The SME Perspective on

Debit and Credit Cards

Presentation to the Senate Committee on Banking,
Trade and Commerce

Catherine Swift, President & CEO

Corinne Pohlmann, Vice- President of National Affairs April 1, 2009
 About CFIB
 Represent 105,000 independent business
members across Canada
 Non-partisan, not-for-profit organization
 Deal with federal, provincial and municipal
issues
 Represent all sectors, all regions
 100% funded by members
 Field force visit 4,000 SMEs per week
 Democratic survey process sets policy agenda

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 Most Businesses in Canada are Small
Business with no Fewer than 5
payroll employees employees
(54.8%) (26.4%)

500 employees
or more
(0.1%) 5 to 19
50 to 499 20 to 49 employees
employees employees (12.6%)
(2.3%) (3.8%)
Number of Establishments: 2.4 million
Source: Statistics Canada, Business Register, June 2007

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 Business Barometer Index

Source: CFIB Quarterly Business Barometer, March 2009, based on 1,741 responses

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 CFIB activities on credit/debit card
 CFIB has collected more than
12,000 Action Alerts
 Letters and Action Alerts
sent to Minister Flaherty and
all MPs
 Continue to collect about one
thousand Action Alerts per
week
 Survey in field to collect
more detailed information
 Public opinion poll

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 SMEs that accept credit cards by sector
Accept credit cards Do not accept credit cards
Retail 96 4
Hospitality 94 6
Personal & Misc. Services 89 11
Arts, Recreation & Information 84 16
Wholesale 82 18
Social Services 69 31
Enterprises & Admin. Management 67 33
Manufacturing 56 44
FIRE 53 47
Professional Services 52 48
Transportation 52 48
Construction 38 62
Agriculture 29 71
Natural resources 27 73

Source: CFIB Point of View Survey on Business Financing, Preliminary data based on 3,514
responses, March 2009.

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 Which of the following credit cards does
your business accept?

Visa 96

Mastercard 94

AMEX 40

Franchise Store Card 4

Other 4

0 20 40 60 80 100
Source: CFIB Point of View Survey on Business Financing, Preliminary data based on 3,514
responses, March 2009.

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 Which of the following does your business
use for credit card processing?

Chase Paymentech 24

Moneris 21

Global Payments 7

TD First Data 7

Desjardins 4

Other 9

0 10 20 30
Source: CFIB Point of View Survey on Business Financing, Preliminary data based on 3,514
responses, March 2009.

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 What level of difficulty do you encounter
in understanding your credit card fees?

22%
32%

46%
Very difficult
Somewhat difficult
No difficulty at all

Source: CFIB Point of View Survey on Business Financing, Preliminary data based on 3,514
responses, March 2009.

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In its 2009 budget, the federal government proposed to improve the
way that banks and other financial institutions inform consumers
on credit cards. Should the federal government expand this
approach to include credit/debit card fees paid by merchants?

Yes
91%

No
3%

Don`t know
6%

Source: CFIB Point of View Survey on Business Financing, Preliminary data based on 3,514 responses,
March 2009.

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 Would you support or oppose tighter rules
for the credit card industry in Canada?
Support Oppose

BC 80 12

Prairies 82 13

Ontario 83 12

Quebec 82 16

Atlantic 86 11

% response

Source: Environics Research Group for CFIB, Public opinion poll conducted March 5th to 8th,
2009 with 1,524 credit card holders.

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 Recommendations
 Enhance oversight/scrutiny of credit and debit
card industry
 Appoint an Agency responsible to oversee credit card
and debit card fees and activities (eg. Bank of Canada)
 Regularly collect data and/or conduct research on the
cost of merchant/ interchange fees and other activities,
trends and/or practices
 Regularly conduct Parliamentary hearings to study
impact of credit and debit cards on merchants and
consumers

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 Recommendations
 Enhance transparency and accountability
 Merchants should be able to easily understand a card`s
merchant fee before accepting it for payment
 There should be full transparency on interchange fees
and what they should cover (transaction processing,
fraud, authorizing process, etc.)
 Fees should not be subject to change within a contract
period. If the fees or conditions change, there should be
no exit penalties for the merchant
 Create a Code of Conduct that is applied to credit and
debit card activities
 Require fair warning of cost increases
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 Recommendations
 Allow merchants and consumers choice with
credit cards
 Merchant Choice - Merchants should be allowed to
refuse certain cards, create limits on their use, or offer
discounts for other payment methods
 Consumer Choice – Banks should not be permitted to
send out cards with new fees and features that have not
been requested by the consumer
 Set up a Total Cost of Acceptance calculator to assist
merchants in understanding impact to their business

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 Recommendations
 Scrutinize changes to debit card system
 Maintain Interac as the debit transaction mechanism. It
has served merchants and consumers well
 Debit charges should be on a cents per transaction basis
and not on a percentage (of the value)
 Need for public hearings on any changes to the
structure of debit in Canada
 Do not allow debit and credit features on the same card

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