Candidates slam credit card companies
Published Wednesday October 1st, 2008
Merchant fees | Local businesses, chamber of commerce not impressed
Federal Conservative candidate Keith Ashfield says he supports small-business owners in Fredericton who are upset about hikes to Visa and MasterCard merchant fees.
"The fees charged to merchants by the credit card companies are way out of line," said Ashfield.
"The merchants, who are mostly small businesses, will be able to absorb these extra costs for only so long. At some point, they'll have to be passed on to the consumer."
Local businesses and the Fredericton Chamber of Commerce support a national campaign organized by the Retail Council of Canada and the Canadian Federation of Independent Business to protest hidden fees on new premium credit cards.
Many consumers don't realize that when they swipe reward charge cards such as a Visa Aerogold Infinite - which offers perks such as free travel insurance - the merchant accepting the card gets hit with a higher-than-normal combination of fees and surcharges.
In some cases, merchants don't know what the surcharges billed to them will be because credit card companies and banks calculate
surcharges based on the spending levels and habits of individual cardholders.
"The lack of transparency is almost as bad as the extra fees," Ashfield said.
"From what I can find out about these new merchant fees, they'll be completely hidden from the cardholder. The merchants themselves won't even know what fees they're being charged until they receive their monthly statements.
"Why all the secrecy? Because the credit card companies know full well they're fee-gouging."
Ashfield said the Retail Council of Canada and the Canadian Federation of Independent Business are lobbying for their members, and he supports their campaign.
"Canadians pay some of the highest credit card fees in the world.''
If Ashfield is sent to Ottawa as the federal MP for Fredericton, he said he would support a review of legislation or regulations to improve transparency in the banking industry and credit card companies.
"I think the events on Wall Street these past few weeks show what can happen when financial companies get greedy and no one is watching,'' said Fredericton Liberal candidate David Innes.
The crisis speaks to the need for oversight of the banking industry and Innes said he'd support a review that includes the credit card industry.
The public has a right to be better protected and it behooves government to assume that role, he said.
MasterCard Canada sent a letter to The Daily Gleaner challenging retailers' claims.
"Just as retailers and independent businesses adjust prices from time to time in response to various market circumstances, card fees require adjustment as well," said Tony Maraschiello, director of corporate and government affairs with MasterCard.
"The recent adjustments to merchant fees for consumer cards are the first in seven years and not all of the recent adjustments resulted in increased cost to the merchant. In fact, many of the adjustments will reduce merchant fees.''
He said it's the Retail Council of Canada and the Canadian Federation of Independent Business that are
attempting a cash grab from consumers by calling for government regulation.
"In Australia, where such regulation occurred, retailers did not pass on cost savings to consumers and many instituted surcharges on purchases," he stated.
"Consumers saw annual fees for their cards rise and benefits decline."
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