Industry Committee on Oct. 28th, 2024

[Ryan Turnbull, Liberal, Whitby, ON]

Okay, so nobody knows how much money they make—or no one is willing to disclose how much money they make from their credit card services, which is more true, I would say. It is highly profitable, is it not? I'm going to assume that the answer is yes.

What is the justification for the interchange fees? I well know that the credit card companies have stated that the banks are essentially responsible for setting the fees. You guys say that you're not responsible, that they're responsible for setting the fees. It may be both of you. I note also that the banks all own their own payment processors. I have that in my briefing note here.

What percentage of the interchange fees do your banks get to set? Can you please explain that?

Mr. Siromani, I'm going to you first.

[Ramesh Siromani]

We don't set interchange fees. They are set by the networks.

One thing I would add in terms of the processing fees that you mentioned is that we do incur those processing fees. In addition to that, we incur network fees, fraud losses, the cost of all the benefits that we provide to the cards, Apple Pay transaction fees, IT and infrastructure costs, customer support and innovation costs.

[Ryan Turnbull, Liberal, Whitby, ON]

Is it true that you're only a receiver of fees, that you set no portion of the interchange fees and that you do not collect any fees for the transactions through the credit card services that you offer?

Mr. Siromani, I'm going to you because I'm just following up on what you said.

[Ramesh Siromani]

The interchange fees are set by the credit card networks, yes.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay, so your only cost recovery on those fees is the interest rate on the credit that you're offering to your clients. Is that correct? How are you recovering all of those fees if you only receive those fees that are set by the credit card companies? You are a payer of those fees and don't set any portion of them yourself, correct?

[Ramesh Siromani]

We don't pay interchange fees. The credit card companies set those interchange fees. We have some revenues from those fees, but we have a variety of costs associated with those fees.

[Ryan Turnbull, Liberal, Whitby, ON]

That's what I'm asking, Mr. Siromani. What are the revenues you're getting from those fees? Can you explain that to us, please?

[Ramesh Siromani]

It is not possible for me to break down the revenues associated with those fees.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay, but we know your business is highly profitable, offering credit to your customers, so you must be making money on the fees and the interest rate that you're charging for offering credit. We know that. I mean, that's common sense. I don't think anyone here would disagree that the banks are making considerable money from offering credit card services to their clients.

People have said that it's an expensive business. I'm trying to understand the cost structure and how you're involved in setting those interchange fees. If you both run a payment processor and are the issuer of the credit card—and we know that you're running a highly profitable business—why are you guys hiding from the very fees that you're setting for the consumer? Just be clear and consistent about it.

Mr. Siromani, I'm going back to you. I would like to ask all the witnesses, but I'm limited in my time, so I'm going back to you.

[Ramesh Siromani]

Again, the interchange fees are not set by us. They are set by the networks. It is commercially sensitive information, as all of us have said, to divulge the full revenues associated with credit cards.

If you're trying to understand the model better, we get fees and interest income. Against that, we have a variety of costs, including fraud losses, processing fees, network fees, Apple Pay transaction fees, the cost of benefits, IT and infrastructure costs, customer support and the innovation costs that we have to bear.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay.

Thank you, Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Turnbull.

Mr. Savard‑Tremblay, you have the floor.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

I'll carry on with you again, Mr. Siromani.

A number of stakeholders, particularly in the area of fintech, told us that a cap on interchange fees would be indirectly circumvented by banks and credit card issuing companies, as they would be able to increase other fees.

Would you agree with that?

[Ramesh Siromani]

I'm sorry, honourable member. I could not understand that question. Could you please ask it once more or clarify it a little?

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

All right.

Since I was asked to repeat my question, Mr. Chair, you're going to be able to give me my speaking time back, aren't you?

[The Chair, Liberal, Joël Lightbound]

Yes, certainly, Mr. Savard‑Tremblay.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's fine, thank you.

A number of stakeholders, particularly in the area of fintech, told us that a cap on interchange fees would—

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

I have a point of order, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Go ahead, Mr. Van Bynen.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Mr. Chair, I keep getting an overlap between the French language and the English language, and this may be what's confusing our witnesses. I hear the shadow, but I also hear both languages when I hear the translation. I don't know if anybody else is receiving that.

[The Chair, Liberal, Joël Lightbound]

All right.

Are others having the same problem? I'm getting nods from Mr. Perkins, as well as from Mr. Patzer.

I'll try to find out what's going on with the interpretation. I don't see anyone in the interpretation booth at the moment.

Is the interpretation working properly at the moment or is there an echo?

[Ramesh Siromani]

There is a bit of an echo, but I'm able to understand the question.

[The Chair, Liberal, Joël Lightbound]

Very well.

Don't worry, Mr. Savard‑Tremblay, I always give you a little more time, because I take into account the time needed for your comments to be interpreted and understood by the witnesses.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

What's more, I've been asked a few times to repeat my question.

[The Chair, Liberal, Joël Lightbound]

Yes. Don't worry, I'll take that into account when allotting your time.

I'd also like to point out that we are joined today by representatives of five national banks that provide services to the 25% of Canadians who speak French, but they haven't spoken a single word in French. Nor are they accompanied by people from their teams, of whom there are certainly many, who could have spoken some French before the committee. I find that somewhat puzzling.

Mr. Savard‑Tremblay.