Canada’s government is pushing Visa, MasterCard and banks to accept lower interchange fees paid by Canadian retailers, which the government claims are currently among the highest in the world, Bloomberg reported on Thursday (Sept. 4).
Officials from Visa and MasterCard have held talks with government officials in Toronto, and an agreement could be reached as early as this month, according to unnamed sources. Canadian Finance Minister Joe Oliver is reportedly reluctant to impose regulations and wants an industry-led solution to reduce interchange rates, which currently range from 1 percent to 2.65 percent of each transaction.
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Canada’s competition bureau sued Visa and MasterCard in 2010 over rules that do not allow merchants to encourage shoppers to use cheaper payment options, and prevent them from applying a surcharge on higher-cost cards. A tribunal dismissed the case in 2013, saying the “proper solution” is a regulatory framework.
The government wants the card brands to voluntarily cut interchange fees by about 10 percent. But while cuts would lead to lower costs for retailers, they would also erode revenue for banks, which say cuts might force them to reduce card-holder benefits or eliminate cards.
Another sticking point is how the card brands coordinate any reductions, given that MasterCard typically charges a higher fee, according to one Bloomberg source.
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