BY his own admission, Ralph Warrington travels a lot, and he pays for many expenses with his credit card. Yet the 68-year-old Winnipeg man spotted a charge on one of his recent card statements that led to a startling discovery.
An item carried a charge higher than Warrington expected. He did some investigating and found his bank had charged him a fee of 2.5 per cent, not only on the item Warrington had spotted, but also on each transaction he had made with his credit card outside Canada.
The finding left him miffed. But what surprised him was the reaction of his friends at the golf course, his accountant, even his banker. Almost none of them knew such credit-card foreign transaction fees existed, let alone were mentioned, as Warrington was told, in the fine print of card application forms.
"Ninety-nine per cent of people don't realize that if you use your VISA, for example, outside of Canada, there's a two-and-a-half per cent upcharge," Warrington said. "A handling fee."
Warrington tried to vent his anger in a letter to the Free Press. In it, he pointed to a question with troubling implications. How many Manitobans, he wondered, would return home from a cross-border shopping trip on the coming Labour Day long weekend to make the discovery he had made?
Canada's dollar has climbed in value in the last several months, inching to a level almost at par with its U.S. counterpart. But the service fees Canadian banks charge to convert foreign purchases to Canadian dollars stand to take some of the lustre off this country's new buying power.
Moreover, one financial analyst said Tuesday that such fees are part of the continuing unfair treatment Canadian banks give their customers.
"The banks have not justified that their costs in any way come close to the fees they charge," said Duff Conacher, an Ottawa-based spokesman for the Canadian Community Reinvestment Coalition, a group advocating for increased accountability of Canadian banks.
"What the federal government should be doing is requiring the banks, which provide essential services, to prove their prices are fair," Conacher said.
On the matter of basic banking fees, Canadian banks have either said they don't know their costs, in which case their fees are arbitrary, or they do know their costs, but won't reveal them, Conacher said.
"No business has a right to gouge, and the burden of proof is on the business, especially when they're providing an essential service," he said.
Tania Freedman, a spokeswoman for VISA Canada, said foreign transaction fees levied on credit-card holders come from the banks themselves.
VISA, whose cards are licensed to 25 financial institutions in Canada, charges its member institutions a one-per-cent fee to convert foreign purchases to Canadian dollars, said Freedman, the company's director of corporate communications. She would not comment on how banks turn around and charge consumers 2.5 per cent to convert foreign transactions.
A national spokeswoman for Scotiabank declined to comment on foreign transaction fees. Such fees, from a wide array of banks, are available for review on the Financial Consumer Agency of Canada's website at www.fcac-acfc.gc.ca.
VISA uses what's known as a "wholesale currency exchange rate" based on advance currency rates to try to keep foreign transaction costs down, Freedman said.
On Ralph Warrington's bill, however, the cost of foreign shopping appeared to go up instead of down.
"The question is: How many people actually see that?" Warrington said.
joe.paraskevas@freepress.mb.caFee facts
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