REPORT OF THE COMMITTEE

Tuesday, April 21, 2015

The Standing Senate Committee on Banking, Trade and Commerce has the honour to present its

NINTH REPORT

Your committee, to which was referred Bill S‑202, An Act to amend the Payment Card Networks Act (credit card acceptance fees), has, in obedience to the order of reference of Tuesday, March 25, 2014, examined the said bill and now reports as follows:

Your committee believes there is a necessity to have fairness in the realm of credit card acceptance fees.  Lower fees can reduce the burden on merchants, especially those of small and medium sized businesses.

Your committee understands the motives underlying Bill S-202’s approach and applauds the bill’s sponsor for her commitment in bringing the bill before Parliament and for her valuable contributions to your committees’ deliberations.

Pursuant to rule 12-23(5), your committee recommends that this bill not be proceeded with further in the Senate for the reasons that follow.

In 2010, a Code of Conduct for the Credit and Debit Card Industry in Canada was released by the government to promote merchant choice, transparency and fairness in the credit market.  The government was confident that industry would adopt the code voluntarily, which it did. The Minister of Finance, at the time, also indicated that the government maintained the legal authority to regulate the industry if necessary.

Appearing before the committee, Department of Finance officials reiterated the support that merchants and merchant associations expressed with the implementation of the Code of Conduct.

On November 4, 2014, Visa and MasterCard submitted separate and individual voluntary proposals to the Department of Finance committing to: reduce their respective credit card interchange fees for consumer cards to an average effective rate of 1.50% for a period of five years, ensure that all merchants receive a reduction in credit card fees, provide a greater reduction for small and medium sized enterprises and charities, and require annual verification by an independent third party to ensure compliance. 

As changes to the Canadian credit card industry are continually unfolding in a voluntary manner, it is the opinion of the majority of the committee that government intervention is unnecessary at this time.

Respectfully submitted,

IRVING GERSTEIN

Chair