TORONTO, Nov. 16, 2012 /CNW/ - OPEN LETTER November 16, 2012 Mr. Jim Allhusen President and Country Manager Visa Canada Corporation Scotiabank Plaza 40 King St. West, 37(th) Floor Toronto, Ontario M5H 3Y2 Dear Mr. Allhusen: I am writing you today to express deep concern about Visa's plan to increase the cost of accepting credit cards in Canadian restaurants. Our members are reaching the breaking point -- the amount they pay to process a credit card transaction can be higher than the average industry profit margin! Currently, the average full-service restaurant in Canada generates only 3.7% in pre-tax profits, while the cost of accepting some credit cards can be up to 3% of the total bill, plus the credit card fee on tax and tip: -- On a $100 restaurant bill, the owner makes an average of $3.70 profit. -- If the customer uses a premium credit card, a restaurateur in Ontario, as an example, will pay a credit card processing fee as high as $3.99 on that transaction (3% fee calculated on $100 + $13 GST + $20 tip). It is unconscionable for the payment industry to make as much off of a restaurant transaction as the restaurateur who creates local jobs and invests in his or her community. Adding insult to injury, the upcoming rate increases come at a time when Visa earnings have repeatedly surpassed expectations, prompting your company to double shareholder dividends and buy-back shares. You may argue that Visa does not set the fees charged to merchants, but it is disingenuous to argue that fee increases introduced upstream to processors and banks will not result in higher processing costs for the restaurants that accept Visa. Simply look at what has happened since card fee structures were adjusted in 2008. Business owners have no choice but to pass these costs on to consumers. In our view, an ever-expanding portfolio of high cost Visa cards is an abuse of the "honour all cards" rule, which requires merchants that accept Visa to accept all Visa branded credit cards. A challenge of these and other business practices is already underway with the Competition Tribunal. Furthermore, we view the unilateral introduction of new fees and the increase in existing fees as an abuse of Visa's dominant market position at the expense of merchants and consumers. As you are aware, restaurateurs have already been deeply upset by Visa's publicity campaign earlier this year advising Canadians not to buy lunch from restaurants. In your response to my letter about that campaign you indicated that you want to continue to constructively engage with our association and our members. We ask that you reconsider your plans to increase fees and introduce a costlier class of credit cards and instead work with the Canadian Restaurant and Foodservices Association to help make the costs of accepting Visa cards affordable and predictable for all merchants. Sincerely, Garth Whyte President and CEO Prasanthi Vasanthakumar, CRFA Communications, (416) 649-4254 email@example.com. SOURCE: Canadian Restaurant and Foodservices Association To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/November2012/16/c8895.html CO: Canadian Restaurant and Foodservices Association ST: Ontario NI: FBR FOD RES -0- Nov/16/2012 15:00 GMT
CRFA urges Visa to reconsider planned hike in credit card fees
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