A Canadian lawmaker has introduced legislation to establish new ceilings for credit card interchange, and though it has the support of some retail groups, experts say the bill faces headwinds.
The proposed bill would amend the Payment Cards Network Act to enable Canada’s government to set a cap on credit card interchange, though it didn’t specify any rate. The bill’s sponsor, Linda Lapointe, a newly elected Liberal MP for Rivière-des-Milles-Îles, introduced the legislation late last month in Canada’s House of Commons.
But Canada’s latest proposed interchange-cap bill faces long odds, suggested Christie Christelis, a Toronto-based payments consultant with Technology Strategies International. Lapointe’s proposed legislation mirrors similar bills introduced in each of the last several years that did not advance, he said. Like the previous proposals to cap credit card interchange, the latest is a Private Member’s Bill, which lacks the support of any particular party, Christelis noted.
The Quebec Convenience Stores Association (QCSA) and the U.S.-based Merchants Payments Coalition are among retail organizations backing the bill. “Canada is ripe for a regulatory cap on credit card transactions fees,” said Michael Gadbois, QCSA president. The QCSA contends Canada’s existing credit card interchange rate costs merchants and consumers nearly CA$7 billion annually.
Downward pressure on interchange rates has been in the air for years. In Canada, Visa and MasterCard in 2014 voluntarily agreed to cut credit card interchange rates to 1.5% in response to a request from a government agency. Last year European payment authorities introduced a 0.3% cap on interchange.
Legal action on the proposed bill also would likely require review by Canada’s Competition Bureau on the grounds that interchange interferes with a free market, Christelis believes. “Even though Canada now has a Liberal government in power, I think they have other fish to fry before tackling this issue,” he said.