Finance Committee on Feb. 27th, 2014

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Wilkes, it looks like you want to jump in. I don't know whom I should direct this to, but the unguided hand is a marvellous thing. Sometimes if you want a great exercise, you can just look at any specific organization or any marketing that's out there and see how the whole thing has transcended. Nobody has directed this thing but it's just created an incredible industry. I look at this as an excellent example.

Do you have a handle on, does anybody have a handle on, how much of this has resulted in more jobs and more expertise that we can export to other countries? Does anybody have an idea about that?

[The Chair, Conservative, James Rajotte]

May we have a brief response on this, please.

[Darren Hannah]

I believe Global Payments did a study on exactly that question. They looked at the growth, the amount of additional GDP that electronic payments have created, the amount of additional spend that it has created. I don't have it with me, but we can certainly provide it to the committee.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

All right, thank you.

[The Chair, Conservative, James Rajotte]

Does someone else want to respond? No. Okay, thank you.

We're going to Mr. Thibeault.

[Glenn Thibeault, NDP, Sudbury, ON]

Carrying on where I left off with Ms. Pohlmann. We were talking about co-badging. I believe it was in response to a question by one my colleagues across the floor, but you were talking about how there is concern that the mobile payment will have the Visa premium card as the primary, again taking away the choice of the consumer. Is that part of the co-badging piece and part of the concern with automatically going to the most expensive one?

[Corinne Pohlmann]

Yes, it's the idea that defaults can probably easily be put into the file name. As some around this table have said, they're still trying to figure out their BlackBerrys. If you can download an app that automatically puts the highest price card at the top and you as a consumer are not really sure how to change the default, suddenly that becomes the card the merchant has to accept if they want your business. That's the piece we want to make sure is clear: that default cannot be there. It's up to the consumer to make the choice, and it has to be an easy choice.

[Glenn Thibeault, NDP, Sudbury, ON]

Great.

Mr. Wilkes, does RCC have concerns with co-badging?

[David Wilkes]

The concerns we have are similar, that the default must be set by the customer. The phone can't come loaded with the higher cost of the premium cards.

I think co-badging is a bit of a different issue within the mobile environment because, as I mentioned, Interac Flash is not currently issued by all the banks. Therefore the co-badging that was protected in a voluntary code ensured that Interac would have a stand-alone platform. I think we're the envy of the world with the debit system that we have, and we commend the protection of the Interac system.

We see mobile as a greater risk to Interac because it's not being issued; it's not being offered. Without that option, we may lose the ability for customers to pay with Interac and move to other debit options that are offered by the credit card companies, which by their very nature are much more expensive. We see it even more as an acute problem than the one in the plastic world.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Wilkes.

Mr. Hannah, there was some concern with the Canadian Bankers Association and some of their internal policy relating to mobile payments that seemed to start to skirt around co-badging. Has that been addressed? Are the Canadian Bankers Association and the banks ensuring that co-badging is going to be followed and is being followed?

[Darren Hannah]

I think the credit and debit card code that the government has created is abundantly clear on the issue of co-badging. You cannot have competing applications on the card at the same time.

[Glenn Thibeault, NDP, Sudbury, ON]

Excellent. I'm assuming that's a yes.

[Darren Hannah]

No, I've said there is a code. The code of conduct is abundantly clear. I could read it. It complies with it and is enforced through the FCAC. Institutions have said they follow the code; therefore they follow the code.

[Glenn Thibeault, NDP, Sudbury, ON]

Good.

Mr. Wilkes, I asked CFIB earlier in relation to the decision this summer by the Competition Tribunal about the anti-competitive practices. What was RCC's response?

[David Wilkes]

Our council's response was one of confirmation. I think the tribunal did come forward indicating that the business practices currently in the marketplace were having a negative impact on competition. They ruled that in the strict guidelines of what the act currently has they did not have the ability to address them, but we were very encouraged by their call and recommendation, if you will, that these practices be addressed by the Minister of Finance through a legislative approach.

We called it a bit of a silver lining that there was unfortunately not the ability to create change through the act, but there was a recognition of the need for change. We were very pleased to see that the budget of a couple of weeks ago made the commitment to lower cost of payments acceptance, which we believe is a direct correlation to the guidance given by the minister.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Wilkes.

Mr. Hannah, we have CFIB saying that was a disappointment, the RCC saying it was a disappointment, and then the CBA saying this is a win. Especially when we were looking at the release that contact lists, cards, also benefit merchants, make it easier and faster for customers to make purchases.... That's what we're talking about. So we have concerns by, I would say, the two largest small business organizations in the country, and then the banks are also calling this a win. Does the CBA not see there's an issue here, and that it needs to be addressed?

[Darren Hannah]

You're going to have to repeat the question. I'm sorry, but you have lost me a little bit.

[Glenn Thibeault, NDP, Sudbury, ON]

Sure. What we have is the Canadian Federation of Independent Business and the Retail Council of Canada both saying that the tribunal's decision this summer was a disappointment, but the Competition Tribunal decision was touted as a win by the Canadian Bankers Association.

Does the Canadian Bankers Association not see that there's an issue here?

[Darren Hannah]

What the tribunal said is that there was no legal issue. It's not a legal issue. What they said is it's a policy question. It's a complex one. It's multi-faceted, so they've asked the government to address it. That's what has happened.

[Glenn Thibeault, NDP, Sudbury, ON]

The Canadian Bankers Association doesn't see that the Canadian Federation of Independent Business, the Retail Council of Canada, the Canadian Restaurant and Foodservices Association and retail outlets, all of these organizations see a concern with many of the practices, and so we can understand where they're coming from when they are concerned about mobile payments, because it's the one extra layer.

As I said on Tuesday, I believe, if we put on one more fee, it is like the straw that broke the camel's back. It is important for the CBA to recognize that this isn't just me standing here saying there is an issue. We have the RCC, the CFIB. Are they going to be looking at this, or are we waiting for regulation to come from the government to fix this?

[The Chair, Conservative, James Rajotte]

Just give a brief response.

[Darren Hannah]

Sure.

I think you're talking about two separate issues. Mobile payment is one issue. The Competition Tribunal was looking at two very distinct legal questions. I understand what you're saying. I'm just saying they are two separate things.

[Glenn Thibeault, NDP, Sudbury, ON]

Okay, fair enough.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Thibeault.

I'm going to take the next round.

Again, I want to thank you all for coming. It's been a very interesting panel, an interesting discussion.

A number of you have talked about the need for standardization. The RCC called for the government, through the FinPay committee, the advisory committee, to be tasked with ensuring that there be a standardized platform. The CFIB recommended updating the credit and debit card code of conduct.

Ms. Pohlmann, do you support the RCC's recommendation in terms of developing a standardized platform through the FinPay committee?

[Corinne Pohlmann]

Reducing complexity is the most important thing, through standardization perhaps. Whether FinPay is the right avenue I don't know. That would be probably the only point of difference between us and the RCC, but at the same time, it's probably the only forum right now that exists where you bring together all the industry players along with government, so it probably would make the most sense.