Mr. Speaker, I move that the 20th report of the Standing Committee on Industry and Technology, presented on Friday, November 1, be concurred in.

The reason why I am proposing this motion today is in response to an interim report on a committee study that the Standing Committee on Industry and Technology is undertaking right now. The motion that precipitated this within the committee read, “Following testimony from banking executives” the Standing Committee on Industry and Technology encourages “the Competition Bureau...to investigate potential anti-competitive behaviour in Canada’s e-Transfer ecosystem, and if deemed necessary, the broader electronic payments industry in general.”

For members of the House, this report is encouraging the Competition Bureau to look into what we believe, and this was a unanimous report at committee, to be a flagrant abuse of Canada's anti-competition laws and, frankly, a flagrant abuse of any sort of spirit of wanting to see productivity in the Canadian economy, because this issue impacts the payments industry in such a broad way. This may be a technical topic for some, but I will try to summarize it briefly.

Over 88% of Canadians use something called e-transfers. I guarantee that everybody in here has done this at some point in time. When we want to send money to, let us say, a pet sitter or if we are paying rent to our landlord, we would execute an e-transfer and that is where our money would go.

The key player in this space, the key facilitator of e-transfers in Canada, a dominant player as we heard from banking executives at the committee, is Interac. Interac is an association that is, for all intents and purposes, owned by the big banks in Canada.

This is how it works. Interac charges a fee to financial institutions, banks, for facilitating these e-transfers. What colleagues and I heard anecdotally was that there was a significant difference in the fees that were charged to big banks by Interac as opposed to smaller financial institutions. Smaller institutions were paying around the neighbourhood of 46¢ per transaction while big banks were paying 6¢.

What does that mean? It means that the big banks have a competitive advantage over smaller financial institutions. First, it is more difficult for smaller financial institutions to be competitive in this space. Second, it also allows bigger banks to make more profit off Canadian consumers.

Some Canadian consumers will say that they do not pay anything for e-transfers, but the reality is that anybody who is interacting with a bank in Canada is likely paying a significant annual fee or a hidden fee to have the privilege of banking in Canada, and there are situations where customers might go over even what is included in those plans. For e-transfers, the fees can range from $1 to $1.50, and there are billions of e-transers a year. If we start doing the math on how much big banks are making compared to smaller banks on the price differential in that volume-based pricing system, if we then start thinking about how much more those big banks are making off their customer fees than smaller institutions are and if we start thinking about how much fees customers are paying just in general, does it not look a little sketchy?

That is what we were concerned about in the committee. Our concerns were validated, and for me as a parliamentarian, by shocking testimony from a banking executive, who also sits on Interac's board. This person was clearly not prepared for these questions, but he did admit to the fact that this volume-based pricing system, which we had heard about anecdotally, did exist. That is highly problematic. The committee did pass a motion, an interim report, to encourage the Competition Bureau, which is an independent body, to look into this based on the testimony we heard.

I will be splitting, Mr. Speaker, my my time with a member for Simcoe North.

Why is this important? This is not just important from the perspective of smaller financial institutions being unable to be competitive with larger banks, which I believe is the case. It is also a matter of new and potentially emerging technologies that could lower fees for customers and for financial institutions entering the market. That is because Interac is essentially owned by the big banks.

If we look at Interact's website, we will see that the big banks nominate people to sit on their boards. They have essentially a controlling interest in Interac. Of course, they are going to ensure that new players, where they can within the competition law or the government refusing to act, they are going to try to squeeze profit out of this arrangement. They essentially have created a stranglehold on the e-transfer market.

I want to note something for colleagues, because this is kind of a niche topic. When we think about the ripple effect it has across the economy, it is pretty big. It is not just e-transfers; it is also the payments industry writ large. We know that, for example, the government did not regulate this, although it could have regulated it like other jurisdictions by putting a cap on what we call interchange fees for credit cards. Instead of doing that, it came up with a voluntary agreement with Visa and Mastercard. The fees are still much higher than other jurisdictions, like in the European Union. The government also did not ensure that those savings would be passed to small business. It actually did nothing. Now we have payment processors like Stripe, and Mark Carney, the Liberal's senior economic adviser, is on the board of directors, being accused of hoarding those savings. They basically admitted in testimony at our committee. There is a whole competitive issue in the payments industry.

However, I want to highlight for colleagues why we should be encouraging the Competition Bureau to look into this.

Across the world, there are more modern payment systems. I am looking at Swish in Sweden,; FPS in the U.K.; UPI in India; and Pix in Brazil. These are all processors that facilitate e-transfers, but they do it in a way that is much more efficient and probably at a lower cost than Interact. For example, with Interac, it takes minutes to hours for that transaction to complete. All of us have been in a situation where we have asked someone if a transfer went through.

For the competitors with new and modern technology, the transfers almost happen instantly or within seconds. Customer fees are also way lower. They are almost negligible with some of the competitors. Interac has relatively low limits on what can go through in an e-transfer, whereas competitors can facilitate much larger transfers. These competitors, which we are not allowing into our market, might have more modern security, and we know that they have more modern security protocols.

There are competitors around the world that can make our economy more competitive by producing a competitive landscape in which e-transfer fees could be lower. They could be lower for our financial institutions. We could perhaps have more competition in our financial institutions. However, because of the way Interac is structured and governed and because of this volume-based pricing scale that it has for e-transfers, it creates a non-competitive environment for innovation for our competitors to enter, and that is wrong.

This is why this motion is here today. I hope the House, across all political stripes, will encourage and ensure that the Competition Bureau looks into this, given the massive economic impact. There is probably a lot more information that the industry committee needs to look into. This is a huge issue. The federal government committed to lowering bank fees for Canadians. It has not done that. When we are talking about productivity, this is a huge problem for the Canadian economy. It is also a problem for the fintech sector with regard to entering into rent-seeking, inflexible places that have pushed out innovation for many years. I also think the industry committee should be looking more into this, but I encourage colleagues to support this motion.

Michelle Rempel

$533,680.00