As members will know from news reports, last week there were a couple of major developments with respect to the issue of credit card fees. Both Visa and MasterCard made announcements that the audits they had conducted, indicated that after one year, they were meeting the target established by the previous government, of providing retailers with an overall rate reduction to 1.5%. The next day, Walmart announced that they were expanding their markets to where they would refuse to accept Visa cards, in this case, the entire province of Manitoba.
As CFIG and the Small Business Matters Coalition has pointed out, we know many of our members are not seeing an overall rate of 1.5%. Besides, we believe that even that rate is unacceptably high and should be more aligned with the 0.3% rate that is regulated in other jurisdictions. We also know that if Walmart is feeling the squeeze of high credit card fees, then it should give everyone an idea of how this disproportionately impacts smaller businesses, who by the way do not have the market dominance that would allow them to shut off credit card use in their stores.
The Minister of Finance has responded by announcing a review of the fees and in a departure from the approach of the previous government, this will be a review not conducted by the credit card companies themselves and one in which CFIG and our Coalition will play a significant role.
It is worth noting that the events of last week were only a small part of the efforts we have been putting forward over the last year on this issue – before Walmart arrived on the scene. In fact, as a result of CFIG’s work, both Visa and MasterCard announced further reductions earlier this year (see link to communication we received from Visa).
Beginning in October, the overall VISA interchange rate for grocery is being reduced by a further 10 basis points to 1.23%. MasterCard promised further reductions back in June, but CFIG has not received details of their reduction.
As we continue to battle on your behalf in the months ahead as part of the new government review, it is imperative that you play close attention the overall rates you are paying for both Visa and MasterCard.
Again we are providing you with this link to the template response by which you can let us know what progress is being made on your own bottom line. We keep all responses confidential and only use the information on an overall aggregate basis, so that we can make factual judgements on how well, or not well, our members are doing on fee reduction targets.
Providing this data will help us continue pressing for more downward pressure on rates and putting more of the $5 billion paid annually in fees by retailers, back into allowing you to remain price competitive, reinvest in your businesses, generate more employment in your community and continue sourcing local products.
© 2017 Canadian Federation of Independent Grocers