House of Commons Hansard #230 of the 41st Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was s-7.

Topics

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Some hon. members

Yea.

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

All those opposed will please say nay.

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Some hon. members

Nay.

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

In my opinion the nays have it.

And five or more members having risen:

The recorded division on Motion No. 1 stands deferred. The recorded division will also apply to Motions Nos. 2, 3, 8 and 10.

The next question is on Motion No. 4. Is it the pleasure of the House to adopt the motion?

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Some hon. members

No.

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

I declare Motion No. 4 defeated. I therefore declare Motions Nos. 5 to 7, 9, and 11 to 17 defeated.

(Motions Nos. 4 to 7, 9 and 11 to 17 negatived)

Normally at this time the House would proceed to the taking of the deferred recorded division at the report stage of the bill, however, pursuant to Standing Order 45 the recorded division stands deferred until Monday, June 15, at the ordinary hour of daily adjournment.

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Vancouver Island North B.C.

Conservative

John Duncan ConservativeMinister of State and Chief Government Whip

Mr. Speaker, if you seek it, I think you will find agreement to see the clock at 1:30 p.m.

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

Is that agreed?

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Some hon. members

Agreed.

Zero Tolerance for Barbaric Cultural Practices ActGovernment Orders

1:15 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

Accordingly the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House resumed from April 30 consideration of the motion.

Small and Medium-Sized BusinessesPrivate Members' Business

1:15 p.m.

NDP

Laurin Liu NDP Rivière-des-Mille-Îles, QC

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.

Small and Medium-Sized BusinessesPrivate Members' Business

1:25 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Mr. Speaker, it is a pleasure to speak in support of the motion brought forward by my colleague from Marc-Aurèle-Fortin, which is very timely. There is a lot of talk these days about standing up for consumers and small and medium-sized businesses. This issue was addressed in the government's throne speech and two most recent budgets. However, the Conservatives are a long way from walking the walk.

The motion addresses an issue that all small and medium-sized businesses in Quebec and Canada really deplore, credit card interchange fees, which are borne by businesses. These fees are extremely high in Canada. They are usually about 1.5%, but they can be as high as 4% in the case of premium credit cards, which allow cardholders to collect points that they can exchange for goods and services. People need to realize that these cards, although beneficial to the cardholder, are largely paid for by merchants themselves and by other consumers. It is basically a brilliant marketing and advertizing strategy thought up by credit card companies. However, at the end of the day, they entail additional fees that are assumed by all consumers and that contribute to price increases.

I say that because in some places outside Canada, whether it be in Australia or even the European Union, a cap has been placed on these fees. In many cases, small businesses have profit margins of 5%, 6% or 7%, which is not very much. When credit card payments eat up between 1.5% and 4% of that profit margin, it becomes very difficult for these small businesses to survive. What other choice do they have? The only other choice is to no longer accept credit cards.

We know full well that in this day and age, refusing to accept credit cards puts businesses at a huge disadvantage because many people use their credit cards for everyday purchases. Refusing to accept credit cards seems to be the only option for these companies, but it is not a realistic one, because obviously, customers who cannot use their credit card and are not in the habit of using a debit card or cash may choose to shop somewhere else.

This motion is very timely because it confirms the official opposition's intention to cap credit card interchange fees. It also confirms our intention to no longer rely solely on the voluntary code that the Conservatives seem so proud of, but to set real restrictions that will benefit all SMEs, merchants and, by extension, consumers.

The government is saying that it has already negotiated with Visa and MasterCard, which are the two major credit card companies, to ensure that they will voluntarily agree to set a limit on interchange fees. However, that is not enough. The Canadian Federation of Independent Business and other businesses and organizations representing small businesses and the business community are still on edge and still do not know when Visa and MasterCard might change their minds and do something to violate this voluntary code.

Instead of a voluntary code, what we really need are federal regulations. We could always discuss how to apply the regulations and their parameters. However, it is clear that the government can play a role in a market such as the credit card market, which is neither free nor competitive, but is a duopoly. Visa and MasterCard control approximately 92% of the market. Even a known quantity like American Express cannot bite into the market share of Visa and Mastercard. When we are faced with a duopoly, there is an imperfect market, a failure of market forces. In that sense, the government is completely justified in intervening to protect the consumer, the industry and business.

We can look to the regulations, such as these, that have been adopted in other countries. Australia is an interesting example. I am not saying that this is what an NDP government would do, but it does deserve to be studied.

In Australia, the decision to cap interchange fees is made by the Reserve Bank of Australia. It is not up to the federal government to make that decision, which is not a bad thing, but up to the body responsible for the country's monetary policy. This is an interesting approach, and it demonstrates that such regulations or such an approach can be successfully implemented. Our interchange fees vary between 1.5% and 4%, but Australia has managed to decrease its fees significantly.

Elsewhere, the European Union has just adopted regulations that will impose a cap of 0.3% on credit card fees paid by merchants and a cap of 0.5% on debit card fees. We clearly see that there is the political will in Europe to tackle a real situation that penalizes small and medium-sized business.

The European Union just limited this rate to 0.3%, and in 2006, Australia reduced it to 0.5%. Of course, Visa, MasterCard and other credit card companies will say that this will destroy them and that they will not be able to provide efficient service if the market is disrupted like this. That is what they said in Australia to try to halt the efforts of the Australian government. They said that if the government got involved, the consequences would be disastrous.

In reality, credit card use continued to increase after 2006. There was no disruption to Australia's credit card system. The companies adapted. They lowered their costs elsewhere and adapted to their decreased revenues as a result of the Australian government's regulations.

It is clear that we need to do something. The merchants I speak to in my riding are happy with voluntary codes of conduct. However, when I speak to them about the interchange fees they have to pay for using credit cards, the reaction is overwhelming. These fees eat into their profit margin, which is often not very high.

When I speak to them about the NDP's proposal, the motion moved by my colleague from Marc-Aurèle-Fortin, they see a real desire to make meaningful changes. That is the best gift we can give our artists and our merchants, who simply want to provide services in their communities and grow their businesses. However, in order to do so they must be able to set aside this profit margin for future investments, in order to have a greater presence on the domestic market within their community.

That is why they wholeheartedly welcome the NDP's proposal, which is well known. Three years ago, I worked alongside the member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, who was our tourism and SME critic at the time. We launched a campaign to raise awareness among small business owners and the business community in Quebec and Canada.

At the time, it was the member for Sudbury who was leading the campaign in the rest of the country. The campaign was very popular, both among chambers of commerce and such organizations as the Canadian Federation of Independent Business. That was three years ago already, but we still need to implement this measure. It was already overdue even before that campaign began, which is why we will continue to advocate for stricter regulations.

The motion brought forward by the member for Marc-Aurèle-Fortin is therefore most welcome. It reveals what direction the official opposition plans to take, once we form the new NDP government in October 2015, in order to help small businesses and merchants in Quebec and Canada deal with the various challenges they face by limiting credit card interchange fees.

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Mr. Speaker, for me, the position of the government is a deception, but absolutely not a surprise. Why? It is because in the House, there are two sides. One side is the side of Canada and of Canadians. It is the side of the spirit of Tommy Douglas, a great Canadian. This Canadian developed a policy to include economic development and social solidarity. At the same time, everybody had a job and the respect and help of the state.

The other side is the side of great American losers. This un-Canadian government is motivated by the spirit of George W. Bush, a great loser. Those guys are on the other side. Presently, this un-Canadian government refuses to help small Canadian enterprises. Imagine: the result of the un-Canadian government policy is a 2% rate for credit cards in Canada for small enterprises, but in the European Union it is 0.3% and in Australia it is 0.5%, a fraction of the present rate.

For this reason, it is a clear deception, but absolutely not a surprise. Each time this un-Canadian government has a chance to sabotage the Canadian economy, it does not lose the opportunity. It transformed Canada into a kingdom of corporate welfare dumps. That is it. That is all.

It is our choice. We refuse to have such a Canada, and in the next election, Canadians will vote for a Canadian party.

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

The question is on the motion. Is it the pleasure of the House to adopt the motion?

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

Some hon. members

Agreed.

No.

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

All those in favour of the motion will please say yea.

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

Some hon. members

Yea.

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

All those opposed will please say nay.

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

Some hon. members

Nay.

Small and Medium-Sized BusinessesPrivate Members' Business

1:35 p.m.

Conservative

The Acting Speaker Conservative Barry Devolin

In my opinion the yeas have it.

And five or more members having risen:

Pursuant to Standing Order 93, the recorded division stands deferred until Wednesday, June 17, 2015, immediately before the time provided for private members' business.

It being 1:42 p.m., this House stands adjourned until next Monday at 11 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 1:42 p.m.)