Finance Minister Jim Flaherty told reporters yesterday the Canadian government is working on regulating credit card companies.
He noted that interest rates for credit cards remain high despite aggressive rate reductions by the Bank of Canada but did not say what he had in mind in terms of regulation.
“There are a number of issues we can address with respect to credit cards,” Flaherty said.
In the January budget, the government said it would move to limit “business practices that are not beneficial to consumers,” adding that one measure would be to require a minimum grace interest-free period on new purchases.
The minister’s comments came as the heads of Visa Canada and MasterCard Canada, the country’s dominant credit card companies, appeared before the Senate banking committee to argue against regulation.
They also asked for further powers to enter the debit-card market, which withdraws funds directly from a consumer’s accounts — a business that is dominated by Canada’s chartered banks.
MasterCard Canada president Kevin Stanton said that allowing the credit card companies to enter the debit market would increase competition and give consumers greater benefits, including use around the world.