The gap between what small retailers pay and what big companies pay has been called inexcusable
Small business advocates say the government’s mention of credit card fees in Thursday’s fall economic report is a positive step, but won’t help businesses deal with rising costs in the short term.
According to the financial update, the government plans to start negotiations with payment networks, financial institutions, companies and other stakeholders on reducing credit card payments for small businesses.
Small business advocates have long called for action on these fees, which they say are harder for small businesses to swallow and are becoming an increasing problem as customers move away from cash.
The financial report said the government will publish draft amendments to the Payment Card Online Act, and if the industry can’t reach an agreement in the coming months, Ottawa will introduce legislation to regulate credit card transactions in the new year. payments instead.
Gary Sands, vice-president of the Canadian Federation of Independent Grocers, praised the federal government’s decision.
While he believes action could have been taken sooner, he said the threat of legislation could provide a strong incentive for stakeholders to reach an agreement in the coming months.
“I think it’s a big step forward,” he said.
“It shows very clearly that the government is committed to finally getting a solution to this issue.”
Sands has been advocating action on credit card payments for years and said the gap between what small retailers pay and what big businesses pay is “defensible”.
On Thursday, the government announced in a separate announcement that it would launch a series of negotiations on the costs of small businesses, the financial stability of the digital world and the fairness of taxation. These negotiations include negotiations on credit card payments.
The Payment Card Networks Act currently states that the federal government can make regulations regarding payment card networks, including regulations regarding disclosure, notification and pricing conditions.
Provisions would be added to the bill published on Thursday, among other things, that the government can issue regulations to determine the payment ranges and maximum amounts.
The government’s position was strongly expressed, but many details still need to be fleshed out, said Karl Littler, vice-president of public affairs at the Retail Council of Canada.
According to him, the measures aimed at reducing credit card fees must affect all companies, because the fees are paid by companies of all sizes and ultimately by their consumers.
He said it’s important to frame credit card payments as a consumer issue because consumers pay the bulk of the payments, which are close to $10 billion across Canada.
The Canadian Federation of Independent Business (CFIB) said in a written statement Thursday that the government’s fiscal update included a stronger commitment to lower credit card processing fees for small businesses.
However, CFIB President Dan Kelly said he is concerned that easing payments may be too slow to help inflationary pressures on existing small businesses.
New rules went into effect in October allowing businesses to add surcharges to credit card transactions, but the CFIB report found many business owners were unsure whether to do so for fear of losing customers.
The rules do not reduce fees charged to businesses, many of which have already added fees to their retail prices.
Kelly said the direction taken in the government’s economic statement is broadly positive and should encourage talks with card networks and banks for early trading.
Small business advocates also argue that large companies are often charged lower fees, making prices unfair to small and medium-sized businesses.
The government launched negotiations on reducing corporate credit card fees in August 2021, as the pandemic rapidly increased electronic payments and online transactions. At the time, it admitted that because SMEs have less bargaining power than large companies, they are therefore charged transaction fees that are “the highest in the world”.
However, Littler disagreed, saying most companies pay similar fees, with a few big-name exceptions.
Other jurisdictions, including Australia and the European Union, have already moved to reduce fees by capping the amount charged to businesses.
— with files from Ian Bickis
This report by The Canadian Press was first published on November 4, 2022.
Rosa Saba, Canadian Press
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