Industry Committee on Oct. 7th, 2024

[Darren Hannah]

The benefits that consumers get through credit card payments are substantial. They get the ability to shop in person or online. They get complete security. They get protection from fraud. They get the ability to buy on credit, particularly if they're buying on sale. They get rewards.

[Brian Masse, NDP, Windsor West, ON]

Okay, so they got rewards, but the percentages stayed the same then, and they're still the same now.

You mentioned to Mr. Perkins that the rate at large is a 1.6%, but you can't break that down.

[Darren Hannah]

That is correct.

[Brian Masse, NDP, Windsor West, ON]

How do you get that rate then? How does that come to you?

Let's follow the chain here, if you can identify that. Thank you.

You can't break it down, but you've come to a cumulative rate of 1.6%.

[Darren Hannah]

That comes from Equifax.

[Brian Masse, NDP, Windsor West, ON]

We would have to get Equifax to break down some of these numbers. We'll have to look at doing that.

Equifax is talking about the rates going up with regard to Canadians having to pay for goods and services that are more urgent. Their buying habits have changed.

Mr. Dorey—I'll go across—have you noticed with your customers the purchasing decisions that Canadians have made? That's part of the reason we're doing this study. If they're using the credit card more, and the evidence coming in is that they're paying higher rates of return and so forth, they're more vulnerable. Do you do some analysis in terms of how that affects your customers?

[Jay Dorey]

We do in part. There are parts of what I think you're describing that belong to the financial institution, the banks and the credit unions that issue the credit. You're correct. I think they would be more appropriate to answer those questions, because they know those customers and products. We don't at Visa.

We do track spending in the economy between what we talk about as discretionary and non-discretionary spend. Those elements that a family really needs to buy no matter what, versus a discretion, which might be a vacation, trip or durable goods. We've certainly seen a decline in those discretionary areas of spend over the last 12 or more months. Non-discretionary spend has continued to be stable.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I go to Mastercard.

[Martin Leman]

I echo that exactly. In terms of trends, we noticed the exact same thing.

[Brian Masse, NDP, Windsor West, ON]

Do you get that data? I don't know if you guys—

[Darren Hannah]

No, we don't have that specific data. What I would say generally, though, just to your point, is that, from a bank perspective, we always want to make sure we put the right person with the right product to suit their needs.

[Brian Masse, NDP, Windsor West, ON]

I have little time, so really quickly, what would be your opinion, Mr. Dorey, then, about...? Should there be an interest rate difference for discretionary and non-discretionary purchases? We know what's changed for Canadians is their debt level and the vehicle they use for payment. Credit cards and the pandemic shifted them. An out-of-market decision made them switch to a cashless society.

Do you think it's fair to have discretionary and non-discretionary interest rates at the same rate?

[Jay Dorey]

First of all, I'm incredibly empathetic to the situation that many Canadians are in today. The cost of everything has gone up, and that's very challenging. Second, I think it's important to point out that the provision of short-term credit, for many Canadians, got them through those challenges. As the CBA pointed out, most of that borrowing is very low term.

With respect to your specific question, I do want to answer that but, unfortunately, it's not the part of the business that we're close to. Those aren't our customers, and we don't set those rates or see that, so I'm afraid I don't have a comment on that particular question.

[Balinder Ahluwalia]

We talked earlier about the roles and responsibilities among the different parts of the ecosystem. From a network perspective, it would be the CBA that would focus on that.

[Darren Hannah]

As I said, we want to make sure we put the right consumer with the right product and try to find a product that works for them. If there's a better product that we have available with a lower rate, we want to put them with that product.

[Brian Masse, NDP, Windsor West, ON]

Okay. I'm just concerned about the competition.

I'm probably out of time. Is that right, Mr. Chair?

[The Chair, Liberal, Joël Lightbound]

You're three minutes over, Mr. Masse, but it's your study so....

[Brian Masse, NDP, Windsor West, ON]

I appreciate it. Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

I turn the floor over to Ms. Rempel Garner.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you, Mr. Chair. I'll pick up where Mr. Perkins left off.

I start with Mastercard. Just to clarify, in 2020, in an announcement made at a Davos conference, you accepted $50 million from the federal Liberal government. Is that correct?

[Balinder Ahluwalia]

It was $49 million.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

In 2023, Mastercard's global revenue was about $25 billion. Did you ever consider that it might be, putting it mildly, reputationally problematic for a company like yours, which many Canadians intimately understand the cost of using, to take $50 million of Canadian tax dollars for something that you should probably be doing on your own anyway?

[Balinder Ahluwalia]

We invested $500 million in the cybersecurity centre of excellence—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Cybersecurity is important and integral to your business. Is that not right?

[Balinder Ahluwalia]

That's correct.