Thank you for the opportunity to appear in front of the committee as part of its study on credit card practices and regulations in Canada.

My name is Anne Butler, and I'm the chief legal officer for Peoples Trust Company, Peoples Bank of Canada and their subsidiaries, which carry on business collectively under the brand name Peoples Group.

Peoples Group has been providing tailored financial services to the Canadian marketplace for more than 35 years. We have over 500 employees across the country, in Vancouver, Toronto, Calgary and Montreal.

Peoples Trust Company and Peoples Bank of Canada are federally regulated financial institutions overseen by the Office of the Superintendent of Financial Institutions. As a federal financial institution, we're subject to the Financial Consumer Agency of Canada's financial consumer protection framework. Peoples Trust is also regulated provincially and is subject to consumer protection regulation across the country.

Peoples Group provides residential and commercial mortgage lending, embedded finance services and deposits to customers in Canada. Through our subsidiaries, Peoples card services and Peoples payment solutions, we provide payment solutions to fintechs and other payment service providers across the country.

Peoples Group's roots are in multi-family residential mortgage lending. We provide commercial mortgage funding to multi-family landlords, real estate investors, developers, seniors facility operators and non-profit, affordable housing societies in communities across the country. We also provide single-family residential mortgages through a network of independent brokerages.

From our roots in multi-family residential mortgage lending, we've grown to become an important enabler for domestic and global fintechs in the Canadian market, providing them with banking and payment services and helping them to provide innovative financial products and services to Canadians. We are a strong supporter of financial innovators, underscoring our fundamental belief that a strong and competitive ecosystem will foster the development of new financial products and services and innovative ways of delivering them for the benefit of Canadian customers and businesses.

As the largest issuer of prepaid cards in the country, we have helped our customers launch products and services that have expanded access to digital financial services for Canadians.

We also have a thriving merchant-acquiring sponsorship business, in which we sponsor and act as the settlement bank for independent sales organizations, which we call ISOs, in their delivery of payment acceptance capabilities to their merchant customers across the country.

Given this committee's focus, I would like to now explain the role of Peoples in the payments ecosystem. I will focus on the acquiring side of the business, which I believe is most relevant to the committee's current work.

Peoples Group's role in the merchant-acquiring side of the credit card business is relatively unusual compared to the role played by most financial institutions that might appear before you. Peoples Group acts as a sponsor bank for ISOs. We act as their acquiring bank, enabling them to contract directly with merchants and use us as the settlement bank for payments processed through the credit card networks on behalf of those merchants.

In this model, our ISOs are responsible for signing up merchants and for offering merchants payment processing services and, often, equipment to process card transactions. Peoples Group does not provide payment processing services directly to merchants. We provide ISOs with sponsored access to credit card network processing systems, for instance Visa and Mastercard, and we act as their settlement bank.

In this capacity, Peoples is an acquirer as defined in the code of conduct for the payment card industry. For this reason, we require that our ISOs, as downstream participants, comply with the code of conduct obligations as well as the payment card network operator rules.

Peoples has no direct role in setting the prices that ISOs charge to their merchants. This is determined by the ISO based on a variety of factors, and it varies from ISO to ISO.

All interchange fees charged to Peoples Group by the card networks are passed along by Peoples Group entirely to ISOs for payment. The ISO determines whether or how to factor those charges into the overall pricing to their downstream merchants.

Peoples Group's compensation for acting as the acquiring bank is through a fee paid by ISOs for the use of our services. Typically, this is calculated as basis points on gross payment flows through the account. Interchange rates or fees do not play a role in the compensation that Peoples receives from the ISOs.

I hope my explanation has helped the committee to understand Peoples Group's unique position within the Canadian financial system as an important enabler of financial innovation for Canadians.

Peoples Group appreciates the opportunity to appear here today. I look forward to answering your questions.