TORONTO - Canadian shoppers are paying all-around higher prices because major credit card companies forbid retailers from charging credit card users a fee at the checkout, Canada's competition watchdog claims. Is this another realtors type situation?..Look what happened to them. and here the result

In an application filed Wednesday with the Competition Tribunal, the Competition Bureau alleges that a "no-surcharge" rule and other policies of both Visa and MasterCard are "restrictive and anti-competitive."

The filing has reignited a war of words but not actions, between the bureau on one side and the credit card companies on the other, who say the rules actually protect consumers from retailers who could slap fees on transactions and discriminate against card users. Since its been proved that the credit cards are under the thumb of government(wikileaks)I wonder where this will go?

Store owners are currently charged between 1.5 per cent and three per cent per credit card transaction, but the "no-surcharge" rule prevents them from tacking on a surcharge to offset the extra amount.

The Bureau claims those fees add up to about $5 billion per year in hidden credit card fees for Canadian merchants — who pay some of the highest levels in the world.

I applaud Competition Commissioner Melanie Aitken who maintains that the above facts encourages businesses to bury the surcharges in the prices of all their products — no matter what payment method is used. The Bureau also takes issue with credit card policies that prevent retailers from encouraging consumers to use other payment options, like cash or debit, which cost retailers less, and a requirement that merchants must accept all credit cards offered by a company, including premium cards that carry higher fees for acceptance.

A $400 purchase on a premium credit card, which includes a three per cent fee, would cost business owners $12 compared to a standard 12 cent flat fee that Interac charges on all debit purchases, regardless of the size, Aitken said.

"If you give them flexibility, you take away those constraints you're going to find that you're going to introduce competition between Visa and Mastercard that isn't there today," she said in an interview. "When you introduce competition, they're going to have to try to make those cards attractive to merchants ...They're going to stop loading up more and more fees on these premium cards and that will result in decreased costs that would otherwise be passed down to consumers."

However, the credit card companies and a consumer association argued that removing the rules would allow merchants to charge credit card users exorbitant fees that can vary wildly while at the same time keeping current prices intact. MasterCard said that if businesses were forced to charge a fee for use, it would result in a form of discrimination against credit card holders, who would have to pay more for using the cards. "What the Competition Bureau is suggesting is taking a well-functioning payment system and turning it into, quite frankly, some form of chaos," said Don Lebeuf, vice-president of customer delivery at MasterCard. "This could really negatively affect consumers and that's why these rules are here.

Having consumers faced with any number of different scenarios for every different merchant, it's problematic and it's discriminatory against consumers," he said and added the benefits to businesses who accept credit cards offset any fees they have to pay, adding that those who have an issue with fees can opt not to accept the cards. Some amazing statements in my view and typical of a monopolistic view.

If the Competition Bureau has its way, he said, it is questionable whether businesses will reduce prices across the board or keep pricing levels intact while also charging credit card users a fee. I say let it happen..take stock later!

Visa Canada released a statement calling the Competition Bureau's move "anti-consumer," arguing the rules "protect consumers from being punished by large retailers who seek to impose surcharges and take away consumer choice at the checkout counter."

The company pledged to vigorously defend its "pro-consumer" provisions.

Both companies denied that they forbid store owners from steering customers toward other payment options, arguing that they don't stop retailers from offering discounts for paying with cash or debit.

The Consumers Association of Canada (who are they they did not ask me and I am a consumer) largely supported the position of the credit card companies arguing that allowing merchants to levy surcharges on credit card purchases could lead to "predatory practices," under which individual businesses decide how much they want to charge the consumer.

"The Competition Bureau appears to have abandoned our interests in favour of the well-organized merchant lobby," said its president Bruce Cran.

The association cited a recent study by a consumer group in Australia, where regulators removed the no-surcharge policy, that found consumers are paying as much as 10 per cent extra each time they use their credit card.

The group says that some businesses use surcharges as a new revenue stream. For example, Australia's largest domestic airline now imposes surcharges as high as $30 per ticket, it said.

Meanwhile, the Canadian Restaurant and Foodservices Association, which complained to the Competition Bureau in 2009, said the current rules are unfair to business owners who accept credit cards.

"A duopoly in credit cards has led to significantly higher costs for our members who accept credit cards, and many of them have little choice but to pass at least some of those costs onto their customers," said CRFA President and CEO Garth Whyte.

Visa and MasterCard process about 90 per cent of all credit card transactions in the country. The Bureau is challenging Visa and MasterCard's rules under the price maintenance provisions of the Competition Act, which allows the Competition Tribunal to prohibit certain agreements or contracts that influence prices upwards or discourages the reduction of prices.

The Bureau launched an investigation in response to complaints by merchants and their associations and initiated a formal inquiry in April 2009.

Good luck I say..