Evidence of meeting #152 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.
Chief Executive Officer and Co-Founder, Stripe, Inc.
I learned about it in preparing for this hearing this morning.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Was it just in the last week or two that you first heard of it?
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Okay.
Based on the testimony and interactions I've heard of other colleagues, it really feels like this is the Liberal Party campus club at the local university treatment. It's like he is trying to become the treasurer of the local campus club.
Based on media reports, Mark Carney is being considered to the next finance minister of Canada or the special adviser. This has been going on for years; it is not new. The fact that this is just being glossed over as a “whatever” deal is a bit offensive to this committee, as well as to Canadians and Canadian businesses that have been struggling over the last number of years.
When we look at conflicts of interest, even if they're just perceived.... I think there is something a bit more substantive here than just the perception.
Are you not concerned at all, based on what you've heard here today, about an apparent conflict with Mark Carney being the special adviser to the Prime Minister, as well as the prospective future finance minister of a G8 country, and his sitting on your board? We're sitting here today because the Government of Canada has issued a request to you to lower your fees. Mark Carney sits on your board as the financial adviser to the Prime Minister, and your company has just said, “No, we're not going to do it.”
Chief Executive Officer and Co-Founder, Stripe, Inc.
The important context here is that these Canadian policy matters are not issues of board discussion and never have been. Mark has not been involved in any of these. In fact, not only has Mark not been involved in these decisions... But until very recently, I haven't been involved because the amounts in question are so small, and because we're making less profit from Canadian businesses over time because of the tax increases. This has been a very routine matter decided by our pricing teams. It was not even a topic of discussion by the senior management team.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Is anybody involved in Canadian policy decisions? Your board doesn't do it. You just admitted that you haven't done it up until recently. Who is involved? Who is in charge of it? Whose email inbox or whose junk box, I guess, did the memo go to? That's what I'm trying to figure out here. Where did the memo go if you didn't see it?
Chief Executive Officer and Co-Founder, Stripe, Inc.
We have a series of internal experts who try to make these decisions. I'm actually proud of the fact that they were willing to accept that we would make slightly less money from Canadian businesses and that our blended package would become slightly less lucrative for Stripe. We haven't changed the price in eight years. We should not increase the prices to try to preserve a our margins. We'll just accept slightly less profit, because we think it's really important to provide that simplicity and predictability.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
When it comes to the regulatory environment here in Canada, you alluded to Mark Carney's having great experience being the Governor of the Bank of Canada and the Bank of England. That is obviously a great experience for somebody to have.
Have you not tried to tap into that to figure out a little bit more how you could better navigate Canada's regulatory system? Have you not tried to utilize Mark Carney's knowledge on that at all?
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
That's interesting.
Why did you bring him on board then?
Chief Executive Officer and Co-Founder, Stripe, Inc.
It was because of his expertise in just the evolution of the financial system, generally. For example, Mark and I had a recent discussion about the interplay between stablecoins and the interest rate paid on treasury bonds. It's like a kind of arcane but, maybe in certain ways, an important kind of macroeconomic issue. I find Mark to be a really insightful thinker on those kinds of central bank macroeconomic topics. We don't engage and haven't engaged on the more purely political matters.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Right. What about small businesses?
That's kind of what this gets to. It's small businesses trying to make a go of it. Obviously, they have turned to you. They've turned to your company as a payment processor. When you look at just the general operating system, this whole study is about the fact that costs are supposed to be passed on. Stripe has decided not to do it.
You seem to be, I don't know, oblivious to the fact that you have somebody who is deeply entrenched with the Liberal Party on your board. It's somebody who is tapped to be the next finance minister of this country. It's somebody who is a contender to become the next leader of the Liberal Party of Canada. It's just kind of laissez-faire, as if there's nothing wrong here and nothing to see here.
Chief Executive Officer and Co-Founder, Stripe, Inc.
I think your focus on businesses that are trying to make a go of it is exactly right. I just want to be very clear.
If all businesses on Stripe are on this kind of interchange-based pricing model—those businesses and many of other providers are on such a model—those businesses have seen costs increase over the past year, because of the offsetting effect of the tax change and the interchange change.
Stripe has protected those businesses from that increase if they use our blended pricing model, where we did not increase our costs commensurately. We also haven't increased the 30¢ in tandem with inflation. Stripe is, in our estimation, even better value than it was a year ago, because we're protecting businesses from these cost increases.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
What about around the world? Do other countries around the world have the same fee structure as they do in Canada? Is it the same for everybody around the world, or is it a unique situation here in Canada?
Chief Executive Officer and Co-Founder, Stripe, Inc.
It varies country by country, but our pricing constructs in Canada are roughly the same as they are in the U.S., for example.
Chief Executive Officer and Co-Founder, Stripe, Inc.
Europe has quite stringent interchange regulation, broadly.
Stripe doesn't really have a point of view on interchange regulation as a policy matter. If one caps interchange, you tend to get somewhat less card penetration and consumer credit, but you get lower interchange costs. Whether that trade-off is worth it has to be decided on a country-by-country basis.
Liberal
Liberal
Ryan Turnbull Liberal Whitby, ON
Thanks to Mr. Collison for being here today.
I want to start by asking you this: Have you had any conversations with the Finance team around the expectation of handing down the cost savings from the interchange fee reduction to customers?
Chief Executive Officer and Co-Founder, Stripe, Inc.
Deputy Prime Minister Freeland called me a couple of days ago and we had a discussion about this matter.
That's the only discussion I've had with the Canadian government.
Liberal
Ryan Turnbull Liberal Whitby, ON
There are other people in your organization, of course, who have had conversations with the Finance team as this process has been unfolding over a number of months.
Chief Executive Officer and Co-Founder, Stripe, Inc.
That's my understanding, but I don't have the details.
Chief Executive Officer and Co-Founder, Stripe, Inc.
Somewhat tangential to this, we weren't part of the initial agreement. We're latecomers to this whole situation.
Liberal
Ryan Turnbull Liberal Whitby, ON
We had Department of Finance officials testify at the INDU committee. They said, “We've spoken with the payment processors. Our expectation was that for any rate reductions”—and Ms. Rempel Garner interrupted them, as she sometimes tends to do, to say, “Did you do that with Stripe?” The Finance official said, “We did, absolutely.” That's on the direct record in the parliamentary committee evidence.
We also have the Department of Finance saying, in a public statement on October 14, “The federal government is closely monitoring the implementation of the credit card fees reduction, with the strong expectation that all payment processors like Stripe will pass the savings on to small businesses.”
Then we had the Deputy Prime Minister here just this week, who said, on the record, “We have repeatedly stated that we expect all payment processors—that includes Stripe—to pass these savings on to businesses, and we are prepared to take...action to make sure that happens.”
We also had Brian Peters of Stripe, whom you would know, I'm sure. I'll quote his testimony here at the INDU committee: “We are complying with every obligation we have. We're talking about an expectation in this case. We met that expectation by passing through the reduction.”
What I want to clarify with you is that this clear expectation—although it wasn't an order, as Ms. Rempel Garner called it previously—has been communicated to Stripe over and over again. I think that's been confirmed.
Can you please clarify that your understanding is the same as mine—that this expectation has been clearly communicated?
