Thank you for the opportunity to present a retail industry perspective on credit card payments.

I want to begin by putting a big number in front of you. That's the $60 billion in credit card interchange fees that will be pulled out of Canadians' wallets over the next five years. When you contrast that with the roughly $200 million a year of savings outlined in the government's and networks' announcement last week, you can see how very little is being done to address the interchange problem for consumers. Simply put, 98%-plus of the issue is not being addressed at all.

Let's take it from the perspective of a Canadian family. Credit card interchange costs Canadian households an average of $643 each year or $10.7 billion all told. Last week's response by the government might save them $13 of that $643. It's our position that a savings of only one-fiftieth of the cost is flimsy by any standard, and Canadian families could really have used that help with affordability.

The Bank of Canada sees it as a consumer issue, as does the Competition Bureau, as does every competent authority worldwide, including central banks, competition bodies and academia. Only the Government of Canada seems determined to paint it into a corner as a small business issue, presumably because that makes it less unsettling to the banks and credit card networks.

Not only does that $60 billion in bank revenues weigh heavily on Canadian consumers, it does so in a particularly regressive way. The highest credit card interchange is on premium and superpremium cards, typically those held by Canadians with higher incomes, but the cost for all of this gets passed on in the price of goods borne by all Canadians, including those paying with cash or debit and especially by low- and modest-income earners. Don't take my word for this, you can look at studies by the Bank of Canada and by the Consumers Council of Canada. Many of those lower-income and modest-income customers would never have qualified for those high-fee cards in the first place. It's a kind of reverse Robin Hood problem, with the card companies and banks taking from the poor and giving to the relatively wealthy.

Continuing to perversely portray the problem as a small business issue rather than a consumer issue perpetuates this regressive and growing problem. At an average rate of 1.4%, interchange in Canada is amongst the highest in the world—make no mistake. By comparison, credit cards in Australia have a capped average of 0.5%. The U.K. rate is fully capped at 0.3%, as are all of the 27 countries in the European Union. Rates have also been capped in other jurisdictions like Switzerland, Israel and China, all at around one-third the level we face here in Canada.

Remarkably, the same card networks manage to operate globally at a fraction of the cost imposed on Canadians, both businesses and consumers alike. In a nutshell, Canada needs to address the $60-billion elephant in the room, stop pretending that this is only a small business issue, echo the pro-consumer approach taken by other countries and introduce a meaningfully lower interchange cap or average, whether through regulation or through much more purposeful negotiations with the credit card networks.

Thank you.