Evidence of meeting #31 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was merchants.
A recording is available from Parliament.
Head, Cards and Payments Solutions, RBC Royal Bank
Send them to us, absolutely. We'd welcome them, and we'll deal with every one of them.
Conservative
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
Thank you very much.
Thank you, all of you, for appearing here today. I appreciate your taking the time from your hectic schedules. I know it's very interesting in the banking community these days, given the need for access to capital, which I say on behalf of all of those people across the country who need it. So we really do appreciate your taking the time today.
I have five minutes, so I'm going to be rapid-fire.
Mr. Whalen or Ms. Goulard, are you offering premium cards as well?
Vice-President, Policy, Credit Union Central of Canada
No, we do not offer premium cards.
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
So you're not having the same issues around premium cards?
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
So you didn't do a mass mailout.
I'm going to go to Ms. Hughes Anthony. Thank you again for joining us today. On behalf of your banks, we understand that the premium cards were issued within the last year. They were basically sent unsolicited to clients--I am one of them. I received my little premium card in the mail; I didn't ask for it, and I didn't want it, actually. I have been using it successfully since, I guess, but I did not realize the impact of it on merchants.
Could you tell me what percentage of your current...? You made a reference to a fairly low number, but how has it grown? How has your premium card market grown over the last year?
President and Chief Executive Officer, Canadian Bankers Association
I'm not sure I have the actual base figures from a year ago. I know right now that premium cards represent about 9%.
Liberal
President and Chief Executive Officer, Canadian Bankers Association
No, I don't believe that is a fact. Anyway, we can clarify that it's less than 10%; it's about 9%.
Vice-President, Policy, Canadian Bankers Association
The term “premium card” tends to be used very generically. You could have a gold card or something. The premium card that I think is the focus here--
Liberal
Vice-President, Policy, Canadian Bankers Association
A chip card is a different issue entirely.
The premium card that is targeted to very specific levels of customers but also attracts that somewhat higher interchange is the one, and that's the 9%.
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
Okay. I'm going to go even faster now.
Is it correct to say you have no impact on interchange fees?
President and Chief Executive Officer, Canadian Bankers Association
That's correct.
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
Obviously the merchant discount increased over the last year. I mean in a general sense. I have to get to debit cards, so that's why I'm being--
Head, Cards and Payments Solutions, RBC Royal Bank
I'm sorry, what was the question?
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
Have you, as part of the banking system, increased merchant discount fees?
Head, Cards and Payments Solutions, RBC Royal Bank
That would be an acquirer question. The merchant discount fee includes the interchange rate, so if the interchange rates have gone up for the premium cards, then by definition the merchant discount rate would too.
President and Chief Executive Officer, Canadian Bankers Association
To clarify, that is not something the bank sets.
Liberal
President and Chief Executive Officer, Canadian Bankers Association
Yes.
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
I'm going to move on to debit. As you know, Visa and MasterCard wish to enter the market. Do you see this as a positive, a negative? I have read your statement. Could you comment on that?
President and Chief Executive Officer, Canadian Bankers Association
Generally speaking, as we said in our brief, the members feel that the best thing for the consumer is to have a wide choice. Certainly we understand the issue with Interac, which I believe is going to be testifying in front of this committee shortly. At the moment it is asking for some kind of restructuring that will help it compete.
Clearly there are other products already introduced in the market, and our view is that the best policy is to allow this competition for the benefit of consumers.
Head, Cards and Payments Solutions, RBC Royal Bank
I would add to that. I sat on the Interac board, and I would echo Mr. Laforest's comments around merchants not being forced to accept credit cards.
Part of the problem is that Interac debit cannot be accepted or used at vending machines or for online spending, and it can't be used internationally, so we need to innovate and invest in our debit system.
