Consumers cheer, Ottawa to weigh in after tribunal rejects credit card fee case

Canadians holding those point-collecting premium credit cards won’t have to pay extra for the privilege, at least not yet.

While Canada’s Competition Tribunal has dismissed a complaint against Visa and MasterCard for not allowing retailers to slap surcharges on credit card purchases, it has passed the buck to Ottawa.

Finance Minister Jim Flaherty quickly vowed to review the decision, monitor the anticipated appeal, and is calling for a special meeting of the so-called FinPay Committee, which includes credit card industry representatives, small business, retailers and consumers.

That will be quite the raucous event given the strong reaction to Tuesday's decision.

It’s considered a blow for retailers that wanted the ability to recoup from customers the extra fees they are charged by credit card companies for accepting premium cards. It’s a win for credit card companies and banks that fought complaints their policies and surcharges were anticompetitive.

Consumers paying more than they should

Consumers also appear to benefit, assuming of course those extra card fees aren’t being added to the price of goods and services. Retail groups argue Canadians are paying more than they should at the cash register because of high fees. Consumer groups say surcharging has a history of abuse in places such as the United Kingdom and Australia, and consumers need protection.

The Consumers’ Association of Canada (CAC) argues merchants should honour all credits cards, without a surcharge.

“Consumers should not be asked to pay for the privilege of paying a merchant (other than for the cost of goods) in order to make a purchase," CAC president Bruce Cran said in a statement. "Merchants should remind their association representatives that they have no business without customers.”

Fees higher than profits?

Retailers estimate their credit card fees, which total more than $6 billion annually, have a negative impact on both merchants and consumers. For example, the Canadian Restaurant and Foodservices Association (CRFA) says a typical full-service restaurant pays more than $10,000 annually in credit card fees, which are charged on the meal, tax and tip.

“In many cases the credit card fees are higher than the restaurant's profit,” said CRFA president Garth Whyte.

Both sides do agree on one thing – that the federal government should step in and sort it out.

“We believe that it is time for regulations to do what cannot be addressed by either the market or voluntary guidelines,” said David Wilkes, the Retail Council of Canada’s senior vice president of government relations.

Let the lobbying continue.