Industry Committee on Nov. 7th, 2024

[Nicolas Marion]

That business would not be eligible.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Merchants who accept credit card payments adding up to $175,000 or $300,000, depending on the card, are therefore not eligible for the reduced interchange fee.

[Nicolas Marion]

That is correct.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Since you said 90% of businesses in Canada are eligible for this reduction, that means nine out of 10 businesses in Canada do under $300,000 in credit card transactions.

[Nicolas Marion]

For the transactions using the Visa card, that is the correct deduction, yes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I see; it is somewhat more understandable.

Are interchange fees taxable under Canada’s current tax system?

[Amanda Riddell]

No, they're not. They're exempt services under the GST.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

You said interchange fees are not taxable according to the current Canadian tax system.

[Amanda Riddell]

No, they're not.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Very well.

A representative from the Convenience Industry Council of Canada came here and told us that on average, taxes represent $0.48 of each dollar spent in a convenience store. There are approximately 22,000 convenience stores in Canada. That adds up to $14,000 per store, which convenience stores pay in interchange fees on their share of sales taxes, multiplied by 22,000 stores.

Convenience stores told us they are taxed on interchange fees, and it represents a significant amount. They already asked for the elimination of taxes on interchange fees, but you are saying they are not taxed on those fees.

[Amanda Riddell]

It's actually the inverse. Tax doesn't apply to the interchange fees, but interchange fees apply to the tax. In other words, the interchange fee, or the merchant fee that gets charged to the merchant, applies to the entire transaction, which does include tax if it's a taxable purchase, or the purchase might be a non-taxable purchase, in which case the interchange fee just applies to the total amount of the transaction.

The interchange fee applies to the transaction amount, which may or may not include tax, but the interchange fee itself is not a service that's subject to GST.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Have you ever been asked to eliminate those taxes when calculating interchange fees? Those interchange fees inevitably apply in the case of a credit card transaction. Have you ever been asked to exclude taxes from the interchange fees calculation?

[Nicolas Marion]

We explored the issue of applying interchange fees.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

If it were asked of you, would you be open to considering it?

[Nicolas Marion]

I think the committee can ask the Department of Finance questions on different subjects. It is possible there might be a technical aspect to consider with regard to implementing this type of measure. That said, I think members of the committee can ask questions.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Généreux. I would like to remind everyone that officials are here to talk about applying measures taken by the government. It is not up to officials to decide on the measures that will be implemented.

Mr. Turnbull, you have the floor.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks, Mr. Chair.

Thanks to all the witnesses for being here today. It's a really great discussion.

I want to go back to what Mr. Van Bynen talked about, which has been a common element in the discussion today. It's about wanting to see some more documentation and clarity on the consultation process that was undertaken. I think this process is important for the work of this committee. I think all members agree that within the parameters you have, you're able to provide information.

I want to strongly state that we'd like to see more information on the process of consultation and on who is consulted. We would like more information on any specifics you can provide on the negotiations and the agreements made, knowing fully that those were voluntary agreements, as you've made clear.

Also, we would like more information on the conversations with payment processors and on any review of the regulatory environment for credit card companies that may identify additional tools that may be helpful in considering how we move forward.

Ms. Hamel, can I clarify that you will provide that in writing to the committee at the request of the chair?

[Judith Hamel]

We will need to unpack it a bit. There were various elements in what you provided, but if we receive a request in writing, we'll see how we can address it.

[Ryan Turnbull, Liberal, Whitby, ON]

I need a clear answer, Ms. Hamel. Can it just be a yes or no?

I'm couching this in terms that I think we all understand. It's within the parameters in which you operate as a public servant. I'm not asking you to go outside of the bounds of what you can do; I'm just saying that the committee wants to request the information.

I want to make sure you give us a clear response, on the record here today, and that you will provide this to the committee.

[Judith Hamel]

Yes, we can provide the committee with information on processes that were followed, as well as on consultations.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you very much.

Okay. I want to go back to cleaning up something else.

Regarding interchange fees, the desire to have that reduction handed down to merchants has been expressed here. People are concerned, rightly, that Stripe has come out saying they would not hand down that reduction. I want to make sure the government has made a public statement about this. That is the expectation.

Was that not a clear public statement, Ms. Hamel? Can you clarify this?

[Judith Hamel]

It was a clear public statement, yes.

[Ryan Turnbull, Liberal, Whitby, ON]

The government made a public statement about it.

Mr. Marion, in your response to someone else, I think you said that the department also verbally expressed this in private conversations with Stripe. Is that correct?

[Nicolas Marion]

That's correct.