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Flaherty promises clarity on card fees

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OTTAWA -- The federal finance minister is stepping into a fee dispute between Canada's merchants and the big credit card companies after the Competition Tribunal sided with Visa and MasterCard in a landmark ruling.

Jim Flaherty said Tuesday in light of the ruling, he will convene a special meeting of the government's FinPay Committee -- a consultative body on payments issues that includes representatives from consumer, small business and retail groups, as well as the credit card industry.

The Competition Bureau had brought a complaint to the tribunal that the credit card companies exert too much power in forcing merchants to accept credit cards that carry higher processing fees.

Those fees are among the highest in the world, according to the bureau, adding up to between $5 billion and $7 billion annually.

But the tribunal dismissed the case Tuesday, saying its reasons, at least for now, are being kept under wraps.

"The tribunal's reasons are confidential at this time in order to protect properly confidential evidence," it said in a statement.

"A public version of the decision will (be) issued as soon as possible after a determination as to what information must remain confidential has been made."

In a summary of its decision, the tribunal made two findings.

First, it found Visa and MasterCard did not violate Section 76 of the Competition Act, which would require merchants resell credit-card products.

However, it also found restrictions imposed on merchants by Visa and MasterCard, preventing them from applying a surcharge on those customers paying with credit cards, may have had an adverse effect on competition.

Still, the tribunal rejected the complaint on that basis, placing the ball in the government's court.

It said regulatory change is the proper solution to concerns raised by the commissioner about anti-competitive behaviour on the part of the credit card companies.

And it suggested there would be a consumer backlash should merchants be allowed to impose surcharges on customers using cards that carry higher interchange fees.

"In that regard... the experience in other jurisdictions showed that concerns would be raised by consumers regarding surcharging and that sooner than later, intervention would have to take place by way of regulation."

In response, Flaherty said Canada's small-business owners and consumers "deserve clear information and fair and transparent rules on the type of payment system they use."

The minister added while he reviews the tribunal's decision he will monitor any potential appeal.

The ruling will benefit consumers, who will not have to face additional costs for using credit cards that offer reward points, said MasterCard Canada president Betty Devita.

"The ability to do (transactions) without having to think about whether or not there will be a surcharge or confusion at the checkout is positive for both consumers as well as merchants," she said.

Small businesses were hoping the case would provide merchants new powers to push back against rapidly rising credit card processing fees, said the Canadian Federation of Independent Business.


-- The Canadian Press

Republished from the Winnipeg Free Press print edition July 24, 2013 B6

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