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UPDATED 5:42 p.m. Tuesday OTTAWA — Canada's credit card system is a 'perverse' place where shopperswho pay with cash or debit subsidize purchases made with creditcards, the Competition Bureau argued Tuesday in its opening salvoagainst Visa and MasterCard. That's because merchants pay high fees for accepting credit cardsand those costs are passed on to all consumers, the bureau's leadcounsel Kent Thomson said in his opening statement to a tribunalhearing whether credit card companies are engaging inanti-competitive behaviour. Presenting the case for the Competition Bureau, Thomson argued thatthe restrictive contracts put in place by Visa and MasterCard allowthe two credit card companies — which represent 92 per centof the market — to essentially dictate terms to merchants. The much-awaited case before a tribunal heading by Justice MichaelPhelan of the Federal Court of Canada involves high stakes. As Thomson pointed out, Visa and MasterCard charged merchants about$5 billion in fees for the privilege of accepting payments bycustomers using the cards, charges that merchants recoup throughhigher consumer prices. Those fees, which range from 1.5 to 3.0 per cent on purchases, areamong the highest in the world, he said, about twice the ratecredit card firms charge merchants in Australia, New Zealand andmany parts of Europe. ``Most Canadians are unaware of the high cost of fees' that arepart and parcel of credit card usage, he said. ``And these are notborne by merchants alone, they are reflected in higher prices paidby customers.' In laying out the Competition Bureau's case, Thomson singled outrules credit card firms place on merchants. For example, merchantsare denied the ability to tell customers the imbedded charge forusing a particular credit card, or from levying a surcharge onpremium cards. This encourages consumers to use more premium cards in order tocollect rewards, such as Air Miles, but merchants must pass on thehigher costs to all customers, whether they use standard cards,debit or pay cash. He noted the fees on the average credit card is about 50 timeshigher than those on debit cards — about 12 cents. In a normal competitive market, the merchant would be permitted tocharge customers different prices depending on their method ofpayment. ``But none of this is possible in this country because of merchantrestrictions put in place by Visa and MasterCard,' he said.``These restrictions distort the normal competitive process.' Visa and MasterCard were expected to issue their opening statementslater Tuesday afternoon, but Visa issued a statement denying thecharge, saying the policy against a surcharge ensures customers arenot ``unfairly penalized' for using whatever card they choose. The tribunal has the power to force credit card companies to changetheir method of operations, but can not levy a monetary penalty inthe case. The issue was referred to the tribunal by the Competition Bureauafter a group representing independent firms complained theysuspected credit card companies engaged in price fixing. The hearings, which operate much like a trial, are expected to rununtil the end of June. The bureau first brought its application to the quasi-judicialtribunal in December 2010 with a challenge under the pricemaintenance provisions of the Competition Act, which allows theCompetition Tribunal to prohibit certain agreements or contractsthat influence prices upwards or discourages the reduction ofprices. The bureau launched its investigation in 2009 in response tocomplaints by merchants. The e-commerce company in China offers quality products such as E-Light IPL RF Manufacturer , Ultrasonic Cavitation Slimming Machine Manufacturer, and more. For more , please visit Anti Aging Machine today!
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