Industry Committee on Nov. 16th, 2011

[Terry Campbell]

I am sympathetic. Diane and I actually have a lot of good conversations on things.

Let me say a couple of things. First of all, on the code--Diane mentioned the code, because it relates to a lot of these issues--we think the government did a very good job on the code. We thought it was balanced. We thought it was, quite frankly, an elegant solution. It has only been in place for just over a year and our argument is to give it time to work. We think it actually is working and we think to the extent that there are disputes it gives a good basis for being able to resolve them, and that has happened.

We hear a lot of discussion about the costs. I emphasized in my opening remarks that that's focusing on one thing. You really do need to look at the benefits and at the positive revenue implications with the payments card system we have. If you look at mobile payments, it's not here yet, but there are a couple of things to bear in mind. Canada has the number one penetration in the world. You won't get this in the United States. We have the number one penetration in the world for contactless, the payWave and the PayPass. The mobile system is going to build on that. It's not as if you need to introduce a whole new set of technology. It's way too early for me to talk about whether there would be costs or fees, but just bear in mind that it's going to build on an existing technology.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Campbell.

I'm sorry, Mr. Thibeault.

[Glenn Thibeault, NDP, Sudbury, ON]

We should have gone with seven minutes.

[The Chair, Conservative, David Sweet]

On to Mr. Richardson for five minutes....

[Lee Richardson, Conservative, Calgary Centre, AB]

I'm with you, Glenn.

I'd like you to continue, but we're kind of getting to that point where.... Maybe two minutes, and then, Diane, I'd like you to reply.

[Diane Brisebois]

I'm sure. I know you don't, but I will.

[Lee Richardson, Conservative, Calgary Centre, AB]

Can you give me two minutes, Mr. Campbell? And then I want to hear the reply. I can't believe you both.

[Terry Campbell]

First of all, I would say--and I say this with a lot of respect for Diane, because she does great work for her constituency--there is a lot of exaggeration and hyping up on the cost side. I invite you to consider the benefits that accrue to retailers and businesses with a payment system that works very well.

On mobile going forward, the forgotten voice in a lot of these discussions is the consumer. We talk about issuers, networks, retailers. It's the consumer. The consumer likes to be able to use these things. They are the ones who drive our economy, and if we change the structure of the payment system in a way that is going to disadvantage consumers, you will have a negative impact.

On mobile, we have not seen any kind of rollout. As I say, it's building on existing technology and it's not introducing a whole new set of machines or boxes on the retailer's counter. So I think that's going to be factoring into issues of cost.

Diane.

[Diane Brisebois]

I feel like I should be playing this little violin, but I'm not going to.

That was a good try, Terry.

Consumers will always be well served and they will always have a wide choice of products. There are lots of issuers, lots of banks out there, competing for their business, regardless if it's VISA or MasterCard. So I'm not concerned about consumers. I'm concerned about the middle guys--no gender intended--small and medium, and even large businesses, because we heard their testimony last year or two years ago, who know this technology is coming, who are not, Terry, with all due respect, at the table to discuss the standards, to discuss whether there should be one machine on the desk or 20 machines on the desk, and who are asking why is this machine not lasting 10 years versus a year, and why isn't this great security, the new PIN pads, the new PIN cards, the chip in PIN cards, decreasing fraud? It's costing more than when retailers were handling cash 10 years ago.

So it's very hard to convince the retail community, and they are very sophisticated, regardless of their size. With all those improvements and technologies, costs are going up. In every other business with increased investment in technology, efficiencies go up and costs go down. That is the biggest concern. It's great, VISA has more money than the Vatican. They have great advertising. They will convince you to pay with your VISA credit card, even if you buy a loaf of bread. That's not to the advantage of the merchant. The consumer is not less served or better served; they're just using a different product. What they don't know is these guys are making a hell of a lot more money by using the credit or mobile or tap-and-go than by using Interac debit. So let's be honest about that.

I think I won that argument.

[Terry Campbell]

I'm not so sure.

[Diane Brisebois]

I'm voting for myself.

[Voices]

Oh, oh!

[A voice]

Terry's going to get the violin out.

[Terry Campbell]

Yes, it's my turn with the violin.

I'd like to take just a moment, Mr. Chair.

[The Chair, Conservative, David Sweet]

You have a minute and a half left, Mr. Campbell.

[Terry Campbell]

If we learned one thing during the financial crisis, it's that you cannot ever take prudence and security and safety for granted. It's absolutely critical. It's also true in the payment system. In the payment system, the bad guys are always trying to get ahead of you. The costs of dealing with security are ever-increasing, because they get more sophisticated. They're highly motivated. These things do not come cheap and they do not come easily. It is a continual fight, and it takes money to win it.

Remember, though, the more efficient you get—and that's what mobile will do—the better it is for Diane's community, the better it is for businesses generally, and the better it is for consumers, because it will be faster and more effective.

[Lee Richardson, Conservative, Calgary Centre, AB]

Are you any less secure?

[Kirkland Morris]

Are we? No.

[Lee Richardson, Conservative, Calgary Centre, AB]

There you go.

[The Chair, Conservative, David Sweet]

Mr. Regan.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chairman.

My thanks to all our witnesses for coming today, especially you, Madam Brisebois, and anybody else who's had to travel and will be sent away much too soon today.

Mr. Morris, one of the things we heard earlier on in the study was that the uptake of e-commerce has been slower in Canada than in the U.S. What is your sense of whether that's true, why that's the case, and how the U.S. market compares?

[Kirkland Morris]

That's a great question.

I would suggest that the Canadian market is moving forward well into the digital economy in the world of electronic commerce. As a payment provider, we're endeavouring to offer a suite of solutions that take our products and our answers—whether it's for the retail community, a small-business community, government, or other communities—from the old bricks-and-mortar world into electronic commerce.

We often look south of the border and have these feelings of inferiority. I don't think this is an area where we should. I think Canada has long been recognized as having a highly robust, highly mature, highly efficient, safe and sound payment system. Interac and a number of Canadian payment providers are looked at as leaders on the global stage, and I think that's a place we can continue to occupy.

[Geoff Regan, Liberal, Halifax West, NS]

Do you have anything measurable? You're telling me that we're doing well here compared with the U.S. Do you have some measurements you can talk about?

[Kirkland Morris]

Off the top of my head, I'm not sure I have anything that directly relates Canada to the U.S. I'd certainly be happy to--

[Geoff Regan, Liberal, Halifax West, NS]

How many retailers are using e-commerce in each country? That's the best comparison I can think of. What we've been told is that it's faster and there's more of it in the U.S., partly because there's more competition in transaction fees, etc. Because it's lower cost, there's more uptake.