Finance Minister Jim Flaherty should take action against the credit-card foreign transaction fees applied to Canadians, says one activist.
"It's pure gouging and the finance minister should be stepping in and doing something to protect 20 million Canadians, who are bank customers, from these kind of gouging fees," said Duff Conacher, an Ottawa-based spokesman for the Canadian Community Reinvestment Coalition, a group calling for increased accountability from banks.
When credit card transactions by Canadians are processed abroad, a fee is levied by Visa to its member institutions to convert foreign purchases to Canadian dollars.
Tania Freedman, director of corporate communications for Visa Canada told the Winnipeg Free Press last month that the Visa fee was quantified as being one per cent. However, the financial institution charges a 2.5 per cent fee to their customers for the transaction.
"This is the first time that we've had confirmation with Visa saying, well if someone purchases something for $100, we'll add another dollar on," Conacher told CTV's Canada AM.
While the fee is specified in the fine print of credit card agreements, Conacher said that it's "not very transparent."
"The banks are doing nothing for (the 2.5 per cent fee) because Visa is the one that actually does the exchange," Conacher said.
With the value of the Canadian dollar rising in recent months to be on par with its U.S. counterpart, the issue over the credit-card foreign transaction fees could gain a higher profile.
"All the banks are charging this fee and Finance Minister Jim Flaherty should be doing something to actually protect people instead of letting the banks off the hook and protecting them from accountability," Conacher said.
According to the Winnipeg Free Press, the service fees can vary depending on which financial institution you are dealing with. The Bank of Montreal, RBC Financial Group, Scotiabank and TD Canada Trust all apply 2.5 per cent service fee charges on credit card transactions made outside of Canada. Citizens Bank of Canada applies a 2 per cent fee and 1.8 per cent is added on by Desjardins.
