Welcome to InterchangeTruth.com - Interchange Truths

Truth: Consumers do not pay credit and debit card transaction fees.
Consumers do not pay transaction fees for merchants’ credit and debit card processing any more than consumers directly pay merchants’ rent, staff wages or other operational costs. Retail lobbyists have deliberately confused and combined references in their materials to merchant fees, which consumers do not pay, with fees that consumers may pay as part of their credit card agreements. Such deliberate muddying of the waters on the issues is misleading and disreputable.

Truth: Credit cards are vital for economic activity.
The credit card payment system provides a vital infrastructure for economic activity, facilitating more than $240 billion in retail transactions annually in Canada. Credit cards provide millions of consumers and businesses with access to credit and facilitate spending with Canada’s retailers.

Merchant fees are critical to the functioning of the credit card payment system. Restructuring the system by disrupting these fees as suggested by retail lobbyists will undermine its overall operation. It is particularly ill-advised to make such proposals during a time of economic uncertainty when retailers can ill-afford to see further impediments to consumer spending.

Truth: Merchants accept cards because of the value they represent.
In exchange for the enormous value provided, merchants do pay a fee for card acceptance. Merchants are not required to accept credit or debit cards, but choose to do so in increasing numbers. This is because card payments represent good value. Debit and credit cards represent convenient, secure, and globally recognized forms of payment that enable billions of dollars in commerce for Canadian retailers and independent businesses annually. Moreover, card payments are more cost-effective than handling cash or cheques.

Some of the benefits of accepting payment cards are:

Increased Sales
Customers spend more when they are not constrained by cash on hand. As a result, it is not uncommon for merchants to see increased sales, especially purchases of higher-margin products and specialty items. This is particularly true among different segments of cardholders. Moreover, when customers are empowered by card payments they tend to frequent the same store more often.
Customer Satisfaction
Customers appreciate retailers and independent businesses that allow them the flexibility to pay the way they want to pay - including by credit or debit card. Happier customers are more loyal customers.
Improved Efficiency
Card transactions today are conducted electronically. These payments can save time and money by minimizing cash handling and payment reconciliation, giving merchants more time to do more important things - like managing and growing their businesses.
Increased Safety
With lower volumes of cash, merchants are less vulnerable to theft and pilfering.
Currency Convenience
Credit cards are settled in the currency in which merchants sell their goods and services, regardless of where the cardholder is from.
International Customers
MasterCard and other major card brands represent access to millions of international customers who otherwise would be unable to exercise their purchasing power when visiting Canadian retailers and independent businesses.
Payments Innovation
MasterCard and its financial institution customers have introduced innovations that have been embraced by merchants. For example, contactless payments like PayPass® have revolutionized throughput and convenience for merchants and cardholders. MasterCard is the contactless payments leader in Canada, and Canada enjoys an extraordinarily high level of contactless penetration among merchants and cardholders, which is a testament to the Canadian appetite for innovation.
Infrastructure Investment
Merchants enjoy the seen and unseen benefits of the substantial investment made by MasterCard and its financial institution customers in ever faster, more reliable, and more secure payments.
Speedier Checkout
Merchants are able to speed their customers through checkout with rapid card payments. No more counting change, and no one wants a return to waiting while customers write cheques.
Payment Guarantee
When a merchant accepts an authorized card payment, it does not have to manage or worry about the creditworthiness of the cardholder, chasing receivables, or insufficient funds.

Truth: Consumers prefer card payments.
For MasterCard cardholders, the benefits that drive this preference include:

Zero Liability
Consumers enjoy the confidence that they are not liable for unauthorized transactions on their MasterCard cards. When fraudulent transactions do occur, the loss is generally recoverable. This is not the case with cash, and difficult with cheques.
Chargeback Protection
When a consumer does not receive goods or services paid for, with MasterCard they have the power of chargeback protection on their side. Recently, cardholders who charged their Zoom Airlines tickets on their MasterCard cards had recourse through chargeback protection. Consumers who paid with cash or cheque did not enjoy this benefit.
Global Acceptance
MasterCard cardholders enjoy unparalleled acceptance in 210 countries and territories at over 27 million merchant locations regardless of where and by what financial institution their cards were issued. This power represents an enormous advance in personal autonomy and has democratized travel for all. It also enables consumers to make purchases wherever and whenever they want, including on the Internet.
Rewards and Benefits
Canadian consumers have become some of the most sophisticated consumers of payment card rewards and benefits in the world. These programs are promoted by merchants under co-brand programs designed to deliver incremental value to their customers and thereby engender customer loyalty. Consumers using these co-brand programs tend to spend more and more frequently at the same merchant as a way of maximizing the benefits they receive from their card.

Truth: Regulation of interchange in Australia hurt consumers.
When the Australian government mandated reductions in merchant fees at the request of retailers, the reductions were not passed on to consumers as lower prices, and cardholder features were significantly reduced because they could no longer be supported. For reasons like this, the U.S. Department of Justice has recommended against a similar proposal in the United States and noted that the Australian approach hurt consumers.

Truth: Merchant fees are not “skyrocketing.”
Just as retailers and independent businesses adjust prices from time to time in response to various market circumstances, card fees require adjustment as well. The recent adjustments to merchant fees for consumer cards are the first in seven years, and not all of the recent adjustments resulted in increased cost to the merchant. In fact, some of the adjustments will reduce merchant fees. It is therefore inaccurate for retail lobbyists to characterize merchant fees as “skyrocketing.”

Truth: Debit competition will benefit merchants and consumers.
While retail lobbyists criticize the introduction of competition to challenge the current debit monopolist in Canada, they have in the past consistently argued that open markets and competition promote increased choice, innovation, and competitive prices. MasterCard agrees.

We question how anyone could see a lack of competition in the debit arena as a positive for merchants or consumers. MasterCard operates a leading global debit network and has offered debit payments in more than 100 countries for many years under the Maestro and MasterCard brands. Already, including in Canada, MasterCard’s Cirrus network provides unparalleled access to cash through its ABM network. MasterCard’s debit products provide their merchants and cardholders with significant advantages, including a global and secure debit network that allows cardholders to pay with debit internationally and merchants access to over 660 million cardholders worldwide.





			Truth: Consumers do not pay credit and debit card transaction fees. Consumers do not pay transaction fees for merchants’ credit and debit card processing any more than consumers directly pay merchants’ rent, staff wages or other operational costs. Retail lobbyists have deliberately confused and combined references in their materials to merchant fees, which consumers do not pay, with fees that consumers may pay as part of their credit card agreements. Such deliberate muddying of the waters on the issues is misleading and disreputable. Truth: Credit cards are vital for economic activity. The credit card payment system provides a vital infrastructure for economic activity, facilitating more than $240 billion in retail transactions annually in Canada. Credit cards provide millions of consumers and businesses with access to credit and facilitate spending with Canada’s retailers. Merchant fees are critical to the functioning of the credit card payment system. Restructuring the system by disrupting these fees as suggested by retail lobbyists will undermine its overall operation. It is particularly ill-advised to make such proposals during a time of economic uncertainty when retailers can ill-afford to see further impediments to consumer spending. Truth: Merchants accept cards because of the value they represent. In exchange for the enormous value provided, merchants do pay a fee for card acceptance. Merchants are not required to accept credit or debit cards, but choose to do so in increasing numbers. This is because card payments represent good value. Debit and credit cards represent convenient, secure, and globally recognized forms of payment that enable billions of dollars in commerce for Canadian retailers and independent businesses annually. Moreover, card payments are more cost-effective than handling cash or cheques. Some of the benefits of accepting payment cards are: Increased Sales Customers spend more when they are not constrained by cash on hand. As a result, it is not uncommon for merchants to see increased sales, especially purchases of higher-margin products and specialty items. This is particularly true among different segments of cardholders. Moreover, when customers are empowered by card payments they tend to frequent the same store more often. Customer Satisfaction Customers appreciate retailers and independent businesses that allow them the flexibility to pay the way they want to pay - including by credit or debit card. Happier customers are more loyal customers. Improved Efficiency Card transactions today are conducted electronically. These payments can save time and money by minimizing cash handling and payment reconciliation, giving merchants more time to do more important things - like managing and growing their businesses. Increased Safety With lower volumes of cash, merchants are less vulnerable to theft and pilfering. Currency Convenience Credit cards are settled in the currency in which merchants sell their goods and services, regardless of where the cardholder is from. International Customers MasterCard and other major card brands represent access to millions of international customers who otherwise would be unable to exercise their purchasing power when visiting Canadian retailers and independent businesses. Payments Innovation MasterCard and its financial institution customers have introduced innovations that have been embraced by merchants. For example, contactless payments like PayPass® have revolutionized throughput and convenience for merchants and cardholders. MasterCard is the contactless payments leader in Canada, and Canada enjoys an extraordinarily high level of contactless penetration among merchants and cardholders, which is a testament to the Canadian appetite for innovation. Infrastructure Investment Merchants enjoy the seen and unseen benefits of the substantial investment made by MasterCard and its financial institution customers in ever faster, more reliable, and more secure payments. Speedier Checkout Merchants are able to speed their customers through checkout with rapid card payments. No more counting change, and no one wants a return to waiting while customers write cheques. Payment Guarantee When a merchant accepts an authorized card payment, it does not have to manage or worry about the creditworthiness of the cardholder, chasing receivables, or insufficient funds. Truth: Consumers prefer card payments. For MasterCard cardholders, the benefits that drive this preference include: Zero Liability Consumers enjoy the confidence that they are not liable for unauthorized transactions on their MasterCard cards. When fraudulent transactions do occur, the loss is generally recoverable. This is not the case with cash, and difficult with cheques. Chargeback Protection When a consumer does not receive goods or services paid for, with MasterCard they have the power of chargeback protection on their side. Recently, cardholders who charged their Zoom Airlines tickets on their MasterCard cards had recourse through chargeback protection. Consumers who paid with cash or cheque did not enjoy this benefit. Global Acceptance MasterCard cardholders enjoy unparalleled acceptance in 210 countries and territories at over 27 million merchant locations regardless of where and by what financial institution their cards were issued. This power represents an enormous advance in personal autonomy and has democratized travel for all. It also enables consumers to make purchases wherever and whenever they want, including on the Internet. Rewards and Benefits Canadian consumers have become some of the most sophisticated consumers of payment card rewards and benefits in the world. These programs are promoted by merchants under co-brand programs designed to deliver incremental value to their customers and thereby engender customer loyalty. Consumers using these co-brand programs tend to spend more and more frequently at the same merchant as a way of maximizing the benefits they receive from their card. Truth: Regulation of interchange in Australia hurt consumers. When the Australian government mandated reductions in merchant fees at the request of retailers, the reductions were not passed on to consumers as lower prices, and cardholder features were significantly reduced because they could no longer be supported. For reasons like this, the U.S. Department of Justice has recommended against a similar proposal in the United States and noted that the Australian approach hurt consumers. Truth: Merchant fees are not “skyrocketing.” Just as retailers and independent businesses adjust prices from time to time in response to various market circumstances, card fees require adjustment as well. The recent adjustments to merchant fees for consumer cards are the first in seven years, and not all of the recent adjustments resulted in increased cost to the merchant. In fact, some of the adjustments will reduce merchant fees. It is therefore inaccurate for retail lobbyists to characterize merchant fees as “skyrocketing.” Truth: Debit competition will benefit merchants and consumers. While retail lobbyists criticize the introduction of competition to challenge the current debit monopolist in Canada, they have in the past consistently argued that open markets and competition promote increased choice, innovation, and competitive prices. MasterCard agrees. We question how anyone could see a lack of competition in the debit arena as a positive for merchants or consumers. MasterCard operates a leading global debit network and has offered debit payments in more than 100 countries for many years under the Maestro and MasterCard brands. Already, including in Canada, MasterCard’s Cirrus network provides unparalleled access to cash through its ABM network. MasterCard’s debit products provide their merchants and cardholders with significant advantages, including a global and secure debit network that allows cardholders to pay with debit internationally and merchants access to over 660 million cardholders worldwide.
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