WATCH: Finance Minister Joe Oliver on Monday announced an expansion of a “code of conduct” that governs credit-card companies.
Finance Minister Joe Oliver introduced on Monday an expanded “code of conduct” or guidelines that govern credit card companies, such as Visa and MasterCard, and their dealings with consumers and businesses.
The biggest of the changes, at least from the perspective of everyday consumers, is the enshrining of a rule that lowers transaction fees charged by credit card companies to merchants such as big department stores down to mom-and-pop convenience shops.
The move, which will slash credit-card processing fees paid by merchants by 10 per cent, should help lower prices for shoppers, Oliver said.
“Every time merchants accept a credit card payment from a customer, they pay fees. Like any other business cost, these fees are often passed on to consumers in the form of higher prices,” the minister said at a press event in Toronto.
Mobile payments
Another important part of Monday’s announcement, experts said, was the extension of the code into mobile payments made using smartphones, a payment option that remains in its early days but is growing. Merchant fees and agreements that apply to card-based purchases at the point of sale must now be identical for payments using phones.
Oliver also opened a new public consultation seeking comment on mobile payments in a possible precursor to deeper regulations. “We want to hear from consumers on the way they pay,” the minister said.
Other rules announced Monday included a stipulation to better inform consumers who opt for premium credit cards about the fees those cards come with, Oliver said. Such cards, which can cost hundreds of dollars a year in annual fees, must also come with “new branding requirements,” the minister said.
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WATCH: Will benefits of new credit card rules be passed on to consumers? Global’s Mike Drolet asks the minister.
The Harper government has been keen in recent years to show consumers and voters it is working in their interests across a variety of areas, including wireless bills and cross-border shopping. The focus of the Conservatives, who are gearing up for another general election this fall, has shifted in recent months to include financial services.
MORE: Visa, MasterCard agree to slash transaction fees
In November, Visa and MasterCard Canada agreed to voluntarily slash fees they charge merchants to process credit-card transactions. As of this month, so-called “interchange” fees the credit-card companies collect will be reduced by 10 per cent.
The move was made at the urging of Ottawa following years of escalating costs to merchants, who passed them onto shoppers.
The initial code — which remains voluntary — was brought forth in response to complaints from business owners who said card issuers were gouging higher fees from them.
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