CFIB bids to block ‘big cash grab’ by credit-card giants
Wendy Mclellan
Province
Visa and MasterCard are about to change the way they charge merchants for credit-card transactions, which worries Dane Baspaly, who owns a clothing store on Main Street. Gerry Kahrmann – The Province
Canada‘s two major credit-card companies rejected claims made yesterday that adding debit card options to Visa and MasterCard offerings would lead to massive fee increases for merchants.
The Canadian Federation of Independent Business launched a national campaign yesterday to lobby against allowing the two credit-card companies to add debit cards to their products, and to protest credit-card transaction-fee increases planned for next month.
Both Visa and MasterCard offer debit cards in the U.S. and in other countries worldwide, but in Canada, the debit-card system is managed by a not-for-profit national network and members pay a low, flat fee per transaction. The CFIB claims the credit-card companies will change the fee structure to a fee based on the value of each transaction, which is the way merchants are charged for credit-card transactions.
The organization, which represents independent businesses, says the change could cost merchants 10 times more for each debit-card transaction.
“This is basically a big cash grab and it will put more money in the pockets of Visa and MasterCard,” said Laura Jones, the CFIB’s western vice-president. “These are big, big increases in fees and it will ultimately lead to price increases for consumers.”
But a written statement from MasterCard Canada says the CFIB is jumping to conclusions.
“[The] statements are founded on rumour and speculation at best, or a complete lack of information at worst,” the statement said. “It is premature and irresponsible for anyone to incite fears that are unfounded.”
The statement from Visa Canada was slightly less critical: “Since Visa debit cards are not issued in Canada, interchange rates have not been set. Any speculation about debit interchange rates is both premature and inappropriate.”
The CFIB says the credit-card companies increased their transaction fees to merchants in June, and will increase them again on Oct. 1. Visa and MasterCard have also introduced different fees depending on the credit card, which means merchants have to pay more when customers use a corporate card or one of the specialty gold cards.
“It’s all being done without a lot of transparency,” Jones said.
“Most businesses are not going to reject credit cards — they don’t want to make things inconvenient for their customers. But these are big costs for small business owners and some of them will likely be passed on to the consumer.”
Vancouver retailer Dane Baspaly said his little shop can’t absorb many more costs for accepting credit cards, but asking customers to pay cash for their purchases would kill his business.
“I’m getting a little nervous,” said Baspaly, who owns a Main Street clothing store called Lark with his wife, Veronika. “I’ve had a letter about the transaction fee increases, but it’s not clearly worded. You can smell what’s coming down and it’s not good.”
