Industry committee  I will answer the question you said I didn't answer--what would happen?--and then I'll come to your present question. What would happen if nothing is done in terms of price regulation? The trend is very clear. From the empirical data, the percentage of transactions accepted by cash or cheque is going to continue to decline.

Finance committee  I will answer the question you said I didn't answer--what would happen?--and then I'll come to your present question. What would happen if nothing is done in terms of price regulation? The trend is very clear. From the empirical data, the percentage of transactions accepted by cash or cheque is going to continue to decline.

Industry committee  I have two quick responses. I have looked at several studies, including the Bank of Canada study, and I have looked at it with a couple of chartered accountants from the school. I believe that every study that's been done on the cost of payments has radically under-estimated the cost of cash, because they have not factored in the cash custody required—safes, two people counting the cash, and so on.

Industry committee  I have looked at it. In fact, DBRS has a beautiful study that came out only three months ago. Remember that 70% of all cardholders pay off their credit card in full within the 30-day interest-free period, so they're not getting the 19%. Their effective gross yield is 13%; then you deduct costs of funds and you deduct the charge-off rate.

Finance committee  I have two quick responses. I have looked at several studies, including the Bank of Canada study, and I have looked at it with a couple of chartered accountants from the school. I believe that every study that's been done on the cost of payments has radically under-estimated the cost of cash, because they have not factored in the cash custody required—safes, two people counting the cash, and so on.

Finance committee  I have looked at it. In fact, DBRS has a beautiful study that came out only three months ago. Remember that 70% of all cardholders pay off their credit card in full within the 30-day interest-free period, so they're not getting the 19%. Their effective gross yield is 13%; then you deduct costs of funds and you deduct the charge-off rate.

Industry committee  Can I respond to that?

Industry committee  You said one thing that caught my attention. You said the merchants are pawns, implying that they have no choice. I will test your theory. Is any merchant forced to take credit or debit? No, they can take cash or cheque, but they choose not to because they know deep down that cash and cheque are far more expensive than debit or credit.

Finance committee  Can I respond to that?

Finance committee  You said one thing that caught my attention. You said the merchants are pawns, implying that they have no choice. I will test your theory. Is any merchant forced to take credit or debit? No, they can take cash or cheque, but they choose not to because they know deep down that cash and cheque are far more expensive than debit or credit.

Industry committee  Actually, I would take the opposite tack. It is a reduction, a discount on the purchase. People who buy big ticket items know this: that when they go into the car dealership, they can negotiate a deal better than some other customer. So this is a diminution.

Industry committee  I'm not dealing with the Income Tax Act. I am not a tax accountant, nor a tax lawyer. I'm dealing with the strategic decision by companies.

Industry committee  I don't want to duck the issue. I want to confront it head on. I just don't want to deal with the tax issue. If you want—

Industry committee  First off, when you're buying something, you're buying it out of after-tax income. If I buy an airplane ticket, and then you, as Parliament, want to tax me on the savings, you're taxing me twice, because I've already bought the ticket out of net income.

Industry committee  I'll respond to it very quickly. There are loyalty programs throughout the economy. At Carleton University we have coffee shops and they give out a card, which they punch every time you buy a coffee, and the tenth coffee is free. It's the same concept as getting a discount on your credit card.