Telus can’t impose surcharge on credit card payments: CRTC

Canada’s telecom regulator broadly called out the “unacceptable” practice of charging an extra fee for paying by credit card in a ruling that bars Telus from imposing the surcharge on a small number of home phone customers.

The decision Thursday by the Canadian Radio-television and Telecommunications Commission comes amid a major shift in the payment processing landscape in Canada, and the CRTC highlighted concerns that new fees for using a credit card to pay telecom bills hurt low-income and vulnerable Canadians.

As of early October, merchants (except in Quebec) have been able to pass along the costs of processing Visa and Mastercard payments to customers, although few major retailers have done so and recent survey data suggests those who do could face a backlash from shoppers who choose to go elsewhere.

Telus is the most high-profile company to add the surcharge to customer bills since the change. It started charging almost all of its customers who pay by credit card an extra 1.5 per cent on their monthly bills on Oct. 17 (excluding customers in Quebec).

But Telus needed permission from the CRTC to apply the charge to a small subset of its customers whose services are regulated by the commission — largely home phone clients in rural Alberta and British Columbia. (The CRTC only directly regulates services and retail prices in areas where it has determined there is not enough competition, such as rural and remote regions.)

The CRTC rejected that application on Thursday.

The decision doesn’t stop Telus or other telecoms from slapping credit card surcharges on unregulated services, such as wireless and home internet in urban areas.

But the commission slammed the practice in general as “unacceptable,” said it would “negatively impact the affordability of telecommunications services,” and warned the industry against adopting surcharges or continuing to use them.

“Should this practice continue, or should it become a practice within the telecommunications industry, the commission is prepared to explore all available regulatory options in the near future,” the CRTC said.

John Lawford, executive director and general counsel of the Public Interest Advocacy Centre, called the decision a “huge consumer win.”

“The CRTC decision is also a warning to all other cellphone, internet and home phone companies not to effectively double charge their customers for simply paying their bills with a credit card, which is normal,” Lawford said in a news release issued jointly with the National Pensioners Federation.

Telus did not respond on Thursday to questions about whether it plans to drop the surcharge for other customers.

Rogers told the Star it has not added surcharges to any customers’ bills while Bell did not respond to a request for comment.

Visa and Mastercard, the two dominant credit card networks in Canada, set what are known as interchange rates, fees charged to merchants to accept the cards for payment.

But it’s the banks that issue the credit cards that actually collect those interchange fees, which account for the vast majority of credit card processing costs. (Visa and Mastercard as well as payment processors such as Moneris also collect smaller fees.)

Previously, merchants could not pass credit card processing fees to customers (though many factored them directly into their prices), but for the past two months they have been allowed to add a surcharge to customers’ bills of up to 1.5 per cent.

Earlier this week, a survey found 40 per cent of credit card holders would avoid shopping at major retailers that imposed the surcharge.

Most have not done so and small business lobby groups have said the real solution lies in the government lowering interchange rates. (The federal government said in its November fiscal update that it is working on the issue.)

Telus, however, did add the charge for most of its customers and it also applied to the CRTC for permission to add the charge to the bills of regulated home phone customers in Alberta and B.C.

In a news release announcing its decision Thursday, the CRTC said it heard from almost 4,000 Canadians who complained about being charged an additional fee for paying by credit card.

It said the surcharging practice “goes against affordability and consumer interest” and hurts vulnerable consumers at a time when prices are rising owing to inflation.

PIAC and the NPF had warned about the surcharge having a negative impact on seniors and low-income Canadians.

“The problem of inflation on necessities such as food, heating and communications is eating into our seniors’ retirement funds to the point it affects their quality of life,” said NPF president Trish McAuliffe in the news release. “Telus did not consider the larger implications of its behaviour.”

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