TORONTO, Jan. 19 /CNW/ - The Canadian Federation of Independent Grocers (CFIG) has responded to the federal government's request for comments on the new code of conduct for the payments industry and sides with the Consumer's Association of Canada in opposing surcharging consumers for using credit and debit cards.
According to CFIG President and CEO John Scott, "surcharging consumers for using a debit or credit card, simply punishes the customer for continually escalating fees levied by the card and payments industry on the backs of retailers." Scott added that passing those charges on to consumers, especially in a time of a fragile economic recovery, "is not a solution to the problem of high credit and debit fees. Our independent retail grocers always have and continue to stand on the side of consumers."
CFIG is calling on the federal government to adopt and finalize the code of conduct as soon as possible, and to ensure that competition in the debit card market exists by ensuring that Interac continues to be available to both consumers and retailers as a relatively low cost alternative to the products offered by the companies that control 945 of the credit card market.
A complete copy of the CFIG response to Minister Jim Flaherty's proposed Code of Conduct is available on request.
Monday, January 18, 2010
Hon. Jim Flaherty, M.P., P.C.
Minister of Finance
Confederation Bldg, Rm. 207
140 O'Connor St.
Ottawa, ON K1A 0G5
On behalf of the Canadian Federation of Independent Grocers (CFIG), I
wish to provide you with our response to the draft Code of Conduct that
will govern credit and debit card companies.
CFIG is a national, not for profit trade association that represents the
unique interests of independent and franchised retail grocers. Our
members are primarily small and medium size business owners who are an
integral and critical part of a myriad of communities across Canada. In
an industry whose hallmark is becoming one of heightened concentration,
independent retail grocers understand very well the demands of a
competitive marketplace. However, they need to compete in an environment
that promotes and sustains fair business practices, particularly in the
area of payment systems, which constitutes the infrastructure of any
It is difficult, putting it mildly, for independent retailers to
understand why major players in the credit and debit card industry, who
hold approximately 94% of the market, and still free to set their own
rates and fees, are complaining about adhering to a code of conduct.
Both you and your department will be receiving responses to the Code from
the Retail Coalition, or Payments Accountability Council, and other
retail organizations. We have reviewed most of these submissions and
largely echo and support many of the comments and observations that they
have made. However, it is important to put our concerns in the context of
the food industry and the realities in which our members must face every
Over the last twenty years, according to data compiled by Agriculture and
Agri-food Canada, thousands of independent retail grocers have become
casualties to these realities and have been forever lost to the industry
and the communities they served. In an increasingly concentrated
industry, it is vital that we ensure that the independents who have
survived, can do so without the continued squeezing of margins by
monolithic credit card companies, whose unilateral actions simply stem
from the fact that they control 94% of the market. Neither they, nor
payment processors, have been held accountable. Indeed, the letter we
sent to Chase Paymentech in November (enclosed), raising our objections
to the 'negative option' that is being imposed on our members, has never
been answered. In this market, they simply, but unfortunately, don't feel
they need to answer to retailer concerns.
Ensuring that independent retail food grocers survive is vital to our
food industry and to that aforementioned myriad of communities,
particularly in rural Canada, in which they are rooted. To do that, along
with implementing key provisions and principles of the Code, Canada must
preserve Interac as a lower cost, flat fee debit card alternative.
This ensures that the spirit and intent of leveraging competitive
practices through the Code, can in fact, be realized.
The credit card companies have recently approached larger retail grocery
food chains to negotiate rates and fees with respect to debit card
transactions. There has been no such approach to our small and medium
size members, and in fact, such negotiations will not take place with
small and medium size retailers. There is no necessity for two parties to
negotiate, if one party does not see the need.
Nor conversely, do small and medium size business have anywhere near the
leverage to 'negotiate' a rate with Visa or MasterCard. That is precisely
why the Interac alternative must be available. Without it, the future of
independent retail grocers is at risk, and we urge both you and the
Competition Bureau to review Interac within that context. It is
inexorably linked to the ability of all small and medium size retailers
to be able to compete on the retail landscape.
While it is also our request to clearly include the payment processors,
such as Chase Paymentech and Moneris in the Code, CFIG wishes to applaud
you and your officials, in particular Lynn Hemmings, for listening
carefully to our concerns which we believe have been reflected in the
Code. Lynn has ensured that no stakeholder can feel that there has not
been genuine consultation. This code of conduct is a significant step
forward and while we are not enamored of certain provisions relating to
fee increase notification, we know that you have sought to strike a
balanced and fair approach, which the Code does.
Attached to this letter is our response to each one of the points
outlined in the Draft Code of Conduct which you released in December,
2009. Thank you again for addressing our concerns and CFIG looks forward
to working with you and your officials in the months ahead.
John F. T. Scott
President & CEO
c. Ms. Melanie Aitken,
Commissioner of Competition
Ms. Lynn Hemmings,
Senior Chief, Financial Sector Division
SOURCE Canadian Federation of Independent Grocers
For further information: For further information: John F. T. Scott, President, (416) 492-2311 ext.229