Thank you, Bill.
As Bill discussed, interchange fosters competition and innovation. When it comes to debit, there is currently no competition in Canada, and without interchange, financial institutions have little incentive to invest in the system. The debit product offered today has served us well in some ways, but the dynamics of the global and Canadian payment landscapes are changing, as are the demands of the Canadian consumer.
The Visa debit card builds on the utility currently offered, and like today's bank card, it will be issued by a financial institution. It will allow you to withdraw money from a bank account at an ABM and buy goods at points-of-sale in Canada. But unlike today's bank card, Visa debit also allows you to use your debit card when shopping online, by telephone, or mail-order, or when travelling internationally.
I think it's also important to stress how the concept of choice applies to Visa debit in Canada. A competitive debit product that offers features and functionality not currently available in Canada will succeed because financial institutions see value in issuing cards, cardholders want to use it, and retailers choose to accept it.
Merchant groups campaigning for the regulation of interchange and against the introduction of an alternative debit product want to reduce their business costs. We respect the desire of any business to manage their expenses, but we do not believe that government intervention is the right solution in a functioning industry. Visa believes that the best way to balance the interests of merchants and consumers is to provide them with an array of payment options in an open and competitive market.
Ultimately we believe you are being asked to regulate what is fundamentally a business-to-business matter, and government intervention is inappropriate for this purpose. We recognize the importance of engaging with merchants and merchant associations, and over the past year we have made changes to the way we operate our business in Canada that have addressed many of the concerns highlighted by merchants.
We have heard the calls for disclosure and believe that Visa provides transparency through the publishing of our interchange rates and our operating regulations on our website. We have met with and continue to meet with the CFIB, the RCC, trade associations, and hundreds of individual retailers—both large and small—to help them understand our system and the value it provides, and to help them more effectively manage their costs of accepting payments.
We have also heard retailers' feedback regarding choice. In recognition of the unique environment in Canada, we have changed our rules so that retailers can choose not to accept Visa debit without impacting their acceptance of other Visa products, such as Visa credit.
Our interchange rates for Visa debit were reduced last year to reflect market feedback. They are now about half of what they would have been previously, and about one-fifth of our current rates on our credit products. The Visa debit rates also now include a fixed component, which Canadian retailers are accustomed to, and a reduced variable component that is less than one quarter of one percent.
I would also like to highlight that the financial institutions on either side of a Visa transaction are already subject to oversight, either federally or provincially. In addition, Visa itself is subject to the provisions of Canada's Competition Act. The Competition Act has recently been bolstered by a number of amendments that will enhance and strengthen the protection offered by competition law in Canada. The overall trend in Canada has been toward more deregulation of industries, with competition law increasingly recognized as the appropriate protector of both consumers and businesses.
Thank you. We are now happy to answer any questions you might have.