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CFIB challenging major credit card companies

Credit card companies and major Canadian banks challenged to adopt a Code of Conduct


July 7, 2009
By Administrator

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NEWS HIGHLIGHT

CFIB challenging major credit card companies
In its continuing
battle against unfair credit card practices affecting merchants across
the country, the Canadian Federation of Independent Business (CFIB) is
challenging major card processing
companies to adopt a Code of Conduct.

July 7, 2009, Toronto – In its continuing battle against unfair credit card practices affecting merchants across the country, the Canadian Federation of Independent Business (CFIB) is challenging Visa, Mastercard, chartered banks and card processing companies to adopt a Code of Conduct on behalf of the small business sector.

"Small firms across Canada are outraged with the dramatic rise in credit card merchant fees and the introduction of new premium cards by Visa, Mastercard and Canadian banks. It is time that the various players in the credit card industry demonstrate reasonable business practices for consumers and merchants, especially as we fear the current unfair policies and fees may be expanded into debit services offered by Visa and Mastercard," said Dan Kelly, CFIB's senior vice-president of legislative affairs.

CFIB is pleased that governments are paying close attention to this issue following hearings by the Senate Committee on Banking, Trade and Commerce, the Competition Bureau and the combined House of Commons Standing Committee of Industry, Science and Technology and Standing Committee on Finance. CFIB has raised this issue with Finance Minister Jim Flaherty, Opposition Leader Michael Ignatieff and dozens of other MPs and ministers. "In all our dealings with government, we have been clear that regulation of the credit card industry is not our first choice, but may become necessary if we do not see any movement on implementing a more transparent and fair card processing fee system for small firms," said Kelly.

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As an alternative to strict regulation of the industry, CFIB is calling on credit card companies and the banks to adopt a Code of Conduct for small business. CFIB has prepared a code to focus on 10 principles it feels would significantly improve the relationship between credit card companies, card processing companies and banks with its small business clients.

These practices include:

  • Premium cards should never be distributed without the request of a customer;
  • Merchants should know the total fee associated with a card before accepting it;
  • Merchants should be able to refuse any card or assess a fee for accepting it;
  • Merchants should be able to exit a contract without penalty if the terms change; and,
  • Credit card companies should commit to never introduce a "percentage of sale" fee should they enter the debit card marketplace.

"We are very pleased many of CFIB's principles were endorsed in the recent report of the Standing Senate Committee on Banking, Trade and Commerce, including the need for a code of conduct. As a result, we are calling on credit card companies, Canada's banks and the card processors to work with us on this code in the weeks ahead," Kelly added. "Should these institutions not wish to consider these voluntary practices, CFIB will have to consider alternate strategies to protect the small business sector.