The Retail Council of Quebec (RCQ) is an association representing the vast majority of retail and distribution businesses in Quebec, making it a key stakeholder. For all issues affecting the sector, the RCQ adopts a “solutions-oriented” approach to contribute to government discussions, strategies, and decisions.
On October 24, the Retail Council of Quebec (RCQ) participated as a witness before the Standing Committee on Industry and Technology of the House of Commons as part of the study on credit card practices and their regulation in Canada.
This issue is not new to us, but we felt it was important to reaffirm our position. The RCQ has long maintained that credit card interchange fees in Canada are among the highest in the world. Taking advantage of this platform, we advocated for capping credit card transaction fees at 0.5%.
Credit card usage fees, charged to retailers for these services, are a disguised “private tax” that penalizes both retailers and consumers.
For this reason, the RCQ reiterates its call to the federal government to limit credit card transaction fees to the European level. Over 27 countries, including Australia, France, and Germany, have capped these fees at 0.5% for nearly a decade. There is also a consensus among retail organizations across the country on the urgent need to cap these fees.
Moreover, by maintaining such high interchange fees, the government further impoverishes consumers. These fees influence the price of goods sold in stores, adding to retailers’ operating costs and driving up retail prices.
In 2023, the federal government reached an agreement with Visa and Mastercard to reduce interchange fees for small businesses, effective October 19, 2024. However, the problem persists: the fees remain far too high compared to the target we are demanding.
The RCQ also believes that the reduction in interchange fees should apply to all retailers, not just small businesses. All retailers, regardless of their size or revenue, should not be forced to fund credit card and bank marketing programs.
While we recognize credit card issuers’ right to charge for the digital systems needed to operate their networks, we question the need for such high fees in a system that is already established.
Retailers, in our view, are held hostage. Cash payments are disappearing, and smartphones have further diminished the use of physical money. Electronic payments have surged.
The 2024 Canadian Payment Methods and Trends Report, released in October 2024 by Payments Canada, confirms this: card payment transactions accounted for nearly two-thirds (63%) of the total payment volume in 2023, with 33% through credit cards and 30% through debit cards.
Credit cards are convenient and essential tools. However, to attract more customers, card issuers offer so-called “privileged” categories, providing holders with points, rewards, or benefits.
This system is highly inequitable as it benefits wealthier consumers who earn more points at the expense of others who can only access basic credit cards. Additionally, it leads to higher fees imposed on retailers to cover these perks. Retailers, in turn, have no choice but to accept all credit cards, regardless of type, to stay in business.
The RCQ recommends that the federal government apply the user-pays principle and mandate transparency in the fees associated with these programs.
In conclusion, the RCQ stands firm: we recommend reducing credit card fees to 0.5%, regardless of the type of credit card chosen by the customer. This recommendation was also included in our submission for pre-budget consultations ahead of the 2022-2023 federal budget.
Intervening to ensure better control of credit card fees for all retailers would have several advantages: