In a statement released yesterday, Visa Canada continues to vigorously defend it’s consumer protection policies in defense to the application submitted by the Competition Bureau to have it’s no surcharging policy removed.
“Visa remains committed to preserving our pro competitive and pro consumer policies and we have reiterated this position today in our response to the Canadian competition Bureau legal challenge. We believe the Bureau’s Application to eliminate our no surcharge and honour all cards policies has no merit and in fact the Bureau’s position would be harmful to Canadian consumers.”
Late last year, the Canadian Competition Bureau submitted it’s legal challenge to have both Visa and MasterCard remove their no surcharging and honour all cards policies on merchants. By allowing these practices, merchants will now have the opportunity to set a fee on top of the transaction to be paid by cardholders who wish to use their credit card as a form of payment. Merchants will also have the ability to decline the acceptance of premium credit cards which tend to carry higher fees than those of regular credit cards.
Currently merchants are allowed to surcharge on Interac debit transactions so long as the surcharge is clearly displayed at the point of sale and at the time of purchase. Consumers have the option to continue with the transaction should they wish or choose another form of payment.
Visa contends that by allowing merchants to surcharge on transactions, they are in fact penalizing cardholders who choose to pay with credit cards. They’ve cited studies completed in countries where this practice is currently allowed show that merchants have abused this practice and turned it into a profit making solution.
“In Australia, where regulations allow retailers to surcharge consumers, surcharges are now as high as 10 percent, according to a November 2010 survey commissioned by the New South Wales Minister for Fair Trading.”
The Visa Honour All Cards policy currently dictates that merchants must accept all Visa issued cards if they choose to be a Visa accepting merchant. Within the Visa portfolio of cards, a spectrum of different cards can be found, from the regular standard-issued card to premium cards associated with travel and reward points. The downfall is that in order to pay for these reward programs, Visa charges a higher interchange. A benefit to the consumer that comes from the merchants pockets.
Merchants are currently allowed to offer incentives to cardholders who wish to pay with other forms of payments, such as discounts for cash sales. However, the Competition Bureau did not feel that this was enough to promote healthy competition in the payment card industry. By allowing surcharging on all cards should the merchant wish, they feel this enables both merchants and consumers to really choose the form of payment they wish to use and accept.
It remains to be seen whether or not the Competition Bureau will win it’s case. There is precedent set in other countries allowing surcharging but will Visa be right in this scenario? Will allowing surcharging level the playing field for all cards but at a cost that the consumer will have to bear?
