Canada About to Scrutinize Credit Card Fees

Canada’s Competition Bureau is turning its attention towards Visa and MasterCard and has opened an inquisition into the fees imposed on retailers by the card brands. The bureau alleges the fees are in violation of anti-trust rules and equal some $5 billion in the pockets of Visa and MasterCard.

The organization’s inquiry follows an application filed with the Competition Tribunal in 2010 to eliminate rules Visa and MasterCard forces on merchants. Canadian merchants that accept Visa and MasterCard can’t encourage customers from considering lower cost payments options such as cash or debit. From Finextra:

Canada has among the highest credit card fees in the world, with merchants that accept Visa and MasterCard paying a fee ranging between 1.5% and three per cent a purchase, nearly twice as much as counterparts in Europe, although slightly less than in the US, says the Bureau. In contrast an Interac debit transaction has a flat fee of around 12 cents.

It should come as no surprise this is happening in Canada, where consumers heavily favor debit cards. When the competition bureau filed its complaint in 2010, it was around the same time credit card reform was happening in the U.S. as well as the initial talk about cutting debit interchange fees. Observers here believed it was only a matter of time before Canada followed with some kind of changes of its own.

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