Ottawa to review credit card practices
Canadian lawmakers have announced legislation that would regulate the
credit and debit card industries. Canadian Finance Minister Jim
Flaherty hopes the new measures will give Ottawa the power to prevent
the credit card industry from gouging retailers. The powers of this
proposed legislation would only be used if the industry failed to
comply with a new code of conduct, said Flaherty. Debit card fees, too,
could face regulation, following the entry of Visa and MasterCard into
the debit card arena.
Without any legislation in place, the sky's the limit on escalating Visa and MasterCard merchant interchange fees, forcing retailers to pass the fees on to consumers. Such unattractive pricing, in turn, may force some retailers to close their doors.
Canada's new budget has proposed that the Federal Consumer Agency of Canada be granted the authority to monitor the credit card industry's compliance with the voluntary code of conduct. A special task force will be in charge of reviewing the payments system, filing a report at the end of 2011, the government announced.
"It tells us they know the system is broken," says Diane Brisebois, president and CEO of the Retail Council of Canada and head of the Stop Sticking it to Us Coalition.
The Canadian Federation of Independent Business has also welcomed the proposed changes, but is concerned that the federal consumer agency won't have enough power to enforce the new code, which was drafted last November. It's possible that the code may ban Visa and MasterCard from using the nonprofit Interac network for their card transactions, forcing them back to the drawing board.
MasterCard has said it is recommending few changes to the stricter regulations, while Visa is opening the door for further discussions in Ottawa.
Written by Melanie Dixon.
Most recent Legal, regulatory, privacy Stories
- Should you use your inheritance to pay down debt? -- If you're set to receive an inheritance, should you use it to pay debt, or to pad savings? ...
- Why you should donate to crowdfunding campaigns with caution -- Donating to your friend's sister's GoFundMe might not be as harmless as you think. Here's why ...
- Are you being tricked into applying for credit? -- If you've ever been offered a loyalty card that turned out to be a credit card, you know it's frustrating. But it's also illegal ...