Retailers want right to refuse credit cards

TORONTO – Canadian retail organizations are urging Ottawa to create a stronger code of conduct for the credit-card industry that would ensure merchants aren’t stuck with transaction costs when they accept Visa and MasterCard.

The Canadian Federation of Independent Business (CFIB) said Tuesday it is calling for new rules that give merchants more flexibility in what they accept at their cash registers.

The group, which has more than 100,000 member businesses across Canada, wants changes to the federally regulated code that would allow retailers the right to refuse highcost cards at their stores.

The CFIB also wants the ability for merchants to add limited surcharges that would counteract the transaction fees charged by some credit-card companies when customers swipe their higher-end credit cards, which rack up points that can be used for travel or other bonuses.

“Merchants have had a 30-percent increase in their costs in the last two years because of premium (credit) cards,” said Dan Kelly, the president and CEO of the CFIB, in an interview.

“Those additional costs are finding their way into their service. Consumers are paying these fees already, and they’re going up.”

The association is among those arguing against industry rules that force businesses who accept Visa or MasterCard to treat all types of their cards equally, regardless of the cost of processing the payments.

The issue has been of concern to the Competition Bureau, which argued in May that restrictive contracts that were put in place by Visa and MasterCard allow the two credit-card companies, which represent 92 per cent of the market, to essentially dictate terms to merchants.

The tribunal has the power to force credit-card companies to change their method of operations, but it cannot levy a monetary penalty in the case. A decision is expected this year.

Last week, a landmark settlement in the U.S. between Visa, MasterCard and merchants thrust the debate back into the spotlight in Canada.

The two credit-card companies, as well as several major banks, reached an agreement to pay U.S. retailers at least $6 billion to settle a long-running lawsuit that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards. The dispute stretched back to 2005.

Under last week’s settlement, the U.S. merchants will be allowed to charge their customers more if they pay with credit cards.“