Time to regulate credit card companies

When the Competition Tribunal dismissed a complaint from major Canadian retailers against credit card processing fees recently it wasn’t as surprising as it was disappointing.  For consumers and small business it means business as usual which includes hefty interest rates and transaction charges.

The Competition Bureau stated that it is up to the government to take action to better protect consumers and small businesses.  That likely means there won’t be any action since the Conservatives have refused to take strong regulatory action in the past.

It is disturbing that the Tribunal found evidence of anti-competitive behaviour in the marketplace but still dismissed the complaint.   Anti-competitive behaviour rigs the deck to ensure maximum profit for credit card companies but that comes with a significant price tag.  It hurts our economy and distorts business decisions, especially for small businesses that offer this convenient service to attract customers. 

Ultimately, the current arrangement leads to higher prices for consumers and smaller profit margins for businesses.  Whether a transaction is made with a credit card or not, the price will include an adjustment to compensate for the fact that Canadian businesses face the highest merchant fees of all major economies.

When first elected the Conservatives promised tough regulations for credit card companies.  Instead of creating an environment that forced these companies to actually compete in the spirit of a free market economy, they have created a voluntary code of conduct with predictable and disappointing results. 

New Democrats have consistently advocated changes to merchant fee regulations for credit card companies.  The evidence of price fixing should be enough to force the government to take action.  It is an opportunity to take a stand that would in no way cripple these lenders but make a difference for businesses and consumers.

In Northern Ontario small businesses face more challenges than those in larger urban centres.  Many operate on tight budgets and would benefit from a reduction in the cost of handling credit card transactions.  These businesses create wealth and jobs in our communities unlike credit card companies who act as siphons that move money out – which is one thing if it is being done in a fair and competitive manner and quite another when it isn’t.  

This should be a simple problem to address.  What is required is a government that has the fortitude to enforce regulations on an industry that shows no desire to change a thing – except for raising their fees and rates.