Evidence of meeting #17 for Industry, Science and Technology in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was merchants.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kevin Stanton  President, MasterCard Canada
Andrea Cotroneo  Vice-President and Canada Region Counsel, MasterCard Canada
Tim Wilson  Head, Visa Canada
Bill Sheedy  Regional President, North America and Head of Interchange Strategy, Visa Canada

4:50 p.m.

President, MasterCard Canada

Kevin Stanton

There are 2.4 million merchants in Canada, to use Mr. Blouin's figure. There are only 600,000 who accept MasterCard; 75% don't accept MasterCard, which means that, yes, you can run a viable business without accepting MasterCard.

There is a difference between need to accept and want to accept, because of the benefits that come with the proposition. For restauranteurs there is a particular benefit in that people aren't restricted to the cash they have on hand and they tend to spend more, and that sort of thing. There are hotel chains that use credit cards to make the reservation to cover their risk on letting somebody in a room before they've actually paid, and steer them to debit.

So I think the necessity has to be separated from the desire. And of course we want more merchants to desire to accept our propositions. And our job is to work every day to figure out how to balance the system of economics so they're attracted to it, together with the value proposition represented by innovation and that sort of thing as well.

4:50 p.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Do we not think it would work to have a transparent, fair, and equitable system where merchants know ahead of time, so they know when they get their bill at the end of the month and they're not necessarily always having to put things off to the consumer, and you’re still making your fees?

4:50 p.m.

President, MasterCard Canada

Kevin Stanton

I couldn't agree with you more, and I think that's one of the breakdowns we want to address. I think that while we meant well by our customized report, apparently it's not working as well as we thought. And focusing not only on transparency of interchange, but understanding the actual cost of acceptance, which is something different from interchange, is important.

But the other part of that, Mr. Thibeault, is that it's important for merchants to go through a business analysis to see if in fact they should, based on the cost-benefit analysis. That's why part of our program will involve a cost-benefit calculator, because it may put it through the system and say, you know what, you can do this without the cost of credit cards. Cash is good enough.

4:50 p.m.

Conservative

The Co-Chair Conservative James Rajotte

Okay, you can ask a five-second question, if you have one.

4:50 p.m.

An hon. member

Oh, oh!

4:50 p.m.

Conservative

The Co-Chair Conservative James Rajotte

Yes or no?

4:50 p.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Very quickly, we can't forget about charities. Charities are now paying interest rates as well. We have generous Canadians who are giving their money to charities, which are now starting to pay higher interest rates on premium cards as well.

4:50 p.m.

Conservative

The Co-Chair Conservative James Rajotte

Do you want to respond to that, Mr. Stanton, briefly?

4:50 p.m.

President, MasterCard Canada

Kevin Stanton

Yes. I heard the Retail Council mention charities. As far as I know, they don't represent any.

The only thing we've ever heard from charities is that credit cards represent a higher level of donation and a higher level of fulfillment—fulfillment being the most important.

4:50 p.m.

Conservative

The Co-Chair Conservative James Rajotte

Thank you.

We'll go to Mr. McTeague, please.

4:50 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Mr. Stanton, and Chair, thank you very much.

I just want to make very clear--and I hope you can clarify this for us, Mr. Stanton--that there seems to be a great divide between CFIB and RCC on your behalf, and that you'll be offering to extend the same courtesy and special rates to RCC as you suggested in your earlier statements you would give to CFIB. There are no misgivings between you the RCC at this point, are there?

4:50 p.m.

President, MasterCard Canada

Kevin Stanton

The focus on the CFIB is based on two things. One, we thought that Catherine put forth very workable suggestions at the Senate. They were a foundation for putting forth specific proposals. Furthermore, her constituency is small merchants; and I think the principal breakdown in the system right now is with small merchants, so they have become our priority.

4:50 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Mr. Stanton, I have a couple of regulatory issues I want to raise with you, and I'm wondering if you could perhaps provide a quick answer to these.

Do you think your move into debit should be included under the Canadian Payments Association and be subject to the same rules as Interac?

4:50 p.m.

President, MasterCard Canada

Kevin Stanton

You know, I heard the witnesses earlier in the week say that. I don't know what they would get out of it, because that wouldn't change the price dynamic. In the current situation, we're offering a lower-cost product, and we're going to stick to that. Before the Parliament of Canada, that's what we're stating we're going to do.

4:50 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Building on my previous question, how do you know what Interac fees are going to be? Are you going to be lower than them? But I think I understand where they're coming from.

4:50 p.m.

President, MasterCard Canada

Kevin Stanton

Yes, if they go down, we're going to have to respond downward.

I don't know if the CPA gets anybody out of this. Our system has never failed a merchant in delivering safety and soundness of payment, even in this crisis.

One of the things, I think, we have to be careful about as we consider the different options is that sometimes suggestions like those made by Interac actually create nothing more than barriers to competition.

4:50 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Well, look, Mr. Stanton, on the subject of competition, I take the comments that have made hypothetically by Mr. Chong. I think there are a number of pitfalls here and a number of areas that we are very concerned about as a committee.

Let me go on to the regulatory issue as well. Assuming, of course, you continue with debit—and I know you do some of these transactions through certain credit unions, etc.—you're going to have real-time access to information on the spending and saving behaviours of Canadians. I'm wondering if in fact you can guarantee to us that this data will remain within Canada and will not be stored in the U.S., given that your parent is from the United States. But more importantly, do you not see any problems and potential conflict should the data be subject to the U.S. Patriot Act?

4:55 p.m.

President, MasterCard Canada

Kevin Stanton

First of all, MasterCard, or Maestro, doesn't transfer personal data outside of Canada. That's fundamental. We're subject to PIPEDA, just as anybody else is. And keep in mind that Interac sends transactions across the border through its alliance with NYCE.

4:55 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Let me go back—

4:55 p.m.

Conservative

The Co-Chair Conservative James Rajotte

I'm sorry, you have one minute left.

4:55 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Yes, thank you, Chair.

I want to go back to something you had said a little earlier, Mr. Stanton, concerning the opportunity to offer discounts. I want to be absolutely clear that MasterCard Canada has never issued a letter suggesting that discounts offered to merchants are contrary to their agreement, now or in the past. Can you categorically state that has never been the case?

4:55 p.m.

President, MasterCard Canada

Kevin Stanton

Not to my knowledge. I've worked at MasterCard for 14 years, and it's always been allowed.

4:55 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

We have several who have come forward and deposited that, so I'd be certainly willing to share this with other committee members and you, Mr. Stanton, to clarify that.

Let me move on to the final question I have—and I only have a few seconds to do this.

I've mentioned or suggested before the possibility of ad valorem fees. I've suggested the possibility of doing that. You've said you couldn't possibly ensure that would not be the case as it relates to debit cards. Are you prepared to make an ironclad agreement to that effect, that there will be no ad valorem charges to debit cards?

4:55 p.m.

President, MasterCard Canada

Kevin Stanton

In fact, that's one of the proposals we put before the CFIB.

4:55 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Thank you.