Industry Committee on Oct. 21st, 2024

[Brian Masse, NDP, Windsor West, ON]

Okay. Thank you very much.

I'm going to move to Equifax with my time. I appreciate that response because there's a combination of things we can do.

To Equifax, one of the things that gives me concern about the way you're getting information is that you mentioned there's no reporting of the interest rate, but your interest credit score could be based on that. My experience has been that, if you can't get a good credit score, then you're often put at a higher interest rate to be able to get that, including some of these scams, quite frankly, which I believe they are, at furniture stores and other places where they're charging 30% to 40% on things they're doing, interest free, for x amount of time. Then later on, you get caught with the whole bill.

Why not collect that data as well? Wouldn't that be relevant to a credit score—the type of interest that you're being charged? The number of people who have to go to a secondary borrower is the whole reason we even saw the rise of payday loans and so forth. Banks wouldn't accept some of the payments or the credit of individuals who had to go to these third-tier lenders with obscene prices, and they were taking advantage of people who were desperate just to pay their bills.

[Julie Kuzmic]

Thank you for that question. It's a good one.

One of the important concerns is that we don't cause discrimination against Canadian consumers because of potential past difficulties they've had financially. That's why there are a number of consumer protections in place that dictate the maximum period of time that negative information, such as a previous bankruptcy, items in collection and so on, can remain on somebody's credit report. I would be concerned to enable a situation where a consumer could be judged by a potential future lender based on the use of a particular lender in the past.

The current credit-scoring model is actually a predictive analytic of the likelihood that a consumer will pay their bills on time. That is based on the actual actions, with emphasis on the recent actions, of a given consumer going into creating that ultimate outcome of the three-digit credit score.

[Brian Masse, NDP, Windsor West, ON]

I appreciate that.

I'll move on really quickly. I know I'm running out of time.

It would seem to me that your data coming in would already be skewed by the fact that consumers are skewed out there by their percentages.

To be really quick, do you identify each payment date that's required for consumers on different credit cards? One of the things that I'm considering is a universal payment date to end some of the confusion in financial literacy, where there could be a universal payment date that could be made and regulated for paying any credit, like a mortgage or a credit card.

[Julie Kuzmic]

That's a very interesting concept that I haven't encountered before. I would certainly welcome the opportunity to bounce some thoughts around for what that might look like.

As the system exists today, the account information is reported on a somewhat staggered basis in alignment with the statement period for each one of the credit cards, as you're aware. There would potentially be a benefit to consumers in the sense that they wouldn't have to pay all their bills at once, where many people would be getting their pay in biweekly instalments, for example.

It's a very interesting thought. There's a lot to consider there.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Masse.

Mr. Perkins, the floor is yours.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

My questions will be for the executive director of Fintechs, the association representing, at least in the case of this study, the processors.

Just so everyone who's watching is clear here, when somebody uses their credit card in a physical store, a retail store, they don't know, in most cases, because it's only seen by the business, that there's somewhere between a 1.5% to 3% additional charge on the total value of that credit card that is charged to the business. Is that correct?

[Alexander Vronces]

Yes, there is an amount charged to the business, and Canadians aren't aware unless they know for one reason or another. For example, some businesses might choose to surcharge.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Okay. Thank you.

Included in that is a whole bunch of things that are set by.... In this case, we're talking about Visa and Mastercard. Then there are elements of this called “interchange fees”, which are fees related to the actual pipes, as I call it, or plumbing of the companies that do all of that processing. Those are your members.

Is that correct?

[Alexander Vronces]

We have some members on the acquiring side that are processing payments for merchants and facilitating the use of those pipes, as you described it.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'm looking down the list of your members.

Is Chase Merchant Services one of your members?

[Alexander Vronces]

They aren't a member, but we have various—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Okay. They've agreed to the discount.

A year and a half ago, the government announced there would be a 0.95%—or 1%, essentially—reduction in those rates. It's taken us a year and a half to get to the point where, two weeks ago, they announced it.

Chase is participating. Is Global Payments one of your members? They've agreed. Is Moneris one of your members? No. Is Square a member? TD merchant services is not one of yours.

Okay. All of those have agreed.

Is Fiserv one of your members? Apparently, they have not responded to any requests. Do you know what Fiserv is going to do?

[Alexander Vronces]

I don't know what Fiserv is going to do.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

How about Nuvei?

[Alexander Vronces]

I'm not sure what they're going to do.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Are they one of your members?

[Alexander Vronces]

Yes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

They haven't responded.

Has People's Trust?

[Alexander Vronces]

They're a member.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

They're one of your members.

Do you know what they're going to do? No.

Is PSP Services Inc. one of your members?

[Alexander Vronces]

No.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Okay.

What we have here are five companies that have agreed.... Only one of them, I think, is yours. A number of your members have not responded to the public announcement, meaning—presumably, since they won't respond—that they're not going to pass on these savings. One member of yours, Strike, has publicly said they're not going to pass it on. It sounds as if most of your members aren't going to pass on the savings.

Is that correct?

[Alexander Vronces]

The ones that have not responded and have yet to elucidate what they're going to do.... I don't know what they're going to do.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Okay. Maybe we should get them before the committee to explain why they haven't responded.

When one of your members doesn't pass the savings on, what happens to the Visa or Mastercard merchant fee? Does it go down?