Evidence of meeting #138 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was visa.
A recording is available from Parliament.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Let's consider the case of two customers who don't have the same type of credit card and want to buy a stick of cotton candy. Will they pay the same price when they step up to the cash with their cards?
Bloc
Jean-Denis Garon Bloc Mirabel, QC
The merchant won't be charged the same amount if the cards and risk levels are different.
Isn't that correct?
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Going back to Mr. Arya's question, a better rewards program is associated with higher fees because it has an impact on cost. I believe that's what Mr. Hannah suggested.
Isn't that correct?
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
Not entirely correct.
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
Interchange fees vary with the type of card and the type of transaction. However, you need to understand that this product substitutes for other payment methods. For example, the payment method—
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
You mentioned economics. I just want to give you an explanation because you said that my statement was false.
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
I just want to say that you have the concepts of substitute products and implicit costs in economics. Cash has an implicit cost. Many independent economic studies have proven—
Jean-Denis Garon Bloc Mirabel, QC
Mr. Chair, the witness isn't answering my question, and he's wasting my speaking time, which I can't accept.
I'll ask my question again. I'm attacking no one; I'm trying to understand. I thought my Liberal colleague's question was fascinating. You can't say I'm being partisan.
As I understand it, the question concerned a case in which, for one reason or another, two customers used different credit cards, each of which was associated with a different rewards program. If the fees charged to the merchants are different, someone has to pay. It's asymmetrical because the fees will be charged to both customers, and the same price will appear on their bank statements whether they buy cotton candy or tires.
That brings me to the regressivity issue, and the Retail Council of Canada also discussed this. Ultimately, credit card users with lower incomes, who, in many instances, spend fewer nights at hotels, buy gasoline less frequently and collect fewer points, Bonusdollars and I don't know what else, implicitly pay for rich cardholders who enjoy more generous reward programs.
Are you opposed to having the amount of the fees billed to customers published?
Transparency is important when it comes to capitalism because it enables people to make decisions. When credit cards carry fees, merchants are able to pass those credit card user fees on to customers. The best reward programs come with higher rates.
If merchants told customers how much credit cards cost them and posted those amounts on the bills they submit to customers, wouldn't that make capitalism more efficient?
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
That's an extremely interesting idea. The regulations of our network already enable merchants to pass surcharges on to customers who pay by credit card and to adjust them based on the card type.
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
You'd have to put that question to our friends at the Retail Council of Canada.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Then I'm going to go to the representatives of the Retail Council of Canada.
How frequently do merchants post credit fees on the bills they submit to customers?
According to the contracts established among credit card companies, how often can those fees be posted?
Senior Vice-President, Public Affairs, Retail Council of Canada
You never see it posted. There is certainly permission now, and it's in the wake of a class action lawsuit.
I should indicate that the networks didn't volunteer this up. They did everything they could for a great many years to hold off any surcharging, but it is allowed in a lot of other jurisdictions, and not unlike most of those other jurisdictions, retailers tend not to surcharge. They do that because ultimately they're concerned that they will see a loss of business. If it were commonplace, perhaps more would do so, but nobody wants essentially to commit seppuku by being the first to surcharge. Therefore, in essence, it's a right without much of a remedy.
Liberal
The Chair Liberal Joël Lightbound
Thank you very much, Mr. Garon.
Mr. Masse, the floor is now yours.
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Thank you to our guests who came here to testify under oath.
You might want to follow the committee hearings. We have a minimum of four meetings, but sometimes we bring witnesses back, especially the first set of witnesses because often we get testimony later on that could be something we need to corroborate.
This is the first thing I'd like to ask, maybe going to Mr. Dorey. Do you carry a credit card balance? The credit card that I have has a 20% interest surcharge if I don't pay it off fully. I want to know if you actually carry a balance. Do you pay it off at the end of each month?
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
Are you asking me personally?
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
I'm not comfortable sharing my personal financial situation with the committee.
NDP
Brian Masse NDP Windsor West, ON
Okay, I'm willing to do that. I try to pay mine off as much as I can because it's 20%.
Mr. Ahluwalia, would you care to offer whether you pay it off every single month?