Retailers are rejoicing this year as Canadian lawmakers are considering a new bill that puts a ceiling on credit card interchange rates. The bill was brought to Canada’s House of Commons by newly elected Liberal MP for Rivière-des-Milles-Îles, Linda Lapointe. The proposed bill would make changes to the Payment Cards Network Act, but does not specify the interchange cap rate. Although the bill does not state the cap rate, Canadian merchants are hopeful that the new rate will bring them some much needed relief.
For the last few years, Canadian retailers have been struggling to make a profit as the Canadian dollar weakens. A recent Retail Council of Canada study, showed that 49 percent of retailers have seen their costs increase over 5 percent. The value of the Canadian loonie dropped 16 percent in 2015, raising the price of U.S. imports significantly. A cap on variable credit card interchange rates could save retailers critical funds at the POS. Most are hoping for rates similar to those seen in Europe. In 2015, European payment authorities set an interchange cap of 0.3%.
For years, interchange rates have been in up in the air. This has led to voluntary interchange decreases of 1.5% between Canadian retailers, and Visa and MasterCard. But this latest proposal faces significant hurdles. Lapointe’s proposed legislation is similar to several bills that have been introduced over the years that did not advance. This particular bill is a Private Member’s Bill, that doesn’t have the majority support of any party. The proposed bill could also require review by Canada’s Competition Bureau, as opponents of the bill claim that interchange caps interfere with a free market system.
But the bill does have the support of retail coalitions. U.S.-based Merchants Payments Coalition and the Quebec Convenience Stores Association (QCSA) are a few retail organizations supporting the bill. Michael Gadbois, QCSA president, believes that Canada is ready for some sort of interchange cap. The QCSA claims that current exchange rates cost retailers CA$7 billion annually.
As Canadian retailers continue to struggle with interchange exchange rates and a weak currency, they’ll need access to competent and convenient payment processing that will grow their customer base. eMerchantBroker has helped Canadian merchants provide credit/debit services, e-check and web payment services, and more. Open your high risk Canadian merchant account today.