Archived - Minister of Finance issues statement on voluntary Visa and MasterCard proposals

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November 4, 2014 – Ottawa, Ontario – Department of Finance

The Honourable Joe Oliver, Minister of Finance, made the following statement:

“Today, Visa and MasterCard submitted separate and individual voluntary proposals to reduce their credit card fees to an average effective rate of 1.50% for the next five years.   As Minister of Finance, I welcome their proposed reductions.

“In total, the two commitments represent a reduction in credit card fees of approximately 10%.  These commitments represent a meaningful long-term reduction in costs for merchants that should ultimately result in lower prices for consumers.

“As a result of the voluntary proposals, there is no need for the Government to regulate the interchange rates set by the credit card networks.

“The proposals from Visa and MasterCard will:

  • Voluntarily reduce their respective credit card fees for consumer cards to an average effective rate of 1.50% for a period of five years.  
  • Ensure that all merchants receive a reduction in credit card fees. 
  • Provide a greater reduction for small and medium sized enterprises and charities, which have the least amount of bargaining power.    
  • Require annual verification by an independent third party to ensure compliance. 

“Visa and MasterCard have committed to start implementing these reductions no later than April 2015.

“American Express has not submitted a proposal to reduce their credit card fees.  American Express has a different business model than Visa and MasterCard. It negotiates its fee directly with merchants and merchants know their cost each time they accept an American Express credit card.

“American Express was not part of the probe by the Competition Bureau.  However, I am pleased to see that American Express has committed to maintaining its current business model.

“Nevertheless, if there is a fundamental shift in the marketplace and it is determined credit card networks other than Visa and MasterCard exert market power or will soon exert market power, the Government will expect that those networks voluntarily commit to reduce their credit card fees in line with the current voluntary proposals submitted by Visa and MasterCard.

“The purpose of these voluntary commitments is to reduce the cost of credit card acceptance for merchants in order to keep prices low for consumers.  If the reductions in interchange fees are not passed along to merchants or the overall cost of accepting credit cards increases at any time during the period covered by these commitments due to actions taken by Visa or MasterCard, the Government reserves the right to rescind its acceptance of the voluntary commitments.

“If Visa or MasterCard do not comply with their public commitments the Government will take all necessary measures to keep prices low for all consumers.

“The Government is currently examining potential changes to the voluntary Code of Conduct for Debit and Credit Cards, which it hopes to announce in the near future.”

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