Mr. Speaker, I am pleased to rise again to speak about the credit card fees that businesses are charged.
I have been working on this campaign for a few years, since 2013, because over the past four years I have heard countless stories from people in my riding about very high credit card interest rates and the exorbitant fees that small businesses are charged by credit card companies such as Visa and MasterCard. Today, we are basically talking about the fees that businesses are charged by credit card companies when consumers make purchases.
In Canada, the processing fee for credit card payments varies between 1.5% and 4% of the purchase price. In 2012, retailers paid $832 million in credit card charges. This is significant, and it is quite a staggering amount for our small business people.
In 2009, the NDP moved a motion in the House asking the Government of Canada to put in place a binding law—“binding” is the key word—to protect Canadians against excessive credit card interest rates.
However, although the NDP's motion has the support of many Canadian merchant associations, the government still has not passed binding legislation. Instead, the Conservative government opted for a voluntary code of conduct. We know that this does not work for the major credit card companies.
Motion No. 574, which we are debating today, calls on the government to reduce the burden on businesses and consumers by reducing the transaction fees charged to merchants by credit card companies.
The motion also calls on the government to allow merchants to disclose to the consumer the transaction costs relating to the payment method chosen. This is very important, since consumers are not properly informed. They do not necessarily know that when they use their Visa or MasterCard, the merchant is required to pay exorbitant fees.
Unfortunately there is a lack of awareness. That is why I launched a campaign in my riding of Rivière-des-Mille-Îles in 2013 to talk about these transaction fees.
The NDP wants a law that will set a limit on these transaction fees. We also held consultations across the country to develop a clear position on this. At the time, our consumer protection critic travelled all over the country and organized a number of round tables on the subject. Six recommendations came out of those round tables. I would like to share them with you.
First, the NDP recommends the development of robust regulations for electronic and mobile payments in order to establish standards and make the rules transparent and fair for all stakeholders, particularly small and medium-sized businesses, entrepreneurs and consumers.
We are also calling on the government to tighten the loopholes in the pre-existing governance structure of the payments system to ensure that processors are not taking advantage of these loopholes to the detriment of Canadian merchants.
We recommend continued support for the Interac payment system, which provides businesses and consumers with a safe, secure and cost-effective means of processing electronic payments in Canada.
Very few people know that merchants pay a fixed 12¢ fee for every Interac transaction. That is much lower than the fees they may have to pay when customers pay by credit card.
We also recommend ordering the public disclosure of the cost per transaction of the merchant discount rate charged to Canadian companies by issuers of credit cards and other methods of payment. These costs affect companies' competitiveness and retail prices. We want consumers to be educated and aware of the practices and fees associated with using these cards.
We also recommend disclosing to consumers at the point of sale the hidden cost to the retailer of the method of payment used.
Lastly, we recommend establishing dispute resolution processes that are more efficient for merchants and take into account how financial institutions' payment processing services work.
I would like to provide a little background on this file and all of the recommendations and observations of the past few years. Seven years ago, in 2008, several retail associations, including the Canadian Federation of Independent Business, the Retail Council of Canada and the Small Business Matters Coalition, launched national lobbying campaigns against the exorbitant merchant fees charged by credit card companies.
In July 2013, the Competition Tribunal of Canada said that the conditions imposed by Visa and MasterCard on Canadian businesses were anti-competitive and that the fees they charged were excessive. The tribunal called on the government to intervene in the market to correct these problems. The government has since reacted by simply introducing a voluntary code for credit card companies, a code that does not work. That is why the Small Business Matters Coalition and most of the small retailers we talked to are dissatisfied with the government's measures. The government must act and take measures to impose binding laws that cap the excessive fees charged to retailers.
The fees paid in Canada are among the highest in the world. The average rate is more than 2% in Canada, whereas it is roughly only 1% in Australia and 0.79% in the United Kingdom. Those countries have taken measures to cap credit card transaction fees. It is therefore possible to regulate the abusive practices of banks. It is done in other countries. Unfortunately, the banks and the oil companies have this majority government in their pockets. That is why the government does not want to do anything about this. Political will is needed to deal with this and on this side of the House, we want to regulate the abusive practices of the banks.
Choosing to not regulate credit card transaction fees is regressive. It only helps those who can afford credit cards that give them rich rewards and very high points. A document published in 2009 by the Federal Reserve Bank of Boston estimated that, on average, each cash-using household actually pays $149 to card-using households every year. What is more, because of the demographics of credit card users and those who use cash or debit cards, this is in fact a regressive transfer from poor consumers to rich consumers. If we really want to reduce inequality in Canada, then capping credit card transaction fees is one way to do that. When I go door-knocking in my riding, my constituents also ask me to put a limit on credit card interest rates.
Political will is needed to protect consumers from the abusive practices of the banks. The NDP will protect consumers when we form the next government of Canada.