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.
Liberal
The Chair Liberal Joël Lightbound
Thank you very much, Ms. Rempel Garner.
Mr. Badawey, the floor is yours for five minutes.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Mr. Chair.
My first line of questioning is for Mastercard and Visa.
How do your companies support financial literacy, including initiatives attached to literacy that are aimed at helping consumers manage credit card debt effectively?
Senior Vice-President, Market Development, Mastercard Canada
I can go first.
Very briefly, I think ensuring Canadians understand financial literacy is a very important topic.
What we have done is focus our attention on small business. I think the CBA and their member institutions have done a very good job and continue to service financial literacy services. Overarchingly, we've been focused on driving the robustness of small business education, whether it be cybersecurity or investments like Pier Five, which is a group we're a part of.
We've focused our attention on small business financial literacy.
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
I'm happy to respond, as well.
Visa continues to invest significantly in financial literacy and financial education around the world, and certainly in Canada as well. That takes many forms.
Similar to our friends at Mastercard, we invest in small business education. We have also been running programs for the last several years that are focused on small businesses and their digital enablement and empowerment. What understructures our financial literacy efforts is the curriculum we developed that's been peer-reviewed and tested in Canada and elsewhere. It's available for free, without a Visa brand on it, to educators and trainers for primary, secondary and post-secondary...and for new Canadians and new families. That curriculum has been delivered thousands of times in Canada.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Do you find it would be beneficial to...?
Mr. Hannah talked about relationships, and I'm happy to hear that. A lot of what you're doing is affecting people's everyday lives.
With that said, seeing the positions some folks might find themselves in, do you think a good direction to take would be creating more of a relationship with your customers with respect to that financial literacy? I won't use the word “flagging”. I'll use the word “communicating” and being transparent with respect to what your thoughts are on some of the positions some of these folks are finding themselves in.
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
Without question, that's something we absolutely do and want to do more of. We continue to invest and build.
I could highlight some other elements that we've done with programs in trying to get the message out on financial literacy. We have a great partnership with FIFA. We'll be bringing new tools to Canada around FIFA that are focused on youth and financial literacy, using soccer and FIFA as a way to get that story and message out. We've had historic partnerships with Marvel, as well, producing comic books for Canadians using Canadian terminology and talking about Canadian banking. I think it's in seven or eight languages now.
I completely agree with your point. That's something where we take our responsibility quite seriously.
Liberal
Vance Badawey Liberal Niagara Centre, ON
How do you ensure compliance with existing regulations related to credit card fees and interest rates, and what challenges do you face in this area?
We'll start off with Mastercard first.
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
Our network rules require that our issuers follow all applicable laws in Canada. Items such as interest rates, the level of interest rates and so forth, are dictated by Canadian laws and by consumer privacy and consumer protection.
Vice-President, Strategy, Pricing and Interchange, Mastercard Canada
As far as we know, all of our customers are currently compliant.
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
I have a similar answer.
We work with regulated financial institutions, both federally and provincially. They're accountable to their regulators and to the government for consumer protection. It's not our rules that enforce that, but we do have provisions in our rules to remove someone from Visa and from their membership if they violate those terms, particularly in a sustained way.
I'm not aware of any issues in Canada where we've had to take action, but that's the compliance framework that we run.
I would also add, and this is something that I think is relevant for this committee also, the code of conduct for the payments card industry in Canada. We co-operate with the FCAC, the Financial Consumer Agency of Canada, to ensure that those rules are promulgated. That's not a consumer protection framework, but it does ensure market conduct for acquirers that deal with merchants to ensure that they have rights when it comes to those payment relationships and contracts.
Liberal
Vance Badawey Liberal Niagara Centre, ON
What is your company's stance on limiting or capping high interest rates or excessive fees?
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
Again, not to redirect, but that's not our part of the business and not something we deal with.
What I would say, though, is that, in any market where we've seen those reductions, the typical response has been higher fees for consumers, lower benefits and higher APR.
Senior Vice-President, Market Development, Mastercard Canada
Ultimately, we have clear lines of responsibility on where the network lines are versus the banks versus the acquiring banks. When we're talking about interest rates, we're talking about the purview of the CBA and the government institutions.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Although that's not your area, you're the card. You're the plastic. The banks are the interest rates, etc., in terms of what they would provide. However, the question is not for the banks right now. The question is for you.
I get it. It's not your purview, but I'm asking you the question. What is your stance on limiting or capping high interest rates or excessive fees?
Senior Vice-President, Market Development, Mastercard Canada
Ultimately, the Competition Bureau would have an issue if we were to step in and start to regulate interest rates, so we have to be very careful about the rules and regulations that govern the relationship that we have with our bank partners.
Ultimately, I think our position is that it's a marketplace and they will continue to be within the conduct of our franchise rules and the rules and laws of Canada.
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
I believe the answer would be the same.
Truly, I don't want to get too far away from our core business in describing that but, as I stated, in markets where we have seen regulation or those fees come down, there's been consumer harm and higher fees.
Liberal
Vance Badawey Liberal Niagara Centre, ON
This is my last question. What future improvements or innovations are you considering to address the concerns related to credit card practices?
Head of Corporate Affairs, Visa Canada & Vice-President, Global Government Engagement, Visa Canada Corporation
Visa continues to invest significantly in our network and in our products that are issued by banks and fintechs. I mentioned previously some of our investments in fraud and security. I'd highlight those again. Those are critically important for consumers who are dealing with fraud and dealing with a dramatic increase in scams.
Our investments, both in traditional technology and in AI and other tools to be able to limit and prevent fraud, truly have a dramatic impact and a dramatic benefit for consumers but also for merchants. Ultimately, having a system that is safe and trusted, where fraud is lessened and where those protections are available, means that merchants will have more sales. Their businesses will grow and ultimately they'll be successful. That's a significant part of our focus right now.
Senior Vice-President, Market Development, Mastercard Canada
In much the same way, as we've driven more transactions onto our network, cybersecurity continues to be something that we continue to invest in. Mr. Perkins and others have alluded to investments that we've made from an inorganic growth perspective to help bring in the best and the brightest while focusing on research and development in-house. That's what we're focused on.