{"id":127686,"date":"2019-01-21T10:00:26","date_gmt":"2019-01-21T15:00:26","guid":{"rendered":"https:\/\/depquebec.com\/?p=127686"},"modified":"2019-01-21T10:03:28","modified_gmt":"2019-01-21T15:03:28","slug":"4-facing-stalled-negotiations-with-visa-linda-lapointe-did-some-arm-twisting-and-won","status":"publish","type":"post","link":"https:\/\/depquebec.com\/en\/4-facing-stalled-negotiations-with-visa-linda-lapointe-did-some-arm-twisting-and-won\/","title":{"rendered":"4 \u2013 Facing Stalled Negotiations with Visa, Linda Lapointe Did Some Arm-Twisting… and Won"},"content":{"rendered":"
\"\"<\/a>Since Visa and MasterCard largely increased credit card transaction fees in 2008, retailers across the board have been urging Ottawa to limit these abusive costs by imposing a regulatory rate cap, as in Europe.
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However, 10 years later, Ottawa still rejects this solution, preferring cosmetic reductions through voluntary agreements. Why?<\/strong>
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In a series of articles entitled “The Secret Memos of Bill Morneau”, DepQu\u00e9bec<\/strong> tries to understand the Federal government point of view on this issue after having obtained for the first time highly secret and sensitive ministerial memos through the access to information Act.
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Today, for the series fourth part, DepQu\u00e9bec<\/strong> is looking at the behind-the-scenes negotiations and dealings that led to a second voluntary agreement with the credit card companies.<\/em><\/h6>\n
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Here you can find all the ingredients of a good thriller movie.<\/p>\n

First, what was thought to be a walk in the park ended up quite more challenging than anticipated.<\/p>\n

The credit card leader, it seems, would not go along as easily as expected.<\/p>\n

However, since retailers’ expectations were set quite high, backing down was out of question.<\/p>\n

Finally, at some crucial moment, the low-profile Liberal MP who started it all after winning a private bill lottery (see article here<\/a>) saved the day through some well-timed intervention!<\/p>\n

And all that to finally suspect that it may have been a bit… orchestrated.<\/p>\n

Indeed, Bill Morneau’s secret memos never cease to surprise and entertain us!<\/p>\n

Get the popcorn.<\/p>\n

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On April 2nd, 2018, DepQu\u00e9bec<\/strong>\u00a0was first in Canada to report on the upcoming Bill C-236 second reading, a nightmarish prospect for Visa then in the middle of intense negotiations with Finance Canada, but exciting for retailers hoping to see a regulatory cap on rates. As it happened, the second reading date was being continuously postponed in sync with progress made with Visa until June 12, 2018, the day it finally gave in. It appears that, unknowingly, DepQu\u00e9bec<\/strong>\u00a0somehow helped the Federal government in reaching a second voluntary undertakings set to generate $250 million in savings for SMEs from 2020 to 2025!<\/figcaption><\/figure>\n
Separate negotiations<\/h5>\n

In the fall of 2017, the Department of Finance had everything it needed to move forward on interchange fees.<\/p>\n

Indeed, the card payment assessment, launched in September 2016, was now complete. All key stakeholder groups were met and needed analyses completed.<\/p>\n

The government was also aware of the outcome following class action lawsuits against Visa and MasterCard (see Part 3 of our series<\/a>).<\/p>\n

Finally, there was only two years left to the first voluntary undertakings signed with Visa | MasterCard by the previous government in 2014 and it was therefore time to prepare for what could replace it in 2020.<\/p>\n

Finance Canada then adopted three guiding principles of its policy aimed at “greater fairness and transparency”<\/em> in the payment card market:<\/p>\n

1 – a reduction in the overall level of interchange rates<\/strong> charged to Canadian businesses;<\/p>\n

2 –\u00a0a significant narrowing of the range of interchange rates<\/strong> (the gap between the lowest and highest rates charged to businesses); and<\/p>\n

3 –\u00a0greater transparency <\/strong>on the range of interchange rates.<\/p>\n

\"\"<\/a>“These objectives are aimed at levelling the playing field, between small and medium-sized and larger businesses, which have greater bargaining power when it comes to negotiating lower rates”, declared Finance Canada in response to questions from\u00a0DepQu\u00e9bec<\/strong>.<\/p><\/blockquote>\n

And to achieve such goals, the plan is simple: to negotiate a second voluntary agreement with credit card companies with the threat of a new regulation should negotiation fails. Success depends, therefore, on posing a credible threat!<\/p>\n

Come on credit card people, move on!<\/h5>\n

Finance Canada officials are so confident in their strategy that they adopted a very tight timeline with little room for arguing.<\/p>\n

In a secret key memo, Bill Morneau’s Deputy Minister, Paul Rochon, gave the big picture:<\/p>\n

\"\"<\/a>“We are preparing to engage separately with Visa and MasterCard to seek new voluntary undertakings as discussed in the previous memo (Sept. 26, 2017) (…) We recommend launching negotiations with the networks and indicating that you are prepared to regulate if negotiations fail”, wrote the Deputy Minister.<\/p><\/blockquote>\n

The proposed critical path aims at speeding things up:<\/p>\n