New Credit Card Laws Threat to Consumers, Critics Charge

October 9th, 2009:  The Star:  In another article written today by The Star, 



Two bills currently before the Senate risk reducing competition in Canada's multi-billion dollar debit- and credit-card markets, while driving up consumer fees through heavy-handed regulation, says the parliamentary secretary to Finance Minister Jim Flaherty.

Liberal Senator Pierrette Ringuette has introduced two bills in Canada's upper chamber that seek to regulate Visa's and MasterCard's entry into the debit market, while giving Canada's banking regulator new powers to control interest rates and fees for both credit and debit cards.  Conservative MP Ted Menzies warns that ordinary Canadians would pay the price if the two pieces of legislation, which face a second reading in the Senate on Thursday, are passed into law.

"Realistically, if we try and shackle this too tight, we'll see competition step out of the market and then we may end up with something worse than what we have already," Menzies said.

The first bill seeks to amend the Canadian Payments Act to make Visa and MasterCard subject to federal regulations at a time when the global giants are preparing to enter this country's debit card market. The amendment would name Visa and MasterCard, along with domestic not-for-profit player Interac, as "designated payment systems" under that piece of legislation to "ensure that all three debit card operators will be subject to the same laws and standards," Ringuette said.

The second bill would grant Canada's banking regulator, the Office of the Superintendent of Financial Institutions, additional powers to oversee the interest rates and fees charged by banks to use credit and debit cards.



...The Canadian Bankers Association said the potential impact on credit card users was still unknown: "But ... there are always unintended consequences when regulations are imposed on highly competitive and well-functioning markets, and these unintended consequences can have a negative impact on consumers."



MasterCard, meanwhile, issued a statement saying Canada's current regulatory framework is "sufficiently robust" to ensure competition.



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