Madam Speaker, I would like to thank my hon. colleague from Courtenay—Alberni for his excellent question.
The government is making smart, necessary investments that will strengthen and support the middle class and those working hard to join it. As part of that support, we are guaranteeing a fair and competitive marketplace for merchants and consumers. Trust in the soundness and smooth operation of the financial industry is crucial to ensuring that the economy runs smoothly for middle-class Canadians. Canadians expect their government to review and monitor the financial sector so that it remains stable, efficient, and attuned to their changing needs.
To that end, one of the steps that our government has taken is on credit card fees.
In November 2014, Visa and MasterCard made separate and voluntary commitments to reduce their fees which are known in this industry as interchange fees. Interchange fees influence the cost of credit card acceptance for merchants. The commitments made explicit recognition that the reduction would be focused on small and medium-sized enterprises and charities. Their respective undertakings were to reduce their interchange fees to an average annual effective rate of 1.50% in each of the next five years. Those voluntary commitments took effect in April 2015.
The code of conduct, which was updated in 2015, includes a requirement that any interchange rate reductions be fully passed on to merchants, or merchants may cancel their contract without penalty.
Last year the government received independent audit findings that both Visa and MasterCard have met their respective commitments, which include reductions for small and medium-sized enterprises and charities.
In order to ensure that there is, in fact, adequate competition and transparency for Canadian businesses and consumers when it comes to the fees they incur when using credit cards, the government announced in September 2016 that it will conduct a further assessment of the fees charged by credit card networks and review the effects of the fee reductions.
The review that is currently being conducted will take into consideration the impact of recent developments, the adoption of the code of conduct for the credit and debit card industry in Canada, the financial sector framework objectives of competition and utility, as well as approaches in other jurisdictions.
Of course, the review will also take into account the recently received third-party verifications of the respective voluntary undertakings of Visa and MasterCard.
Department of Finance officials are currently undertaking consultations with various stakeholders as part of the assessment, including with small businesses.
Earlier this year, the Canadian Federation of Independent Business and MasterCard announced an agreement that would help reduce the cost of credit card acceptance for CFIB members. This deal will provide relief for small businesses.
The government's continued oversight of the financial services sector aims to ensure that it remains stable and competitive, and that it meets the needs of consumers and businesses in a way that supports our belief that when we have an economy that works for the middle class, we have a country that works for everyone.