Evidence of meeting #141 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 stripe.
A recording is available from Parliament.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
The board was not involved. Okay.
I'd like to go back to this issue of the claim that you provide this great flat rate pricing. According to your website, your flat rate pricing in Canada is 2.9% plus a 30¢ fee. Is that correct?
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Therefore, 2.9% of the value of the transaction gets charged. As the value of that transaction rises, the value of the revenue, or the amount of revenue the overall system gets, also rises, but the cost of the transaction doesn't really change. It's an electronic transaction. Therefore, as you go up, you're making more revenue, which means that your profit margin probably goes up the more expensive the transaction is. Is that correct?
Director, Public Policy, Stripe
Actually, that's incorrect. When costs go up, we hold that flat rate the same. Like I said, costs have gone up. This year, costs are net up. Costs fluctuate. Card network costs fluctuate all of the time. There are hundreds of different fluctuations.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
When it's based on the price of the goods, the amount of money that comes in on the transaction rises every time. If I go from a $100 transaction to a $200 transaction, the revenue you get on a $200 transaction in numbers is more than you get on $100.
Director, Public Policy, Stripe
On a percentage basis that's true. However, our percentage has remained the same for eight years.
October 24th, 2024 / 8:40 a.m.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Of course. As inflation drives costs up and transactions go up—and we've seen massive inflation—you get a massive revenue boost without having to change your prices.
Director, Public Policy, Stripe
Actually, we've held our price the same for eight years.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
No, you've held your percentage the same. Your revenue is not the same. It's growing exponentially because of inflation and because the cost of the basket size that gets charged goes up. It's a false claim to say that you're not making more money.
Why is it that when you're making that much more money...? Are you that much less efficient than your competitors like Moneris and others, which have agreed to this price change? You're refusing to do it. Are you that poor a company in your technology that you can't take this modest price cut?
Director, Public Policy, Stripe
We've held our price the same for eight years. I can't think of many other products where the prices have stayed the same for eight years.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Your competitors are lowering the price and dealing with the competitor. You're saying it's because your costs have gone up. Why do your costs go up when theirs haven't?
Director, Public Policy, Stripe
In my opening remarks, I pointed out two things. Yes, net costs are up. The flat rate shields those businesses from what would otherwise be a cost increase.
We are also taking a principled position in support of simple pricing. Our concern with the government's announcement—
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
You're taking a principled position in terms of keeping and maintaining the growth in your profit margin and your revenue and not passing it on. Other companies, who are your competitors, are respecting the fact that, unlike Europe and other places, we charge high merchant fees here.
You're unwilling to do what Moneris, TD capital, Chase merchants or Global Payments are doing.
You're not the only one. There are other companies that have remained silent. It's incredible to me that when your revenue goes up as inflation drives the basket up, you're unwilling to say, “We're making a lot of money here, so we're going to participate in making it easier on all of the merchants in this country in doing this.”
Maybe it's just because Canada is small for a global company like yours that is operating around the world, so you don't care about what the government, taxpayers and businesses need here, as long as you can keep going at your 2.9%, which is the most expensive, as we've just heard, in the industry. It's 1% to 3%. You're at the high end of the charging. You have lots of room to cut.
Liberal
The Chair Liberal Joël Lightbound
Thank you, Mr. Perkins. We're out of time. We're way over time, actually.
MP Arya, the floor is yours.
Liberal
Chandra Arya Liberal Nepean, ON
I will also continue on the same line as Mr. Perkins.
What percentage of your revenue comes from your standard pricing? What percentage comes from the interchange-plus pricing model?
Director, Public Policy, Stripe
As much as I would love to discuss that, it is sensitive business information. It's commercial information.
Liberal
Chandra Arya Liberal Nepean, ON
Again, you just said that you have been maintaining the same cost for the last eight years. During the last eight years, what is the volume of growth you have seen?
Director, Public Policy, Stripe
The businesses operating on Stripe have grown significantly. We're proud to support them and help them increase their sales.
Liberal
Chandra Arya Liberal Nepean, ON
What is the volume in terms of the percentage of growth that you have seen during the last eight years?
Director, Public Policy, Stripe
It's significant growth. The businesses on Stripe are doing quite well.
Liberal
Chandra Arya Liberal Nepean, ON
How significant is it?
You keep saying that you have kept the same price constant for the last eight years. Suppose I've been charging something for the last eight years at 1%. If my volume is growing from $100 million to $500 million to $5 billion, then that 1% is pretty good.
You're refusing to say.... You're saying that you are going to standard pricing, which is good for all of your clients, but you're not letting us know what percentage of your revenue comes from that model and how much the volume has gone up.
You say that whatever the government announced is a small difference. Then why don't you accept the small difference and bring it in? If your volumes were constant for the last eight years, I would agree. I would appreciate that you have kept your pricing constant for last eight years. That is not the case.
I don't understand the rationale. You say that whatever the government has done is a small difference. Why don't you pass on what you call a small advantage to the businesses?
Director, Public Policy, Stripe
Because of the announcement of the government, the expectation is effectively that we would have to split our customers into two different groups. They have chosen winners and losers, and the expectation is that we would—
Liberal
Chandra Arya Liberal Nepean, ON
I'm sorry, Mr. Peters, but they have not chosen winners. They have chosen small businesses versus large businesses. They are saying that the roadside convenience store with the average sales volume of less than $300,000 is different from Walmart. That's what they have chosen.
You are a global company. You said that your management team is all across the world. What is the interchange fee in Australia or in the European Union?
Director, Public Policy, Stripe
Do you mean the specific fee charged by the networks in each region?
Liberal
Chandra Arya Liberal Nepean, ON
Yes. What is the cap imposed by the authorities in the European Union or Australia?