MasterCard, Visa to cut fees for Canadian merchants, government says
TORONTO (Reuters) - Visa Inc and MasterCard Inc voluntarily agreed to cut the fees they charge to Canadian retailers for credit transactions, the government said on Tuesday, adding it now sees no need to regulate fees set by credit card networks.
The Canadian government said the agreement, which industry sources last week confirmed was in the works, should result in lower prices for consumers.
Canadian retailers have long bemoaned the high interchange fees they pay credit card companies and banks for transactions.
Unlike American Express, which typically negotiates a flat fee with every merchant, Visa and MasterCard have variable fees based on the status of their different cards. Small retailers say this hurts them as they are never sure on whether they are going to be billed 1 or 3 percent on any given transaction.
Canada's Conservative government pledged earlier this year to promote lower credit card acceptance costs for merchants. And Finance Minister Joe Oliver said in September the government wanted credit card companies and banks to voluntarily agree to a deal.
On Tuesday Oliver said he welcomed the decision, which will trim fees to an average effective rate of 1.5 percent for the next five years, reducing overall fees by about 10 percent.
"As a result of the voluntary proposals, there is no need for the government to regulate the interchange rates," the government said, adding that Visa and MasterCard have agreed to start implementing the reductions no later than April.
The deal was panned by Canada's main opposition party, who said the move let down consumers or small businesses and noted that Canada's Competition Tribunal had specifically called on the government to regulate the fees.
"We can't allow companies to set their own disciplinary measures," New Democrat parliamentarian Annick Papillon said in a statement, dubbing the government's decision a "shameful climb-down." Continued...