Evidence of meeting #18 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

Brian Crozier  Co-founder, Global Business Development, UseMyBank Services
Jim Baumgartner  President and Chief Executive Officer, Moneris Solutions
Jeff van Duynhoven  President, TD Merchant Services
Fern Glowinsky  Senior Vice-President, General Counsel and Corporate Secretary, Moneris Solutions

5:10 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

The way you are explaining it, it seems well and good but retailers say that they are the ones who will have to bear the higher rates for the use of premium cards. They are the ones faced with the problem, not you. It is easy for you to talk about free competition and to offer various gadgets to sell more cards and to increase their use but there is definitely a problem for retailers. What is your reaction to this?

Are you opposed to including American Express in the regulation of interchange fees?

5:10 p.m.

President and Chief Executive Officer, Moneris Solutions

Jim Baumgartner

Sure. With respect to the premium cards, one of the things I did look at more recently was the difference in behaviour. Do the holders of premium cards have different behavioural characteristics? And the answer is they actually do.

I think that MasterCard mentioned that they have an average spend in their portfolio of $24,000 apiece to qualify for a premium card. And when I looked at the behaviour across our merchant categories—and this was only the last month, so it's only a month's worth of data—the average transaction size of those particular cardholders was markedly higher. It was a lot higher than I suspected it would be. The lowest was in the gas station category, where their cards were a little bit bigger, but they didn't spend that much more; it was a little bit more on food; and it went all the way up to as high as 40% in certain merchant categories.

So it is clear that those particular customers are bringing more value to merchants. But at the end of the day, it's costing merchants more money than they're used to paying. In large part, I think that's why we're here today, because the increases were much more aggressive than I think anyone was expecting, and no one really had a good sense of how many premium cards there actually would be. The merchants couldn't budget for them, and I think that has definitely caused some issues. I think your association is a great example of those issues.

5:15 p.m.

Conservative

The Co-Chair Conservative Michael Chong

Thank you very much, Mr. Baumgartner.

Thank you, Mr. Carrier.

That ends our rounds of questions and comments from members of the committee.

Thank you very much to our witnesses for appearing. Your testimony will be useful to us in forming our report.

We're going to suspend for two minutes to allow witnesses and audience members to depart so we can return in camera to discuss future committee business.

The meeting is suspended.

[Proceedings continue in camera]