Canada’s Competition Bureau last week filed for a Competition Tribunal against Visa and MasterCard claiming that the credit card providers’ mutual ‘no-surcharge’ rule, among other policies, is eliminating competition between them.
Under Visa and MasterCard’s current policy, retailers are charged between 1.5 and 3 percent per credit card transaction but are prevented by the ‘no-surcharge’ rule from adding on a surcharge to offset the extra cost.
As a result, many retails are offsetting this cost by adding it to the price of products, clearly disadvantaging the consumer.
Competition Commissioner Melanie Aitken claims that, “Visa and MasterCard's anti-competitive behaviour hurts businesses and consumers alike.”
“Without changes to the rules, merchants will continue to face high costs for credit card acceptance, while consumers, even those who use lower-cost methods of payment like debit or cash, will continue to pay higher prices.”
The Competition Bureau also plans to take action against credit card policies which prevent retailers from encouraging customers to use more cost-effective methods of payment such as cash and debit.
However, MasterCard fears that credit cold holders may end up being penalised by facing higher charges.
It is estimated by the Bureau that Canadian retailers pay around $5 billion per year in hidden credit card costs, one of the highest levels world wide.