Industry Committee on Oct. 7th, 2024

[Jean-Denis Garon, Bloc, Mirabel, QC]

Who would be able to say?

[Charles Docherty]

I think it's more a question of government policy and reaching the right balance between regulating and not regulating. Banks would work with the government to pursue any types of enhancements when it comes to consumer protection regulation.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Garon.

Mr. Masse, the floor is yours.

[Jean-Denis Garon, Bloc, Mirabel, QC]

On a point of order, Mr. Chair.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Just one second, Mr. Masse. There is a point of order.

Monsieur Garon.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I would like to make what I consider an important point.

I know that the technicians and interpreters do the best they can, but as a result of the technical issues during my last turn, I deeply resented the unequal treatment, in both official languages, between the French and English-speaking members. I was interrupted several times, and the witnesses also found it hard to understand the questions. It was an uncomfortable situation that I believe people sensed.

As a francophone member and a Quebecker, I want to say I thought it was deeply unfair for me and for the witnesses who were interrupted.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

I think the unfairness you refer to was more of a technical nature. As you know, that's what happens when you live in a country with two official languages. Just remember that I'm always quite generous with speaking time in these cases.

Mr. Masse, the floor is yours.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Let's get Mr. Littler back involved here. I have here a poll from the Harris Poll that was conducted, and with the Retail Council.... I mean, we've already heard here some of the bogeymen that are always thrown up, namely that if we lower the percentage costs of borrowing, there are going to be equal or higher fees. We've also heard about cybersecurity and so forth, which I've worked on quite extensively over a number of different years. The issue, though, that I'd like you to address is the fact that purchasing has changed. I'm wondering whether the Retail Council has an opinion.

Really quickly, 64% of Canadians talked about higher prices in general for goods, 30% of which were related to major unexpected purchases; 20% to unemployment or earning less money; 17% to mortgage payments; 17% to living situations; and 6% to other issues. That “other” might be competition perhaps or a portion of that. It's not competition that's changing.

If there were more purchasing power for Canadians on actual goods, as opposed to using finance as a business in terms of borrowing rates, what could that mean for the lives of Canadians and also for manufacturers, distributors and retailers, who are doing more than just moving money around as a business? That's a question for the Retail Council of Canada.

[Karl Littler]

I'm going to resist the temptation to come back to the interchange for the moment because obviously, if those financial costs were not there, there would be greater affordability.

Speaking more generally, I would echo some of the comments that were made earlier that what you're seeing is a consolidation and obviously, in some cases, a shortfall with respect to non-discretionary purchases, the stuff that people need to keep body and soul together. Obviously, that's being squeezed by inflation. It's also being squeezed by interest costs. It's being squeezed by a multitude of essentially non-discretionary things. We have certainly seen that play out in the context of the retail setting.

I don't know whether I can speak to how other players in the mix who are into more of the financial instrument space could positively influence that, but obviously anything that can alleviate the pressure that arises in the context of borrowing, whether that be for mortgages or a credit card.... If you're carrying a revolving balance, obviously, to the extent that this could be alleviated, it would free up more money for the necessaries of life. That's about the only answer I could really give.

[Brian Masse, NDP, Windsor West, ON]

That's good. I will let you complete...on the interchange fees because you heard the responses, and you deserve the right to respond to that.

I guess my concern is what I've already heard here, which is that, you know, we've all had to adjust our behaviour out of necessity with regard to the pandemic and subsequently thereafter, but it appears that this industry has not had to adjust with it. That's my concern for other parts of the economy.

You mentioned rates in Australia, the U.K. and other interchange things. Perhaps highlight how to actually pass those savings on, because, as we're already hearing again and as I've heard before, if we lower interest rates—and it's funny because you can actually have people call and get lower interest rates at different times—they'll just increase fees somewhere else and, hocus-pocus, your savings are gone. The bogeyman's out there, and it's going to cost you more, so we just can't do anything. We just have to accept the situation that we're in right now.

[Karl Littler]

I guess I'd say a couple of things. One of them is that a number of the witnesses physically present have touted the virtues for merchants and for consumers around the access to a broad market, the security, all of those elements, protection from fraud, coverage against counterfeit and so forth.

Let's be really clear. In Australia, they do all that. In France, they do all that. In Britain, they do all that, and they do it for 30 basis points, which is in the order of less than a quarter—more like a fifth—of what is being charged in Canada. All of those benefits accrue to the merchants and through them, postpurchase, to the consumers. They occur in every one of those other markets that have prices for interchange way below what we do.

Where this racks up the money is in rewards points, which are regressively profiled, where the wealthiest people, certainly the people who are eligible for the highest-fee cards, get the most benefit, and it is paid for by everybody else. Of course, the big pot of gold at the end of all of that goes to the banks as profitability.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Masse.

Mr. Généreux, the floor is yours for five minutes.

As a little reminder for our witnesses, the best thing to do is wait for the red light to turn on. Don't touch the microphones. When it's red, you can start answering the question.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you very much, Mr. Chair.

Thanks as well to the witnesses for being with us.

Mr. Ahluwalia, pardon me if I mispronounce your name.

How much profit did Mastercard make last year? It was about $11 billion if I'm not mistaken.

[Balinder Ahluwalia]

It was $11.2 billion.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Dorey, how much profit did Visa make?

[Jay Dorey]

I don't have that information with me. I'd be happy to provide it to the committee. It's a public document. I think it would be—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Dorey, earlier you said you had invested $11 billion in cybersecurity.

Do I have that right?

[Jay Dorey]

It was in cybersecurity and technology. That's correct. Cybersecurity is a portion of that investment.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Did you invest that last year alone, or did you spread it over several years?

[Jay Dorey]

Yes. Those investments began in 2019 and are ongoing today, and they continue to accelerate.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

So you're making those investments over a period of approximately five years.

Have you previously requested a federal government grant to invest in cybersecurity?

If you have, how big a grant was it?

[Jay Dorey]

In Canada...no.