands, for example, are on the same transaction. The code also addresses the coexistence of credit and debit functions on the same card.

In its wisdom the code is not endeavouring to regulate market outcomes and say “You shall price this way” or “You shall do this that way”. It is trying to establish a framework for healthy competition to allow merchants on one side of the equation to understand the costs of various forms of payment in clear contracts, and to be able to act on those with the ability to consciously select and opt into what they will and will not offer in terms of payments at the point of sale.

On the consumer side, it allows them to choose quite consciously and without confusion what cards to place in their wallet, and then what card to pull out of their wallet to make any given transaction.

I think the concern around co-badging has certainly led to the provisions in the code and what folks viewed as the unhealthy trajectory we were on. There was confusion on both sides. The consumer wasn't sufficiently informed with clear choices, and the merchant wasn't sufficiently informed and able to make clear choices that both of those would prevail.

5:25 p.m.

NDP

Glenn Thibeault Sudbury, ON

Ms. Brisebois, what are your thoughts on co-badging?

5:25 p.m.

President and Chief Executive Officer, Retail Council of Canada

Diane Brisebois

I think it's terrible. I don't think there's much that needs to be said, especially in an environment where the merchant has no choice. The problem here is that the customer sees the advertising: if you use this product you'll get five points instead of one, or you'll get points, but if you use this other product you won't. You create the demand at the consumer level, because it's not costing them more, and you're making the middle guy pay.

You have products residing on the same card, and the mechanism they say you have to put on your cash or on your counter to accept that card is controlled by someone else. So you cannot ensure that the transaction is going through the cheapest route--

5:25 p.m.

NDP

Glenn Thibeault Sudbury, ON

So would we have some concerns?

5:25 p.m.

Conservative

The Chair David Sweet

That's it, Mr. Thibeault. I apologize. Time is always our enemy here.

Mr. Lake is next, for five minutes.

November 16th, 2011 / 5:25 p.m.

Conservative

Mike Lake Edmonton—Mill Woods—Beaumont, AB

Thank you, Mr. Chair, and I again thank the witnesses for coming and being patient.

Diane, thanks for coming here twice now.

5:25 p.m.

President and Chief Executive Officer, Retail Council of Canada

Diane Brisebois

It's always a pleasure.