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Fees on premium credit cards must be held down, NDP urges

By: Terry Pedwell

Tuesday, Jan. 22, 2013 at 8:03 AM | Comments: 0

RYAN REMIORZ / THE CANADIAN PRESS ARCHIVES The hospitality industry says credit-card companies make more profit on a meal than a restaurant.

OTTAWA -- The federal Opposition called on the Harper government Monday to stop credit-card companies from charging businesses higher fees for using premium cards.

The call came as a federal competition tribunal prepared to rule on whether Visa and MasterCard are engaging in anti-competitive behaviour.

Small-business groups hope the tribunal will recommend Ottawa forbid the major credit-card companies to force retailers to accept cards that carry higher payment-processing fees.

The high cost of processing credit-card payments is hurting businesses, said Glenn Thibeault, the NDP consumer protection critic.

"Ultimately, this results in reduced profit margins for merchants and higher retail costs for consumers," he said in a statement.

Canadian companies already pay the highest credit-card processing fees in the industrialized world, although Canadians enjoy some of the lowest debit fees among G20 nations.

A Manitoba official with the Canadian Restaurant and Food Services Association said its members would welcome any kind of relief from high credit-card fees.

Dwayne Marling, the association's vice-president for Manitoba and Saskatchewan, said credit-card companies make a bigger profit on most restaurant meals than the restaurant operator because the profit margins in the industry are so small.

He said a full-service restaurant in Canada makes an average pre-tax profit of only 3.7 per cent on a meal -- less than the percentage fee the major credit cards charge operators when the customer pays a bill with a premium or ultra-premium credit card.

He said the fee is less on a basic credit card -- about three per cent, so at the very least, businesses should have the option of not accepting higher-fee cards. The credit-card companies' current policy is that if a business accepts one type of credit card, it has to accept them all, he said.

Marling said high credit-card fees are an issue for the industry because the vast majority of meals purchased in full-service restaurants are paid with credit cards.

"To put a hard number on it is a challenge, but we do know it is very large, and it's increasing."

A decision from the Competition Tribunal could allow merchants to add surcharges for accepting credit cards, or allow merchants to refuse to accept certain higher-cost cards. The tribunal ruling was expected earlier this month but has not yet been made public.

Visa and MasterCard hold about 92 per cent of the credit-card market in Canada. It's estimated the fees they charge businesses to use their cards add up to about $5 billion annually.

-- Canadian Press, with files by Murray McNeill

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