[OTTAWA, ON] — 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," said 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."
Many European, Asian and African countries have been quick to adopt systems that allow payments to be made using smart phones or other digital means. Some European countries have almost entirely eliminated the need for cheques.
Many of those countries have also 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, says Pat Meredith, who headed the Task Force for Payments System Review.
"The mobile wallet has the ability to give (business) an unlimited number of loyalty cards," said Meredith. "Merchants are prepared to pay a lot more for loyalty; they just don't want to pay for loyalty to your bank credit card. They want a world where the consumer is loyal to their products and services. That's what the mobile wallet can do."
Opposition consumer affairs critic Glenn Thibeault unveiled a private members' bill Monday calling on the government to act on the task force recommendations.
"Canadians are frustrated with the way our system is so dependent on cheques and paper," said Thibeault. "What they want to see is a move towards a more secure, stable, digital payment system."
The task force estimates that delaying implementation of a digital payments system is costing the economy $32 billion annually.
But the banks control the infrastructure and haven't made the necessary investments to move away from paper invoices and payments, said Meredith.
And it will require government action to ensure that those investments are made, she said.
"As the owners of that infrastructure, (the government) could absolutely set a new direction."
