Restaurant industry applauds government decisions to review card fees

(Mar. 18/09) CRFA applauds decisions by the Senate and the House of Commons Industry Committee to review debit and credit card fees for merchants.  On March 3, the Senate supported Senator Pierette Ringuette’s motion to have the Senate Committee on Banking, Trade and Commerce conduct a study on the credit and debit card systems in Canada, including the fees charged to businesses and consumers.  Two days later, the House of Commons Standing Committee on Industry, Science and Technology announced that a review of the proposed restructuring of Interac would be undertaken.

The restaurant and foodservice industry, which employs more than one million Canadians and generates just under 4% of the country’s gross domestic product, has been struggling with skyrocketing fees for processing credit card payments and with unfair business practices.

“In an industry where average profit margins hover around 4.2%, operators have a hard time absorbing credit card fees that have climbed as high as 3%,” says CRFA’s Vice President Labour and Taxation, Justin Taylor.  “And the situation is even worse in Ontario where margins are closer to 2.9%.”

In the past year, Visa and MasterCard have moved from a simple fee to a complex matrix system with different fees for different types of cards.  They have also automatically switched some cardholders to “premium” credit cards which offer additional benefits to cardholders at no additional fee but cost merchants significantly more to accept.

Also, Interac has recently signalled their intent to move from a not-for-profit entity to a for-profit one.  Merchants are concerned that this will lead to the same type of jump in fees that they have seen on credit cards.

“We hope that the review by the Senate and the House of Commons Industry committee will lead to improved business practices and fees charged to restaurants that are fair, transparent, and predictable,” says Taylor.

The need to take action on credit card fees was a key component of CRFA's pre-budget submission to the Minister of Finance, the Liberal Finance Critic and NDP and Conservative members of the Finance Committee.  In addition, CRFA has met with the Parliamentary Secretary to the Minister of Finance, the Chair of the Finance Committee, the Deputy Minister of Finance, the Deputy Commissioner of the Financial Consumer Agency of Canada, MP members of the Restaurant Caucus, and many other MPs and Senators on this issue. 

CRFA will continue to press government for action and encourages CRFA members to calculate the increased cost of credit card fees to your business and to communicate this information to members of Parliament.