Visa and MasterCard impose restrictive and
anti-competitive rules on merchants that ‘hurt’ businesses and
consumers, according to Canada’s Competition Bureau.

Canadian Commissioner of Competition
Melanie Aitken has filed a complaint with the Competition
Tribunal alleging these rules have effectively eliminated
competition between Visa and MasterCard for merchants’ acceptance
of their credit cards, resulting in increased costs to businesses
and ultimately consumers.

“Visa and MasterCard’s anti-competitive
behaviour hurts businesses and consumers alike,” said Aitken.

“It is particularly harmful for SMEs, which
are the key engines of growth in Canada. Without changes to the
rules, merchants will continue to face high costs for credit card
acceptance, while consumers, even those who use lower-cost methods
of payment like debit or cash, will continue to pay higher

Visa Canada has released a statement claiming
it is “disappointed” the Competition Bureau has taken an
anti-consumer position by filing a lawsuit against the network.

“We intend to vigorously defend our
pro-consumer provision,” said the statement.

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“Visa’s no-surcharging protection was created
specifically to shield consumers from retailers who seek to impose
checkout fees and penalise consumers who choose e-payments.”

Visa and MasterCard stand accused of
prohibiting merchants from encouraging customers to consider lower
cost payment options like cash or debit. Furthermore, once a
merchant agrees to accept one of Visa and MasterCard’s credit
cards, it is argued that merchant is forced to accept all credit
cards offered by the networks, including those that “impose
significant costs on merchants”, such as premium cards.

The Competition Bureau claims Visa and
MasterCard operate the two largest credit card networks in Canada.
Together they processed more than 90% of all credit card
transactions by Canadian consumers in 2009, representing over
$240bn in purchases.

The complaint also claims Canadian merchants
pay an estimated $5bn annually in hidden credit card fees.