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Happy Monday, everyone. I call this meeting to order.
Welcome to meeting number 142 of the House of Commons Standing Committee on Industry and Technology.
Before we begin, I would like to ask all members and other in-person participants to consult the small card on the table for guidelines to prevent audio feedback incidents. This is for the health and safety of the interpreters as well as everyone in this room.
Pursuant to the motion adopted on Thursday, September 19, 2024, the committee is resuming its study on credit card practises and regulations in Canada.
We are pleased to welcome today's witnesses, who are all participating in this meeting by video conference.
First of all, from the Bank of Montreal, we have Jennifer Douglas, who is head of North American retail and small business payments.
From the Canadian Imperial Bank of Commerce, we have Diane Ferri, senior vice-president, credit cards.
From the Royal Bank of Canada, we have Ramesh Siromani, executive vice-president, cards, payments and transformation.
From Scotiabank, we have D'Arcy McDonald, senior vice-president, payments and unsecured lending.
From TD Bank, we have Meg McKee, executive vice-president, Canadian card payments, loyalty and personal lending.
I want to welcome you all and thank you for taking part in this exercise.
Without further ado, I give the floor to Jennifer Douglas, from the Bank of Montreal, for five minutes.
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Good afternoon, everyone.
Mr. Chair and honourable members, thank you for the invitation to join you today as part of the committee's study on credit cards.
My name is Jennifer Douglas, and I am responsible for BMO's credit card business.
As Canada's oldest bank, BMO has long been committed to working with our customers to identify their specific needs and to ensure that they have the best product options for their personal situations. This work with customers is done in tandem with continually evaluating our product features on an ongoing basis to ensure that they remain competitive in the industry. It is worth underlining just how competitive the landscape is for credit cards and the resulting breadth of benefits for consumers.
For those consumers who want to take advantage of a credit facility to make purchases, this means ensuring access to no-fee and low-fee options, which constitute over half of BMO's card portfolio. We know from our customers that they greatly value credit cards as a method of payment, given the benefits and the convenience provided, whether it's protections against fraudulent transactions, whether it's cashback or travel rewards, or whether it's extra features, such as insurance or roadside assistance. We are always seeking ways to enhance our benefits.
Some of the recent examples of enhancements that we've made to benefit our customers are extra bonus points for shopping in certain categories, like wholesale clubs and drug stores; new features to get cashback on gas purchases; new redemption options, such as being able to shop at the Apple Rewards Store; and enhancing the customer experience through greater digital self-serve options.
We offer these services within a highly regulated framework. Banks work diligently to clearly communicate fees, transactions incurred on a card, and when the payment is due, among other pieces of information.
As issuers of credit cards, banks do not set interchange fees. As I believe the committee has heard, these fees are set by payment networks, like Visa and Mastercard, which, along with the card issuers, the acquirers and the merchants, comprise Canada's credit card payments ecosystem.
Our role as issuers in this ecosystem focuses on things like adjudicating credit applications, interacting with customers and servicing their needs, paying for transactions on behalf of the customer to ensure that the merchant gets paid, covering fraudulent transactions and credit losses, and competing with other issuers to provide meaningful benefits and features for our customers.
However, credit card services should not be viewed in isolation as just a product offered by the bank. We also ensure that our customers have access to resources to improve their financial literacy in order to make the choices that suit their needs best. Through a survey that BMO conducted last year, we know that this is particularly important in a digital banking context. In that survey, we found that 58% of Canadians find literacy an important aspect of online banking, and 65% want access to personalized advice.
At BMO, we are committed to leading with a digital-first mindset, and we're proud of our BMO SmartProgress financial literacy online portal as a proof point of that. The BMO SmartProgress portal organizes topics such as budgeting, credit management and preparing for retirement, enabling Canadians to learn more about how to manage their finances in a widely accessible and innovative environment.
Thank you for your attention. I would be pleased to answer your questions.
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Thank you, Mr. Chair, and good afternoon.
My name is Diane Ferri, and I'm the senior vice-president of cards at CIBC.
Our bank traces its roots back to 1867. Since Confederation, we've been an integral part of helping Canadians achieve their ambitions. Today we have more than a thousand banking centres in Canada.
Our team of over 47,000 operates with the single purpose of helping our clients make their ambitions real. This is true for individuals, families, students, newcomers and businesses. It's also true for the millions of Canadians who have investments in our bank, either directly by holding shares or indirectly through mutual funds and pension plans, and for the many community initiatives we support.
We strive for a culture of operational excellence, enabled through our talent, technology and processes, and we comply with legal and regulatory requirements.
Credit cards are one of the most competitive offerings in the financial services industry, issued by a wide range of banks, credit unions, monoline issuers and retailers.
Consumers have many choices as to how to make their payments. Cash, debit and credit are amongst these choices, and our role as a bank is to help facilitate those payments in whichever manner our clients choose to make them.
Credit cards are the payment method of choice for many consumers, offering customers flexibility and convenience for managing their cash flow and purchasing online and at the retail point of sale. In a world increasingly shifting towards digital and global commerce, credit cards allow consumers to shop online and internationally with ease, convenience and confidence.
Credit cards play a key role in the Canadian economy. Businesses benefit from their use, receiving immediate and secure payment instead of taking on credit risks themselves, and they enable faster checkout lines and lower cash handling costs.
In addition, credit cards provide benefits such as rewards, insurance and liability protection for fraud and merchant-disputed transactions. Youth, students and those who are new to Canada can use credit cards to establish and build credit.
CIBC offers 25 different credit card options, which we offer in the context of a broader relationship with our clients to meet their full financial needs. Our cards range from no-fee and student cards to loyalty options based on the clients' preferences, including cards that offer rewards. CIBC offers a low interest rate card, a product that was recently recognized in a report by The Globe and Mail as number one in its category.
CIBC complies with transparent sales practices in banking centres and on digital platforms. Our credit card selector tools assist clients in identifying the best product based on their needs and preferences. This puts informed choice in the hands of our clients as they select the card that best meets their needs.
We offer a range of no-charge tools for our clients, including free credit score lookup, credit bureau alerts and a budget and cash flow calculator.
We've leveraged innovation to bring more options to our clients to manage the cost of larger purchases. Our CIBC Pace It feature allows clients to pay off larger or unexpected purchases on their credit card at a pace that works for them, with a lower interest rate. There is no restriction on paying the balance off early. It's another example of putting informed choice in the hands of our clients and giving them tools to have control over their credit.
We have educational tools, including our credit card 101 guide, to help clients learn about how to manage their credit, how to choose the right card, how to read a credit card statement and how to protect themselves from potential fraud. We provide easy-to-use features in our online banking for clients to protect themselves if their credit card is stolen and to stay on top of their transactions.
Credit cards, like other consumer bank products, are overseen by the Financial Consumer Agency of Canada, or FCAC. The FCAC supervises federally regulated financial entities and monitors and supervises the payment card networks with the requirements set out in legislation, regulations, public commitments and codes of conduct. The market conduct obligations that apply to credit cards are detailed and address several matters, including clear disclosure of all applicable rates and fees to consumers.
We recognize our clients have a choice in how they choose to make their everyday payments, and we work hard in a competitive market to meet their needs by offering value, convenience and choice, with additional benefits and protections available to protect against fraud and other risks.
In conclusion, CIBC is proud to help Canadians achieve their ambitions, including providing many options for their banking and credit card needs.
I look forward to our discussion today.
Good afternoon, honourable members. Thank you for inviting RBC to appear this afternoon in front of the committee.
My name is Ramesh Siromani. I'm the executive vice-president for the cards, payments and transformation businesses at RBC.
We at RBC are guided by our purpose to help clients thrive and communities prosper. We live our purpose each day by offering trusted advice to help clients make informed financial decisions, while driving positive change in the places where we work and live.
We are focused on offering a wide range of everyday banking, financing and investment products to meet the needs of our clients at every stage of their lives. Canadian customers are at the heart of our business, and it's our priority to offer value, convenience, choice and information to help clients determine the products and services that are right for them.
Our payments business is no different. As you would have heard from the Canadian Bankers Association earlier this month, Canadians like having access to a range of payment products, including credit cards, which offer a secure payment option with liability protection and other features such as insurance, purchase security and warranties.
We offer a broad range of payment options to clients, along with tools and advice to help them select the right product for their needs. Canada has a well-developed payment system, with credit cards playing an important role. Whether clients are looking to earn cash back on everyday spending, collect reward points, or enjoy student life affordably, RBC offers credit card options for all of those needs and more. Once clients have selected the appropriate card, we offer a wide range of resources online and in our branches to help them manage their cards responsibly.
We provide those tools and alerts to help clients manage their credit cards, ensuring that they feel secure, aware and well connected to their finances. RBC has a process to help clients understand the implications and options associated with any lending product, and we proactively reach out to clients to discuss options through our digital channels, emails, letters, our contact centre and branches.
RBC is proud to offer value to all Canadians through Avion Rewards, regardless of where they bank. Avion Rewards operates as a loyalty and customer engagement platform that provides members with the flexibility to shop, save, earn and redeem on everyday items.
The program provides many benefits, including strategic partnerships with leading brands in Canada such as Petro-Canada, Metro, Rexall, DoorDash and others that provide RBC credit and debit cardholders more value on their everyday purchases, like instant savings on gas.
Similarly, we offer a variety of solutions to our merchant partners. By providing more choice and convenience in credit products to clients, we help drive success for merchants, who derive great value from credit card payments including guaranteed payment, access to the online marketplace, efficiencies compared to cash or cheques, and at the most basic level, not having to run a store credit system.
Finally, we have seen an increase in fraud and scams in Canada, which has affected all industries. Safeguarding the security of our systems and the confidentiality of our clients' information is always our top priority. As a trusted financial institution, we have an important role to play in prevention, education and ensuring our client's safety. We know fraudsters are getting increasingly sophisticated, and we continue to make substantial investments in our security measures and technology. We also regularly educate our clients about best practices, like staying aware of fraud scams and protecting passwords and email accounts.
RBC has a long track record of innovation in payments. Through industry efforts, Canadian merchants and customers enjoy a low-cost to no-cost debit network for purchases and Interac e-transfers, with those being the leading money movement capabilities globally.
RBC has delivered numerous client experiences in innovations like tap, pay with points, and installment payment plans, offering more choice, convenience and security to the client. Canada has a strong, secure and efficient payment system, and RBC continues to invest and innovate to ensure it continues.
We remain committed to providing value, choice and convenience to clients and merchants, while providing education and advice around financial literacy, fraud and the responsible use of credit.
Thank you, members, for inviting me to speak today. I welcome any questions you may have.
My name is D'Arcy McDonald, and I'm the senior vice-president of retail payments and unsecured lending for Scotiabank. I'm pleased to participate in this important study and look forward to the discussion today.
Scotiabank has almost 200 years of history in supporting Canadians with their financial needs, employs 40,000 people in Canada and serves more than 11 million clients from coast to coast to coast. We take our role as an important pillar of the Canadian economy seriously. We're also a leading bank across North America, including a top ten foreign bank in the United States and the fifth largest bank in Mexico, with additional market-leading presence in the Caribbean and Latin America.
At Scotiabank, our credit card offerings are part of our overall portfolio of products and services available to both individuals and small businesses whose banking needs we serve everyday. Our array of credit cards provides secure payment mechanism, fraud detection, liability protections and, depending on the card, rewards for purchases. We are proud to provide cards that offer both consumers and merchants protection when they use a card for payment.
In addition, our cards help those with no or low credit to build their credit rating, helping them to then qualify for loans and mortgages and to make purchases for products where credit is critical.
Our goal at Scotiabank is to build relationships with our clients and ensure that they have the financial products they need and the products that work for their individual circumstances like credit cards, chequing accounts, investment accounts and/or mortgages. This is an important part of our overall strategy to act as the primary banking partner for our customers. Credit cards are often alongside other products and provide clear and substantial benefits.
Canadian consumers see credit cards as a secure and convenient tool to pay for everyday household purchases, travel and a range of other expenses. Scotiabank offers a variety of consumer and small business credit cards suitable for a variety of customers according to their interests and needs so that clients can select the best cards for their lifestyle. We work hard to ensure that the features, services and benefits, including rewards, reflect what our individual consumers and small business customers are looking for in credit cards.
We give customers choice. Examples of the choices we provide to our personal and small business customers include cards that offer low interest rates; cards that offer no or low annual fees; cards for students and new Canadians; cards for travellers with no foreign exchange and other benefits like insurance coverage; cards that offer cash back on purchases and cards that offer Scene+ points that can be redeemed for groceries, travel, gift cards or movies. This flexibility is a critical part of our commitment to ensuring that we provide the right cards to the right customers from both a business perspective but also from a risk perspective.
At Scotiabank, we pride ourselves on the close relationships we have with our small businesses. We work with them to understand their business banking needs and provide relevant advice, tools, products and services to help their businesses thrive. We offer cards that help small businesses manage their daily expenses, enabling them to separate personal and business expenses, which simplifies tax accounting and helps with spend management and cash flow prediction. I mention this to point out that our customers are savvy users, and they use these tools to access multiple benefits from their credit cards. Both our individual and our small business customers use credit cards as a payment tool rather than a credit vehicle if it works for them as appropriate and/or their business needs.
Finally, I want to speak about a topic that we know is top of mind for Canadians and for our credit card customers: fraud and cybersecurity. As we continue the rapid evolution to more digital platforms, it is more important than ever to have robust systems to ensure that payment systems and consumer data is secure. In Canada, fraud has increased since the pandemic. The increase in fraud has impacted our clients and had a significant cost to our businesses. Scotiabank vigorously invests to monitor and protect our customers and businesses from fraud. Each year we spend tens of millions of dollars specifically to manage credit card fraud from the moment someone applies for a new card to how it is used for transactions online and in person.
I'd like to close by emphasizing two points. First, credit cards are a secure form of payment that enable retailers to facilitate payments in real time without taking on credit risk. These payments happen seamlessly, both in store and online, because of investments made by the wider ecosystem as we innovate to provide better services. We do not take those benefits for granted.
Second, Scotiabank and Canadian banks more broadly are heavily regulated compared to other institutions in the wider credit card and payment ecosystem. Aside from the code of conduct, rules set by OSFI, the FCAC, the Competition Bureau and the Bank of Canada, we reinforce the security of our credit card businesses for consumers. When customers use a credit card by a licensed bank in Canada, they have important rights and responsibilities that are protected by those rules and regulations. At Scotiabank, we are proud of our credit cards that offer peace of mind to our customers from coast to coast to coast.
Thank you for your time today. I look forward to answering your questions.
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Thank you, and good afternoon.
My name is Meg McKee and I am the executive vice-president, Canadian credit card payments, loyalty and personal lending at TD. I am pleased to be with you today to represent TD where I have been leading Canadian credit cards since I joined in early 2022. Prior to joining TD, I spent 20 years with Amex Canada.
During my time working in Canadian credit cards, there have been important evolutions and changes in the competitive dynamics of the Canadian credit card market. First, from a consumer's perspective, over time there has been an ever-increasing number of credit card types available, which have their own combinations of features and benefits for consumers. Canadian consumers have very healthy competition in the credit card offerings that are available to them.
TD is a major credit card issuer in Canada. We are proud of our offerings, which include partnerships with Amazon, Starbucks, Aeroplan and Expedia, as well as through the My TD Rewards platform.
There have been multiple rounds of public policy discussions led by governments about credit card acceptance fees and interchange rates over the past two decades. These discussions, under governments of different stripes, have focused largely on reducing card acceptance costs for merchants. As the committee knows, interchange and assessment fees are set by the credit card networks and not credit card issuers like the representatives of the banks that are before you today, which is why it was very appropriate that the first companies that this committee heard from were the credit card networks that set the rates in question.
Canada's credit card ecosystem is important to individual Canadians, to merchants and to its financial ecosystem participants. I look forward to the opportunity to discuss this ecosystem with you.
Thank you.
One of the witnesses mentioned that it is a highly regulated industry, but when we look at the current portfolio of all the five major banks that are here today, 30% to 40% of their lending is to the residential real estate market. When we include commercial real estate it's sometimes about 50% or over, but most of it is for refinancing existing stock, not creating new housing units. Maybe we should bring in credit guidance so that we can mandate the banks to give at least 10% to 20% to create new capital stock, either in real estate or in small-scale manufacturing, which I believe is required with onshoring, near-shoring and self-reliance so that it goes up.
Anyway, to come to today's issue, I have two particular questions for all. We are a developed and a technologically advanced country, but why is it that we're backward when it comes to global south countries, developing countries, that have faster real-time payment systems? If I have to transfer from my personal bank, from one bank in Nepean to another bank in Nepean, say, about $10,000, it takes over a week's time, whereas, in some global south countries, it can be done in a matter of seconds. Why is that?
I will start with the Bank of Montreal.
Ms. Douglas, why is it that our technology solutions are so backward that I can't transfer money instantly between my accounts within Canada, in the same area?
Let's start with that, then I can come to the other points.
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Chair, maybe next time we should ask the chief executive officers of all these banks to come in so that at least they will have the answers, because whenever we get the other executives, they always say something is not their direct responsibility and walk away from it.
Again, I think somebody said that the interchange fee is not set up by the banks. It's set up by the credit card companies. As bankers, I want to ask every one of you if you have any.... I guess you wouldn't have any objections if we capped the interchange fee at, say, 0.3% as was done by Australia or 0.5% as was done by the European Union.
Since nobody's answering, maybe I should go back again.
Ms. Douglas, I'm sorry, but you're number one on my list, so you have to answer that.
Thank you to the witnesses for being here.
Over the past five years, Canada's major banks have seen consistently higher profit margins, largely driven by interest from credit card products, which often carry interest rates around 19.9% or higher. For example, by 2022, the combined net income of Canada's six largest banks reached $60.7 billion, with $102 billion from net-interest income.
Credit products like credit cards play a significant role in the earnings as higher interest rates persist, despite the broader lower interest rate environment. Banks have also benefited from several favourable conditions, including minimal defaults due to pandemic-related federal aid and low operational costs. In fact, loan loss reserve funds set aside to cover potential loan defaults were largely released as fewer Canadians defaulted than anticipated, which boosted profits further. The strong financial performance led to increased dividends and substantial executive bonuses, but did not translate to lower interest rates for the consumers.
My question is for anyone on the panel. Would you like to contest any of that?
Okay, then I'll just move on. It will be based upon that.
Ms. McKee, why is it, then, that banks and credit cards require a 20% interest rate, generally, for their products? There are some other products that are available at lower interest rates, but they generally also come with more difficulty to acquire for consumers or fewer benefits elsewhere.
Why is it consistently 20%, despite even the Bank of Canada just recently lowering its rate? Why would credit cards not have a lower rate as well?
Thank you. I appreciate that.
The reason I'm saying that is when you compare all of the different cards that everybody offers, it's all the exact same. The differences between each and every single card that's out there is basically nothing. The only difference that is going to come down to a consumer is who they are already doing their day-to-day banking with, and that's generally who people are going to get their cards from. Sometimes people will go to a different institution, but it simplifies making your payments if you're at the same bank.
Really, at the end of the day, I've heard a lot of you talk about the different choices and the great options that are out there, but it's all the exact same. There is no real incentive to choose among all the different cards. The competition is actually quite false. There are five of you here today, but there is no competition. What is preventing one of you from saying your travel card is going to be—pick a number—12%? Is there anybody?
Let's go back to RBC.
Thank you to the witnesses. I'm going to start with Ms. Douglas from BMO.
I have a small business with five different services, and for each of those, we can determine what generates profits and what does not. We make adjustments based on what the business community commonly refers to as the cost of doing business. I imagine it's the same with banks.
All the witnesses today have said that they were unable to determine how much profit credit card transactions generate, because they weren't able to extract that information from their general figures. That seems rather strange to me. Honestly, I find it very hard to believe that they aren't able to extract data as simple as the net profits generated by credit card transactions, based on revenues and expenses.
Can you explain why it's impossible to access those numbers? That is the case at BMO, but also elsewhere, in all Canadian banks, it seems.
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In that case, are you able to provide the information to the committee?
I'm asking all the witnesses here, but you can probably answer for the others, Ms. Douglas, since you all seem to have the same policy.
From your overall numbers, are you able to extract the revenue and expenses related to credit card transactions, as well as the resulting profits, and provide those figures to the committee? Our committee is independent, as I understand it, and we can handle these numbers confidentially.
Is each of the banks able to provide that information to the committee, so we don't have to do that work ourselves?
Thank you to the witnesses for appearing.
I want to focus on interchange rates, which are the fees charged by the card issuers for the transaction. They're obviously set by the credit card companies. We've heard that throughout this testimony and in the testimony of Visa and Mastercard as well. Again, these are the fees charged by the card issuers, and a percentage of them is obviously kept by the card issuers themselves.
We had Mastercard appear before committee a few meetings ago. They said:
We set interchange to maximize participation—for our banks to make cards available and for merchants to accept them. Our priority in setting rates is to maintain a balance.
Mastercard does not receive interchange revenue. Were it left to merchants, they would want the benefits of card acceptance without paying for it, but that would make card issuance unattractive to banks. Were it up to the banks, they would want high interchange to maximize revenue, but then merchants would not want to accept the cards.
I found that testimony to be a bit disingenuous, because we know that merchants, obviously, will pass on a large percentage, if not all, of the cost of interchange fees to their consumers, the customers. When we look at banks, again, I don't want to hear in testimony that you don't set the interchange fees—we know that to be true—but I'm looking at the statement that Mastercard made about incentivizing banks to be card issuers.
We've heard in testimony that 1.4% is the average interchange fee that's charged. Obviously, that can vary across different products and different banks. What I wanted to ask of the different banks—and we can go in order of the initial speaking order—is this: Do you feel as though the interchange fees could be lowered and card issuance would still be attractive for the banks to engage in?
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The reason I ask this is we know that the Reserve Bank of Australia sets the credit card interchange rates at a weighted average benchmark of 0.5% of the transaction value, and there's a ceiling of 0.8%. We know that the U.S. does not regulate this. In the EU, the interchange rate is at 0.3%.
The reason I state these figures is that, contrary to what Mastercard said, which is they want to make card issuance attractive for you guys, the banks in Australia or the EU haven't run away from credit cards and haven't stopped offering credit cards just because interchange fees are obviously much lower than they are here in Canada. It's still attractive for them to engage in card issuance.
I also want to echo comments from my colleagues around the table who have said that they'd like to see a breakdown of that revenue, what percentage you make off interchange fees and what percentage you get to keep.
We keep hearing in testimony as well that it's very expensive to engage in this business of issuing credit cards. We'd like to see a breakdown by every single bank of what the real costs are for participating in credit card issuance and then what interchange fees you're making off of it, essentially the cost, the revenues and then the net profits that you make off of this. You guys are public corporations. Your shares are owned by the Canadian public, and I think they should know the breakdown of your participation in this industry.
Thank you.
I can tell you, when I worked at a major bank, it was 52%. It wasn't 10% for the overall bank. It was 52% that was a credit card return on equity internally, so this line that you're not making any money at a 1.6% credit card loss rate, according to the Canadian Bankers Association, relative to, say, 100 basis points generally for your lending, is a fantasy. That difference between all of you, between a 1.6% credit card loss and charging 21% interest on the credit card, is a monstrous profit decision, and it isn't a few bells and whistles on buying points from Air Canada's Aeroplan or Avion
I will move to TD.
Can you tell me about your regulatory failing in the U.S. on money laundering? Was that a result of the regulator or a result that you guys do the bare minimum in money laundering? You don't absolutely say, “I'm going to stop this no matter what.” Is that correct?
My first question is for all of you.
A significant concern relates to vulnerable communities being exploited because of their limited or constrained access to traditional borrowing vehicles, as well as having to turn to credit cards to borrow at substantially higher rates of interest.
For example, a posted interest rate for a credit card from—I'll name you—Bank of Montreal is between 19.99% and 22.99%; Royal Bank is between 19.99% and 22.99%; Scotiabank is 9.99% to 22.99%; and TD Bank is 8.99% to 23.99%. These are the ratios I read online, yet personal loan interest rates for all you in the same order are 6.7%, 6.45%, 6.45%, and 8.99% to 23.99%.
That's a 16%-plus difference. It's a huge margin.
My first question for all of you is: Why is that? Why is there such a huge margin between the credit card interest rates and the personal loan interest rates?
It sounds like you need instructions in terms of who will answer first. I'll go with TD Bank first.
Ms. Ferri, I know that you are not responsible for the choices made by credit card companies. That said, Visa and Mastercard say they agreed to temporarily reduce their interchange fees for some businesses. However, in order to benefit from these so-called agreements, merchants must have completed transactions of up to $175,000, in the case of Mastercard, and $300,000, in the case of Visa. In the end, no convenience store, grocery store or restaurant will benefit from this fee reduction.
Isn't that, in itself, proof that we need regulations and that the major credit card companies aren't taking the food price crisis seriously?
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That's called unanimity.
We see that countries with the lowest interchange fees apply rigorous regulations. This is the case, for example, in the United Kingdom and New Zealand. That is also the norm among the countries of the European Union.
Where does Canada rank internationally when it comes to interchange fees? Does anyone have that information?
I'm very sad to see that no one has that information.
In that case, what would you think of a potential regulation requiring merchants to post on every invoice the fees that credit card companies charge them for each transaction?
The question is for all of you. Whomever wishes to answer it can put up their hand. This time, I'm not going to let the witnesses off the hook.
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Has everyone heard the amendment proposed by Mr. Perkins? Is there some form of consensus?
I don't see consensus around the table on the amendment, so I'll proceed as if you haven't moved your amendment, Mr. Perkins, if that's okay with you.
We're back to the motion.
On the motion itself presented by Mr. Masse, I see everyone nodding in agreement.
We'll do our best with the clerk to try to get this done before November 1, but November 1 is right around the corner. Allow me some flexibility in scheduling, but we'll do our best.
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Okay, so this is exactly what's wrong with the entire payment space.
By the way, my understanding is that when this volume price scheme was implemented, there were only two financial institutions that met the highest volume threshold, that is, Toronto Dominion, TD, and RBC. Lo and behold, who was the co-chair of Interac's board at the time that these volume-based pricing schemes were implemented? It was TD and RBC. Then you wonder why there's a slowing and a delay in real-time payments. Is it because there is an inherent conflict of interest on the board of Interac that they don't want to move away from volume-based pricing and give smaller financial institutions an opportunity to compete on a fair level?
Do you believe you're in a conflict of interest, sir, in your role at Interac?
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Does anyone not agree with the fact that was a good thing for small businesses and not support it?
I'll take it that you all agree. That's great. I guess if we were to continue to negotiate further decreases to those interchange fees, you wouldn't have any issue with it, which is great to hear.
I also want to ask you another line of questions.
When inflation was sky-high and the Bank of Canada decided to increase interest rates to get a hold of inflation, your fees and the structure of your fees seemed to respond extremely quickly, I must say. Your fees and interest rates were very responsive to those changes.
We know that inflation has come down now to 1.6%, and the Bank of Canada has cut rates four times, with the latest one being 50 basis points. The rate is now at 3.75%, which is great news for Canadians. How are you responding in kind?
I'm remarking here on the incredible asymmetry I see between the responses as the interest rates went up and as they have come down, when the response rate has seemed to be very slow. In fact, many of my constituents have said to me that if they don't call the bank and fight with the bank, they won't see any of those rate cuts immediately with regard to their products.
What are you doing to help Canadians out now, when, finally, they're getting some relief from the central bank rate cuts?
I keep starting with RBC, and I apologize for that. There's no bias here.
I'll start with Ms. McKee from TD Bank.