A credit card machine is displayed at Mercedes-Benz Stadium during a tour, in Atlanta. Small business advocates say the government’s mention of credit card transaction fees in the autumn economic statement is a positive step, but will not help businesses cope with rising costs in the short term. THE CANADIAN PRESS/AP-David J. Phillip Small business advocates say the government’s mention of credit card transaction fees in Thursday’s autumn economic statement is a positive step but won’t help businesses deal with rising costs in the short term. The budget briefing said the government intends to start negotiations with payment networks, financial institutions, businesses and other stakeholders to reduce credit card transaction fees for small businesses. Small business advocates have long pushed for action on these fees, which they say are harder for small businesses to swallow and are becoming more of an issue as customers move away from cash. The economic statement said the government is publishing draft legislative amendments to the Payment Card Networks Act and if the industry fails to reach an agreed solution in the coming months, Ottawa will introduce legislation in the new year to regulate credit card transactions. cards instead. Gary Sands, vice-president of the Canadian Federation of Independent Grocers, applauded the federal government’s move. 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 seeing a solution to this issue.” Sands has been advocating action on credit card fees for years, and said the gap between what smaller retailers pay and what big companies pay is “indefensible.” The government announced in a separate announcement on Thursday that it is launching a series of consultations on small business costs, financial stability in a digital world and tax fairness. These consultations include negotiations on credit card fees. The Payment Card Networks Act currently states that the federal government may make regulations regarding payment card networks, including regulations governing disclosure, notice and fee terms. The draft law published on Thursday will add provisions, including that the government can make regulations to set the scope and caps for the fees. The government’s position has been strongly stated, but there are still many details to be filled in, said Karl Littler, senior vice-president of public affairs for the Retail Council of Canada. He said any action to reduce credit card transaction fees must apply to all businesses, as the fees are borne by companies of all sizes and ultimately by their consumers. He said it’s important to frame the issue of credit card fees as a consumer issue, as consumers end up paying the bulk of the fees, which total close to $10 billion across Canada. In a written statement Thursday, the Canadian Federation of Independent Business (CFIB) said the government’s budget update included a stronger commitment to lower credit card processing fees for small businesses. But CFIB president Dan Kelly said he was concerned the fee relief might be too slow to help with the current inflationary pressures on small businesses. New rules came into effect in October allowing businesses to add surcharges to credit card transactions, but a CFIB report found that many business owners were unsure whether to do so for fear of losing customers. The rules do not reduce the fees charged to businesses, many of which already have the fees built into their retail prices. Kelly said the direction the government took in the economic statement was overall positive and should encourage negotiations with card networks and banks towards an early deal. Small business advocates also argue that large businesses are often charged lower fees, making prices unfair to small and medium-sized businesses. The government launched a consultation on reducing credit card fees for businesses in August 2021, saying the pandemic has rapidly increased online payments and transactions. At the time, he acknowledged that because SMEs have less bargaining power than larger firms, they are therefore subject to transaction fees that are “among the highest in the world”. But Littler disagreed, saying the vast majority of businesses pay similar fees, with a few big-name exceptions. Other jurisdictions have already moved to reduce fees by imposing caps on how much businesses can be charged, including Australia and the European Union.
