Thursday, August 28, 2014

Digitized payment systems worries businesses

OTTAWA—Small businesses are worried that so-called mobile wallets will give banks and credit card companies a new way to gouge them and consumers both.
A task force recommended nearly a year ago that Ottawa introduce legislation to give Canadians and businesses better tools to make payments digitally.

But a committee set up by the Finance Department to further study the issue has been told businesses worry they’ll be hit with new fees as consumers adopt payment systems designed for their mobile devices.
The Canadian Federation of Independent Business says many of its 109,000 members are terrified the fees will become too much of a burden, just like those charged for premium credit cards.
“Merchants got creamed by fees by credit card companies when they introduced premium cards a couple of years ago,” noted CFIB president and CEO Dan Kelly.
“So merchants are absolutely petrified that mobile payments, cellphone payments, may be the next big wave of gouging on the part of banks, credit card companies, and potentially new entrants,” he added.
Many European, Asian, and African countries have been quick to adopt systems that allow payments to be made using smartphones or other digital means.
Many of those countries also have imposed caps on digital payment fees.
The Harper government has been reticent to impose regulations on what banks or credit cards charge consumers and businesses.
But the Competition Bureau is expected to issue an edict this fall on the rules imposed on merchants by credit card companies in this country.
Those rules include forcing businesses to accept all credit cards—even premium cards that charge high fees per transaction—but prohibit those businesses from adding surcharges to try to recover those costs.
That is a key reason why Canadian businesses—upset at having to pay fees so customers benefit from being loyal to a credit card company—should embrace mobile payment systems that give them the power to enact or improve their own loyalty programs, said Pat Meredith, who headed the Task Force for Payments System Review.
“Merchants are prepared to pay a lot more for loyalty, they just don’t want to pay for loyalty to your bank credit card,” she reasoned.
“They want a world where the consumer is loyal to their products and services.”

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