TORONTO, Nov. 4, 2014 /CNW/ - The Small Business Matters Coalition, representing over 90,000 small business retailers, have advised the Minister of Finance that this announcement of a voluntary reduction in merchant interchange fees to "an average effective rate of 1.5%", is still well above the 0.5% rate that exists in other jurisdictions. These other countries were particularly concerned about their small business sector, and after careful study, concluded that a rate of 0.5% was appropriate. So our members are disappointed with the level of the fee reduction announced today. The additional measures being put in place, to ensure there is a monitoring mechanism and that the agreement fixes rates for a period of five years, are two elements of the Minister Oliver's announcement we do welcome" said Gary Sands, Chair of the Coalition that represents over 20 small business retail trade associations, and Vice President of the Canadian Federation of Independent Grocers.
"Minister Oliver's announcement today, with a reference to providing a greater reduction for small and medium size enterprises, although no details are provided, is an acknowledgement that these fees are not only too high, but that they disproportionately impact small businesses," says Sands. Larger corporate retailers have the leverage to negotiate more favourable rates, as witnessed recently with the agreement reached between Costco and Mastercard. "Credit card swipe fees charged to Canadian retailers had been amongst the highest of anywhere in the world. These fees had represented well over $5 Billion in revenue for the credit card companies annually, while many small business retailers are barely surviving with razor thin margins. So again, while we welcome the stability of putting a halt to increases for five years, we need to bear in mind that several other countries have supported their small businesses by regulating a capped rate that is much lower than that announced today by the Canadian government. We were hoping that our government would support our small business sector to the same degree" he added.
"We need a long term solution for Main Street, not just an agreement today for Bay Street", stated Sands, "and while the Minister has taken a very welcome first step in the right direction with the first rate cut in 6 years, we are still not clear on how every small business retailer is going to see their rates reduced by an average of 10%. Our coalition also expects the government to announce additional measures in the weeks ahead to deal with the other parts of the payments industry that impact retailers. For example, last week at the same time that the Minister was reaching this agreement with Visa and MasterCard to reduce their fees, payment processor Chase Paymentech, sent letters to small business retailers increasing their processing fees. The Minister must address the situation where our small business retailers are promised rate reductions which will be simply offset by increases charged by payment processors."
"Excessive credit card swipe fees not only impact small business retailers by constraining them from investing in their businesses or hiring more employees, but also result in higher prices for Canadian consumers whether they use credit cards or cash to make their purchases," stated Sands.
That is why earlier this year, the Small Business Matters Coalition endorsed the following Pledge to Consumers:
"Members of the Small Business Matters coalition, representing thousands of businesses across Canada, urge the Government of Canada to reduce credit card swipe fees and to bring fairness and transparency to the Canadian payments industry.
In turn, our members pledge that the reduction in credit card fees will be to the benefit of consumers and communities across Canada, through improved competitiveness, increased investment, job creation and reduced consumer prices."
The Coalition looks forward to working with the government in the months ahead as we continue our campaign to achieving a fair, transparent and accountable payments industry for small business in Canada. But in order to deliver on our Pledge to Consumers, we need more meaningful rate reductions for small business owners.
Image with caption: "The Small Business Matters Coalition (CNW Group/Canadian Federation of Independent Grocers)". Image available at: http://photos.newswire.ca/images/download/20141104_C8646_PHOTO_EN_7510.jpg
SOURCE: Canadian Federation of Independent Grocers
For further information: Gary Sands 416-492-2311 ext.230 or cell: 416-409-7882