Dear editor,

While Finance Minister Jim Flaherty has finally taken some action against abusive business practices of pre-paid credit cards, he continues to ignore the elephant in the room: outrageous credit card fees that cost small businesses billions every year.

Each year, Visa and Mastercard charge businesses an estimated $5 billion through hidden fees. These fees range from 1.5 percent to 3 percent on each purchase, which is almost twice the fee charged to Europeans, New Zealanders, and Australians. In contrast, Interac charges a flat fee of approximately 12 cents, regardless of the value of the purchase.

For example, a three percent hidden credit card fee on a $500 iPad is $15. But if you use a debit card instead, the fee is only 12 cents. You can probably guess where the money to pay these extra fees comes from.

Because credit card companies use their market power to prevent businesses from charging fees on transactions made with Visa or Mastercards, merchants have little choice but to embed those cost in the prices of goods sold to all customers. The real impact of hidden credit card fees is that everyone pays higher prices, regardless of how they pay.

The Liberal Party has been calling for tougher rules for years, but Minister Flaherty has not only been ignoring this problem, he has worsened the situation. He has allowed card issuers (the banks) to offer both Visa and Mastercard, rather than one or the other. This has created a perverse situation whereby these companies now compete to offer higher fees to banks, with the extra costs once again being passed off to small businesses and their customers.

Things are getting even worse, with Visa set to introduce “ultra-premium” cards with even higher fees next year. It is long past time that the Conservative government take action against the anti-competitive practices of credit card companies. It wouldn’t cost taxpayers a dime and would save small businesses and consumers billions.

Yours sincerely,

Joyce Murray, MP

Liberal Party of Canada Critic for Small Business



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