Evidence of meeting #20 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was consumers.
A recording is available from Parliament.
4:15 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you.
Another comment was made on the growth of prepaid cards. We had a chart up that I was looking at. They look as if they are a Starbucks card or a Tim Hortons card.
What percentage of those are gift cards?
4:15 p.m.
Chair, Task Force for the Payments System Review
I would expect that it is a big percentage of them. This was a survey that the CPA did one time. I'm sorry for the data being so far out of date, but it's all that's available. What it showed is the significant growth.
What is very interesting is the Starbucks app this past Christmas. The company processed more than 40 million new Starbucks card activations, valued at more than $610 million in the U.S. and Canada alone, in Q1, including more than two million new Starbucks card activations per day in the days leading up to Christmas.
4:20 p.m.
Chair, Task Force for the Payments System Review
Those are mobile payments.
4:20 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
My final question is on the regulatory framework to protect consumers.
Mr. St-Amant, you talked about that. I think most of our witnesses here have discussed it one way or the other.
The difficulty here—and I think all of our witnesses have had similar points to make—is that it is still a moving target. There's no firm prediction on where the end point is or whether there will be an end point.
At the same time, I think we have some agreement that we need a regulatory framework. The question for Mr. St-Amant is this. Is it your thought that it should be through government rather than voluntary regulation?
4:20 p.m.
Professor, Université du Québec à Montréal, As an Individual
The very brief response is that regulation is only to ensure that it is indeed enforceable—before the courts, for instance.
4:20 p.m.
Conservative
4:20 p.m.
NDP
Murray Rankin NDP Victoria, BC
Thank you, Chair, and thank you to all of our witnesses.
There are so many questions and so little time. I'd like to start, if I could, please, with Mr. Roberts of the CIBC.
You've heard today from Ms. Anderson of the Canadian Independent Petroleum Marketers Association about the frankly outrageous fees that credit card acquirers are providing—merchant fees that cripple business, according to her testimony. Yet we're told that there are no new fees for those people who embrace the new mobile payment technology.
Do the contracts that you're contemplating or have in place now with the acquirers confirm that, and if so, for how a long a period of time?
February 25th, 2014 / 4:20 p.m.
Senior Vice-President, Payments Strategy and Innovation, Canadian Imperial Bank of Commerce
First, the fees that were noted are actually set by the networks: MasterCard, Visa, American Express. Second, the charges incurred at the merchant are set by their relationship with the party that provides services to them. Examples in Canada include Global Payments and Moneris.
So to answer your question, we the bank do not set any of those fees. The mobile payments in question are “tap and go” payments. They look like any credit card payment.
4:20 p.m.
NDP
Murray Rankin NDP Victoria, BC
So your bank will not take any responsibility. You're leaving this issue to the networks and the acquirers.
4:20 p.m.
Senior Vice-President, Payments Strategy and Innovation, Canadian Imperial Bank of Commerce
It's not that we're not taking any action. It is the responsibility of the networks to set rates. We do not set those rates.
4:20 p.m.
NDP
Murray Rankin NDP Victoria, BC
Maybe I could ask Mr. Robinson a question.
I understand that this year Rogers Bank has been created and that you are issuing later this year, if you have not already, a MasterCard. Presumably, given that you're in the technology business and mobile payment business, this new MasterCard will be used for mobile purposes.
Is that what's going to happen?
4:20 p.m.
Vice-President, Emerging Business, Rogers Communications Inc.
It will be both, so that is correct. We have become a federally regulated financial institution for the purpose of issuing a credit card. It is a plastic card running on the MasterCard network. It is a no-fee card. The Suretap wallet that I referred to earlier will be the mobile wallet that Rogers will use to distribute its mobile version of the payment card.
4:20 p.m.
NDP
Murray Rankin NDP Victoria, BC
You're entering this field. Are you too going to take the position that it's the acquirer's problem, that it's the network's problem, that these merchant fees that Ms. Anderson has so eloquently told us about today are their problem and not yours?
4:20 p.m.
Vice-President, Emerging Business, Rogers Communications Inc.
I would agree with Mr. Roberts concerning who sets the fees and who charges the merchants those fees.
4:20 p.m.
NDP
Murray Rankin NDP Victoria, BC
Do you think there's a need for government regulation? Mr. Keddy asked a question that went to some degree to that point, but I'm asking you specifically, Mr. Robinson, in light of what we've heard about this. Do you see mobile payments as being at a point that maybe we ought to engage in government regulation to deal with the gouging of credit card fees that we hear about every day from merchants?
4:20 p.m.
Vice-President, Emerging Business, Rogers Communications Inc.
Yes, I worry, as the mobile operator, that regulating mobile payments at the time when we're on the cusp of such success globally would be potentially a very damaging exercise. There are so many great things that come with the mobile payments, including diversification of payment options.
4:25 p.m.
NDP
Murray Rankin NDP Victoria, BC
All right. Well, I would like to hear form Ms. Anderson on that point.
You've been very eloquent on this issue of merchant fees. I'm wondering if you believe the time has come for more effective regulation.
4:25 p.m.
President and Chief Executive Officer, Canadian Independent Petroleum Marketers Association
Yes, I do. Our organization is advocating for more regulation. What we're asking for is a thorough landscape review of payments. There are models in other parts of the world where credit card fees are significantly lower, so we're asking for a comprehensive review of that.
We believe that regulation of fees is an appropriate intervention.
4:25 p.m.
NDP
Murray Rankin NDP Victoria, BC
We're here to talk about mobile payments, but presumably if we have contracts.... We've talked about how it's always someone else's fault, the network's, the acquirer's, never the bank's and the like. But presumably you would suggest that if we have a contract and it goes into a mobile change.... They say right now there are no new fees for this technology, but five or ten years from now, once they've captured the market, the fees could go up. Is that not correct?
4:25 p.m.
President and Chief Executive Officer, Canadian Independent Petroleum Marketers Association
That is in fact our concern, that it's very difficult to take away from a consumer something that they're very used to using. So our concern would be that there are no fees right now, but then, as you suggest, once there is a precedent there and people have that as part of their protocol every day, our experience has been that fees tend to be introduced. As I explained it's very onerous on merchants who are kind of the silent partners in all of this. They're paying the way.
4:25 p.m.
Conservative
4:25 p.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you, Mr. Chair.
Thank you to the witnesses for being here today. It's been an interesting couple of meetings, for sure.
Mr. Roberts, I'd like to start with you. One of the comments you made in here was with respect to the common standards and protocols and the advantages of those. In your view, who is the one who has to drive these standards? How do we make sure that this is done? Who are the right people to drive those standards?
