Finance Committee on Feb. 27th, 2014

[Andrew Saxton, Conservative, North Vancouver, BC]

Your suggestions are really to mitigate those risks. If we turn the clock back in time to 50 or 60 years ago when credit cards first came out—I think Diners Club might have been the first—and people had that little piece of plastic, they must have been very concerned about risks at that time as well. Those have been mitigated over time.

[Lucie M.A. Tedesco]

Actually, the risks now are a lot more complex than they were perhaps, because when we're talking about mobile payments, more players are involved. The number of players makes it more complex, particularly for consumers in understanding their rights and responsibilities and where they should address their complaints. We see that as a potential risk to consumers.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is for the Retail Council.

Will the savings by merchants as a result of mobile payment technology be passed along to consumers?

[David Wilkes]

Certainly, a competitive landscape ensures any savings are passed along to the consumers. I think we've seen that in some of the tariff relief that has been introduced by the government, to draw an analogy. But some of our concerns are.... Indeed, there may be savings resulting from the ones that you outline, Mr. Saxton, but we want to ensure that additional costs don't creep in.

I've mentioned the way the payment is treated: to ensure that it's treated as a card-present transaction, not a card-not-present transaction, because there's an additional charge that is put in to the retailer when it is a card-not-present transaction. Depending on the type of card and the network the retailer is using, that can be an additional charge of anywhere from 10% to 18% if the mobile payment is indeed treated as a card-not-present transaction.

[Andrew Saxton, Conservative, North Vancouver, BC]

Is that premium basically an insurance policy to ensure the transaction is legitimate?

[David Wilkes]

Certainly in the current environment of a card-not-present transaction where the chip and PIN are not used, that is indeed why there is that premium. We understand that, and we recognize there is that need. But in a mobile environment where there is not that same risk, where there is not the same risk for the payment not to be an authentic one from the individual user, we do not believe that the risks associated and encompassed by the card-not-present charge would transfer to the mobile environment and indeed should not be there.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

My next question is for the Canadian Bankers Association.

We've heard from the banks regarding their mobile banking initiatives. My question for you is, do you know what the credit unions are doing to embrace this new technology?

[Darren Hannah]

Well, I can't speak for the credit unions—

[Andrew Saxton, Conservative, North Vancouver, BC]

But they're your competition, so surely you're watching them.

[Darren Hannah]

Certainly we watch them, but I don't want to speak on their behalf. They were involved in the development of the mobile reference model, along with banks, to try to come up with a harmonized guideline around mobile wallets, but I don't know what sorts of offerings they've come out with. I haven't seen any. There may be some, but I'd certainly invite you to speak with them directly on that.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you for your diplomatic answer.

[The Chair, Conservative, James Rajotte]

You have about 30 seconds, Mr. Saxton.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thanks, Chair.

My next question is for the CFIB.

How is the voluntary code of conduct being received? Do you see benefits coming from that?

[Corinne Pohlmann]

It was well received when first introduced. It did at least provide some very limited powers to merchants at the time. We do believe it needs to be updated today with these new technologies coming in. In fact they are already in the market, and there are no protections right now for them in that regard. We do believe there are other elements that need to be looked at more closely, such as eliminating honour all cards rules and surcharging. We believe it's an evolving document that has to continue to evolve as the industry changes, and then it will continue to be a valuable tool for merchants.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Saxton.

Mr. Bélanger, go ahead, please, for five minutes.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you, Mr. Chair.

I am here to replace a colleague who is on paternity leave. I'm not very familiar with this, and my questions may or may not be very relevant, but we'll see.

Thank you to the witnesses for being here today.

First, I have a question for the Canadian Bankers Association. Presumably if a client of yours gets into the mobile payment method, that would be part of their accounts in whatever bank they deal with. Is that correct?

[Darren Hannah]

If I'm making a mobile payment and I choose to take my credit card and my credentials and load them onto my mobile phone and make a transaction using my mobile phone and NFC technology, that is treated the same way as if I'm making it with my card. The zero liability still applies.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

What I'm getting to is whether that would involve people whose accounts have to be given to the Americans because of FATCA. Would such payments be included in this shared information?

[Darren Hannah]

Just to be clear, if I'm doing mobile banking, that's just another mechanism for me to access my account. It shows up as an account transaction.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

So it would then.

[Darren Hannah]

It's just another mechanism to effect the same sort of transaction.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

So would it be included?

[Darren Hannah]

It would be included as a transaction, and it would certainly show up as a transaction.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Therefore would we have to release that information to the United States IRA?