Thank you, Mr. Chair.

Good morning, members of the committee.

I would first like to thank the committee for allowing the CQCD, the Conseil québécois du commerce de détail, to present its views on credit card practices and the regulation of credit cards in Canada.

I would like to remind you that the CQCD is the most important player in the retail ecosystem in Quebec. Its membership consists of 45,000 businesses throughout Quebec, some of whom have their headquarters here in Quebec, that employ over 483,000 people.

Credit card issues are nothing new for us, but we think it is important that we reiterate our views. First, contrary to popular belief, using payment cards, especially credit cards, does not come without a charge. Fees are billed to the retailer for using these services. We believe this is a disguised private tax that penalizes all retailers and consumers.

Our first proposal is therefore to ask the federal government to limit credit card transaction fees to the same rate as in Europe, which is 0.5%. More than 27 countries, such as Australia, France and Germany, to name just those few, have capped that rate at 0.5% for what is now approaching ten years. In fact, there is a consensus among organizations that represent retailers in Canada that these fees need to be capped right away.

By keeping interchange fees so high, the government contributes to further impoverishing consumers and our economy. These fees have an influence on the price of the goods sold in stores by adding to the retailer's operating expenses. This puts further upward pressure on the prices charged in the retail trade. In 2023, the federal government signed an agreement with Visa and Mastercard to reduce credit card interchange fees for small businesses. This came into effect last Saturday, October 19, 2024. The problem has not gone away, however. Fees are still too high compared to the target we are asking for. The CQCD also believes that the interchange fee reduction should apply to all retailers and not just small businesses.

No retailer, regardless of sales volume and size, should have to finance the credit cards' and banks' marketing programs. We acknowledge that credit card issuers are entitled to pay and bill the costs of the digital system that is needed for setting that system up. However, we have serious reservations regarding the need to keep fees so high where a system has already been put in place. The CQCD believes that retailers are being held to ransom.

The practice of paying cash is disappearing. Smart phones are also making paying in cash increasingly rare. Electronic payment has exploded. The “2024 Canadian Payment Methods and Trends” report released by Payments Canada in October confirms this. In 2023, retail payment transactions by card amounted to 63%, or almost two thirds, of the total volume of payments: 33% by credit card and 30% by debit card. The CQCD believes that credit cards are an essential, easy-to-use tool.

However, issuers of “premium” credit cards offer cardholders points, rewards or special benefits. Because retail prices are going up for all consumers, the wealthiest people are earning more points on the backs of ordinary consumers, who have access only to a non-rewards credit card. This system is enormously unfair to retailers and consumers in Quebec and Canada. The cost of points programs should be borne by the people who benefit from them. At present, it is lower-income retailers and consumers who are ultimately suffering the harm. Our second proposal is therefore to recommend that the federal government apply the user-pay principle and require transparency when it comes to the costs associated with these programs.

In conclusion, the CQCD advocates capping credit card fees at 0.5%, whatever type of credit card is chosen by the customer. This is also one of the recommendations the CQCD made in its brief during the federal government's 2022‑23 pre-budget consultations.

Action to ensure better control of credit card fees for all retailers would be beneficial for several reasons: greater fairness among consumers, an injection of funds for retailers and into the Canadian economy, enabling retailers to offer better prices, and better competitiveness generally for our businesses.

Thank you for your attention.