Canadians Will Not Pay More for Using Credit Cards
Canadian merchants will not be allowed to assess additional charges to consumers who use certain credit cards, according to a recent decision by the country’s Competition Tribunal.
Merchants had hoped to charge more for using certain credit cards than they do for other transactions as a way to combat the higher interchange fees being assessed on those cards. Premium cards with bonus incentives have higher swipe fees than other cards. Merchants wanted to recover some of these additional costs by charging more to consumers who used these cards.
But the Competition Tribunal dismissed a complaint against Visa and MasterCard, companies that had prevented retailers from assessing additional fees on consumers using these cards. Canada’s Finance Minister, Jim Flaherty will now review the decision.
The complaint that was in place alleged that consumers have had to pay an estimated $5 billion in hidden fees each year as a result of the confusion, and Canada’s Commissioner of Competition was determined to put a stop to that.
“Without changes to the rules, merchants will continue to face high costs for accepting credit cards, and all consumers, even those who use lower-cost methods of payment like debit or cash, will continue to pay higher prices,” said Commissioner Melanie Aitken.
Some merchants were hesitant to charge more for specific credit card transactions because they knew that would lead to a bad customer experience. However, they did want to have the option to block credit cards with high interchange fees.