It is my pleasure to be here today to participate in the Committee’s discussions of Bill S-202, which proposes
amendments to the Payment Card Network Act.
The CBA represents 60 banks, including domestic chartered banks, foreign bank subsidiaries and foreign
bank branches operating in Canada.
We are very proud that Canada’s banks have been rated the soundest in the world for the past seven years
by the World Economic Forum. Sound, strong banks help families buy a home and save for retirement, and
help small businesses to grow and thrive. Banks contribute to the economy in many other ways:
- 280,000 Canadians are employed by banks across Canada.
- Banks provide financing to about 1.6 million small and medium sized businesses.
- Canada’s six largest banks paid about $8 billion in taxes to all levels of government in Canada in 2013, and
- Canada’s profitable banks provided $13.5 billion in dividend income to millions of Canadians in 2013 through their pension plans, RRSPs and direct share ownership.
In short, banks help drive the economy, providing economic benefits to all Canadians today and into the
Canadians trust and value their banks. From our public opinion research we know that 81 per cent of
Canadians have a favourable impression of banks in Canada and 90 per cent have a favourable impression
of the bank they do most of their business with.
With this backdrop of how our banks are vital to the growth of Canada’s economy, I would like to take a few
minutes to outline the banking industry’s perspective on the current payments market in Canada.
Canada has a highly-developed payments system that has long offered consumers and businesses the
benefit of a variety of different, competitively priced payment products.
While we are focused on credit cards today, we should remember that they are not the only type of payment
that consumers and retailers can choose from. They compete with cash, cheques, debit cards, mobile
payments as well as unregulated electronic payments services like PayPal. Retailers can choose which
payment methods they wish to accept and consumers can choose the form of payment that best suits their
And Canadians are embracing innovations in payments – our research shows that consumers value
contactless payments such as “tap and go” and they value being able to use a smartphone or mobile device
to pay for purchases.
Credit cards are one part of that broader payments system, offering a safe, convenient and widely-accepted
form of payment that is used by millions of Canadians every day.
The current credit card system provides value for consumers and retailers in a number of ways:
- Both retailers and consumers benefit from very fast, convenient and secure transactions which
reduce lines at checkout. If every payment transaction took an extra 30 seconds, it would use up an
additional 27 million hours of retailers’ staff time each year.
- Retailers don’t need to have as much cash on hand, reducing cash handling costs, making it safer for
them and their employees, and certainly making it more efficient at the end of the day.
- Credit cards provide retailers with guaranteed payment, without worrying about their customers’
creditworthiness, insufficient funds or outstanding receivables.
- Credit card holders are advanced funds for an interest-free period of up to 51 days from purchase to
- Many Canadians also take advantage of the rewards and benefits that come with their credit cards,
such as travel points, car insurance, damage and loss insurance and extended warranty programs.
What is often not very well understood is the credit card transaction process. As you will see in the illustration
that we have provided to you, credit card issuers – banks and other financial institutions like credit unions –
are one player, but there are other players in the transaction process who share in the costs and benefits of
the credit card system.
As credit card issuers, banks’ primary relationship is with their customers, the millions of Canadians who have
chosen to use credit cards as a convenient payment tool that offers the benefits I have mentioned and many
others. Banks work hard to offer the best products and services to their customers – and customers expect
this from their financial institution.
In this ongoing discussion about proposed changes to the credit card market, it is important to remember the
interests of all stakeholders, including the millions of Canadian credit card holders.
We are not supportive of Bill S-202. Aside from numerous concerns about specific provisions and
terminology in this proposed legislation, more generally, 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.
For example, the Reserve Bank of Australia (RBA) regulated card interchange rates and permitted merchants
to apply surcharges to customers paying with credit cards. While merchants received the benefit of the
reduced interchange fees, these savings have not been passed on to consumers in the form of lower prices
by retailers. Where governments have intervened in the credit card market, it has resulted in higher costs
and reduced benefits to the consumer.
As I said at the outset, Canada’s banking system is the soundest and strongest in the world. Part of that
strength is the tremendous choice and competition benefitting all Canadians. We encourage the Committee to
carefully consider the interests of millions of Canadian credit card holders as you review the provisions in Bill
Thank you for inviting us here today.
I will be pleased to respond to your questions.