The Department of Finance said the federal government has not abandoned the Liberal commitment to lower the fees merchants pay every time a buyer pays with a credit card.
The Liberals promised in the spring budget to consult on the proposed changes, which they did over the summer.
Finance Minister Chrystia Freeland was supposed to outline next steps, including the legislative changes needed to regulate fees, in her economic update earlier this month.
But the update didn’t mention the merchant fees.
Freeland’s department said it was continuing to engage with everyone affected by any changes and that any updates “will be provided in due course.”
Business associations have said they are seeking federal action to ease costs for already strained small and medium-sized businesses, and hope the fee-cutting plan does not bring down the government’s agenda.
The Liberals promised to cut fees during the 2019 election campaign, but the pandemic appears to have sidelined plans like so many other federal priorities.
After the Liberals made a budget commitment to get things done, Freeland approved a pre-summer consultation plan that was presented to him in a briefing note.
This memo, obtained by The Canadian Press under the Access to Information Act, reviewed the history of the problem and how the government had previously obtained Visa and Mastercard to voluntarily reduce their interchange rates, first in 2015 and again in May.
Typically, rates range from about one percent to just under three percent of the value of a purchase.
The actual amount is determined by several factors including the industry of the merchant, whether the purchase was made in store or online, and the type of card used with premium cards charging higher fees. All of these fees help credit card issuers like banks cover costs, but also improve bottom lines.
“Credit cards are very profitable and further reductions in interchange rates will likely have a negative impact on issuer revenues,” officials wrote in a June presentation, attached to Freeland’s briefing note.
Costs for merchants have jumped during the pandemic as more people use credit cards for online purchases, and even small in-store purchases that would previously have used cash as a drink and a drink. snack.
Anne Kothawala, president and CEO of the Convenience Industry Council of Canada, said paying fees has become much more difficult because of the pandemic as more customers pay with plastic even though revenues are falling. lagging behind.
âWe have long argued that banks should not be able to impose their costs on convenience stores and other small businesses,â Kothawala said.
âOne of the most important ways for the federal government to help businesses that have been affected by the pandemic is to significantly protect retailers from this total imbalance of power. “
Kothawala also said she believes fee reductions should be legislated, fully transparent and consistent in their application so that different players in the system do not have the opportunity to pass the extra costs on to small businesses.
Karl Littler, senior vice president of public affairs for the Retail Council of Canada, estimated the cost to merchants to be around $ 10 billion, up from about $ 7 billion before the pandemic.
Littler said he still expects the government to act sometime in 2022, and suggested that part of the delay could be due to the Liberals looking into whether the voluntary model used previously is still fit for use now.
âI believe they will reduce it. I don’t think it will drag on for three or four years, âhe said.
âJordan Press, The Canadian Press