Canada seeks voluntary bank agreement to lower credit card costs

Thu Sep 4, 2014 3:48pm EDT
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By Leah Schnurr

TORONTO (Reuters) - The Canadian government wants credit card companies and banks to voluntarily agree to lower transaction fees paid by retailers, and to do so within months, Finance Minister Joe Oliver said on Thursday.

"We've said in last year's budget that the government will work with stakeholders to promote fair and transparent practices and to help lower credit card acceptance fees for merchants and also to encourage merchants to reduce prices for consumers," Oliver told a news conference.

"We would like to see this proceed on a voluntary basis at this point ... We're looking at months, not years, obviously," he said.

Oliver also said he was encouraged by renewed economic growth in the United States but said this needed to be sustained before Canadian businesses would commit to major capital expenditures, something critical for economic growth.

Asked whether he had met the credit card companies or banks to discuss lowering fees, Oliver replied: "We have had meetings, yes." Pressed as to the timing, he said: "The last little while."

The so-called interchange fee is set by the payment networks and is passed along to card issuers, which include banks.

The Canadian government promised in its budget released earlier this year to take steps to promote lower credit card acceptance costs for merchants.

The government said merchants pay fees ranging from approximately 1.5 percent to 4 percent of the value of credit card payment transactions, costs which are passed on to consumers in the form of higher retail prices. Canada has among the highest credit card acceptance costs in the world, according to the government.   Continued...

Canada's Finance Minister Joe Oliver poses for a portrait in the Canadian High Commissioner's official residence in London June 23, 2014.  REUTERS/Neil Hall