Credit card changes a small business killer, MPs hear

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This article was published 03/06/2009 (6169 days ago), so information in it may no longer be current.

OTTAWA — Small businesses on Tuesday made a pointed plea to the federal government to side with them instead of the big banks and credit card companies in an escalating dispute over processing fees for credit card and debit transactions.

Warning that small grocery stores will go out of business unless Ottawa steps in to cap fees, the head of the Canadian Federation of Independent Grocers told MPs it’s time to stand with small business.

“Every political party at election time says small business is the backbone of our economy. Why would you do anything to damage their competitive nature?” John Scott told the special parliamentary probe into Canada’s credit card interchange fees and debit payment system.

He said small grocers have already seen their fees to process credit card transactions increase by up to 50 per cent with the flood of unsolicited premium cards sent to cardholders last year.

Premium cards cost merchants more to process than regular credit cards. The tiered interchange rate for different credit cards are set by Visa and MasterCard and passed on to the issuing banks.

Now, the credit card companies plan to enter Canada’s debit market by the fall to compete against the non-profit association Interac, which currently charges a nominal flat fee for each debit transaction.

Scott said some grocers won’t survive if Visa and MasterCard are permitted to entice banks to sign on to their new debit card with a promise of a higher interchange rate.

— Canwest News Service