Thank you, Mr. Chairman.
I want to first thank all members for the opportunity to provide retailers' views on the government's future economic direction.
The last time the Retail Council was at this committee, we presented on the several credit and debit issues facing merchants. Today I want to focus in on debit issues, to no one's surprise. I would be happy to field questions about the broader economy and its impact on merchants, but I can assure you that the single biggest issue for retailers is the entry of the multinational credit card companies into the Canadian debit market.
Canada has a globally recognized and emulated made in Canada debit system that is in serious jeopardy, although we are hopeful that some relief may be on the way. I am here today as president of the Retail Council of Canada but I'm also voicing the views of more than 30 associations representing over 250,000 Canadian businesses and two million employees. Members of all parties have played a role in raising the profile of this issue and we are grateful for the many discussions and interventions over the past year. It is to the government's credit that it has understood the need for a code that will promote a made in Canada debit system. We are cautiously hopeful that the code will incorporate values that retailers have been advocating for some time.
In that light I must emphasize that big debit market changes are already under way. Tens of thousands of merchants are already enabled for Visa or MasterCard debit, many of them unknowingly, as they were quietly equipped for the new debit products at the same time that their processors switched them to chip and PIN. Millions of new cards have been issued to the consumers--possibly as many as 2.5 million cards from one bank--equipped for both Interact and Maestro, the MasterCard debit brand.
Without prompt action we may have a larger group of merchants and consumers whose arrangements precede the code's release than to whom the code would apply. In short, this moment is the crossroads for public policy on whether to protect and enhance some of the best consumer safeguards in the world. We want a transparent, accountable, market-based solution to which all industry players are committed, one led by the Canadian government.
As to the specific elements, allow me to speak to four principles.
First, merchants must be allowed complete choice of which system and cards to accept in their stores and any such choice must be by express written consent, not by negative option. All too often, negative option is paired with the provision of little or no information and can hardly be said to be much of a choice at all. Express consent ensures that an informed decision was made.
Second, the presentation of options for the routing of transactions at the PIN pad or website should be within the control of merchants. Merchants are surely entitled to determine the order in which goods and services are presented to consumers in their stores. This is as true for the sequencing of payment options as it is for the placement of goods on a merchant's shelves.
Third, merchants should not bear additional charges or fees simply for exercising their rights. Otherwise the big institutions can set a price barrier to keep merchants from exercising those rights.
Fourth, debit transactions should be treated as equivalent to cash, as with Interact today, without any chargebacks to merchants or requirements for reserve accounts.
Last, but by no means least, debit transactions should be priced to the merchant on a flat fee basis only. There is simply no excuse for taking a percentage fee on a transaction that simply withdraws a customer's own funds from his or her account. No credit is being extended and the cost to the bank is exactly the same whether the transaction is for $10 or $1,000.
We are looking for major steps towards a made-in-Canada solution, one that supports a strong and competitive retail sector. On behalf of all those merchants who can't be here today because they are preparing for the make-or-break season of the year, I want to thank this committee for taking the lead on this issue and for the opportunity to speak today.
Merci.