Finance Committee on May 28th, 2009

[Nancy Hughes Anthony]

I think, Mr. McTeague, you may be jumping somewhat prematurely to conclusions. Could I ask Mr. Kitchen to add a few words?

[Mike Kitchen]

I understand that today Maestro, MasterCard's PIN-based offering, is out in the marketplace. It is actually priced below what Interac is charging, so we're already seeing a case in which a new competitor has entered the market and has offered a fixed fee per transaction. They're not doing a percentage of purchase value, and the price is actually lower to those merchants who want to sign up for it.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

How does that relate to consumers?

[Mike Kitchen]

There is no price differential to the consumer at all in that particular case.

[The Co-Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Lake, please.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

I'm finding this study to be quite a communications exercise. Mr. Wallace holds this brochure up and reads off a whole bunch of legal mumbo-jumbo and gets an answer in about eight words about what the stuff that he read actually means. Then I note that we get these simple charts from almost everybody who appears before us; it's taken us four meetings so far, and we still don't know where all the arrows really are on these charts. It's quite an exercise in communication.

I have a question for the CBA. I want to follow up on Mr. Menzies' line of questioning. In talking about the CBA, the second paragraph of the document that you handed us says, “...we provide a forum for discussion on issues of common interest to our members and we advocate for sound policies for banks at the municipal, provincial and federal government levels”.

Do you communicate with the banks when you do that?

[Nancy Hughes Anthony]

Of course, and when I say “we”, I mean “we” as our members, Mr. Lake. The CBA staff doesn't make these things up. We have a variety of committees and different processes. It's really the members who make these policies.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Do you ever get together in a room with your member banks to discuss issues of common concern to the industry?

[Nancy Hughes Anthony]

Of course we do. In those discussions we can discuss a wide variety of matters common to us, including such things as standards and exchange of information. As I mentioned, we must make sure we are compliant with the Competition Act, as is the case with any industry association.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

You meet to have discussions about areas of common concern.

[Nancy Hughes Anthony]

Of course we do. Yes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

You don't consider that to be collusion.

[Nancy Hughes Anthony]

Well, no. As I said, we guide ourselves by the letter of the law of the act to make sure that we don't cross any of those boundaries.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Would you consider the concerns raised by merchants and consumers--our constituents and your customers--to be areas of common concern to the industry?

[Nancy Hughes Anthony]

Of course they are. We've had many discussions about the things that we think we can do better, and some of those are obviously in our brief today. Areas around disclosure, for example, absolutely can be improved and do not represent any problem in terms of our discussion. We certainly are willing to entertain those kinds of discussions.

As I said, we can't go into areas that relate to anything to do with pricing or anything to do with the quality or quantity of the product or service. That's where the line has to be drawn.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I'll just make the point, though, that if you could get together and make this clear to me in a lot less words and clearer language, I won't be calling for the Competition Bureau to investigate you, I promise.

[Nancy Hughes Anthony]

No, your point is well taken. In the dialogue your committee has facilitated, the whole area of disclosure has raised a lot of those concerns. In a number of meetings of bank representatives, we've looked at our own material and said, boy, this is something that can be improved.

[Cathy Honor]

The FCAC came to us over a year ago to simplify the application form. They worked with MasterCard and the CBA, and we've been working on that. That's a great example.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Fair enough.

I want to turn my attention to this issue of the merchants and the fees.

During these hearings I've heard your organizations and several other organizations talk about the concerns raised by the merchants and defend those concerns by saying that it's good for the merchants and that the merchants benefit.

Shouldn't the merchants make that decision? Doesn't it seem fair that it should be the merchants, if they're saying they don't like it and you're telling us that it's good for them?

[Nancy Hughes Anthony]

No, I think our view would be more balanced, Mr. Lake. In other words, you can't forget the benefits. Our point would be that you can't forget the benefits. There has to be a balanced viewpoint.

For example, we could obviously say to merchants that perhaps they could just offer transacting in cash. They'd say they can't, that it's just not feasible--

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I've got about 30 seconds left.

The point is that one of the things we've learned so far is that the way this program is set up certainly benefits the banks, the credit card companies, the acquirers, and the consumers who are receiving the cards, but it certainly works to the detriment of the merchants. That's what they've expressed to us. It also potentially works to the detriment of any of the consumers who don't particularly use those cards and wind up having to pay indirectly for the cost of those cards.

[The Co-Chair, Conservative, James Rajotte]

Ms. Hughes Anthony, could you give a very brief response?

[Nancy Hughes Anthony]

We would certainly disagree, Mr. Lake. Merchants have a very significant benefit from using credit cards, and I think that if you talked to them, you'd see they understand that. At the moment, they obviously have concerns, specifically around.... There is confusion, justifiably, about new kinds of rights, and they are also concerned about costs at a time when their bottom lines are very much in difficulty, and we have sympathy for that.

[The Co-Chair, Conservative, James Rajotte]

Thank you.

We'll go now to Mr. Thibeault, please.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Chair.

I wanted to follow up with Mr. Kitchen from BMO. You were talking about the Maestro card and the interchange rates that Mr. McTeague was asking about. Are you saying that rates are cheaper right now for Maestro than...?