Thank you, Mr. Chair.
I would like to thank the members of the Standing Committee on Finance for giving us this opportunity to speak to them about two concerns we have as part of the pre-budget consultations.
The first has to do with the impact of the increase in debit and credit card transaction fees, an issue that was the subject of special consultations by the committee in spring 2009. Second, we would like to make committee members aware of the need to harmonize legislative and regulatory frameworks regarding Canadian environmental matters in order to lighten the complex and onerous financial and administrative burden on the retail trade and other sectors.
For retailers in all provinces, whether large or small, credit and debit card transaction fees represent a significant cost. Retail trade profit margins are often extremely slim, especially so during the economic downturn that has lasted for over a year now. In this context, all expenditures must be taken into account. Now Visa and MasterCard have chosen to increase credit card transaction fees and enter the debit market in Canada. The Retail Council of Canada estimates the various transaction fees paid by retailers in exchange for the privilege of accepting credit card payments at over $4 billion. These fees, therefore, account for a substantial share of retailers' operating costs.
Our members are satisfied with the debit card payment system as it now stands. It is effective, and the related fees are reasonable. The standard fee is a fixed cost per transaction rather than a charge based on the value of a transaction; it is simple and prevents Interac from profiting unduly from inflation.
The arrival of new players on the debit market will not, in our view, lead to a decline in rates. On the contrary, we are convinced that rates will increase. In this regard, the Standing Senate Committee on Banking, Trade and Commerce states the following on page 32 of its June 30, 2009 report entitled “Transparency, Balance and Choice: Canada's credit and debit card systems”. I quote:
“[...] the Committee believes that, because of the nature of competition among payment systems, there is a risk that debit card payment competition would lead to rising debit card costs for payment processors and merchants and, eventually, to higher retail prices for consumers.”