Opening statement to the Standing Committee on Industry and Technology (INDU) by Commissioner Shereen Benzvy Miller

November 25, 2024 

Ottawa, Ontario 

Check against delivery 

Thank you, Mr. Chair, for the introduction, and to the Committee for inviting us to appear before you today.

My name is Shereen Benzvy Miller. I am delighted to have been recently appointed as the Commissioner of the Financial Consumer Agency of Canada, or FCAC.  

I have been Commissioner for 12 days, and I am honoured to lead an Agency with such an important mandate.

I joined during Financial Literacy Month, which takes place every November, and is now wrapping up.

The focus of this year’s campaign is to encourage Canadians to talk about money and take steps to build their financial knowledge and confidence.

FCAC’s research shows that money conversations can lead to better financial outcomes.

FCAC welcomes this opportunity to contribute to the Committee’s study of Canada’s e-Transfer ecosystem, and the broader electronic payments industry. 

Joining me today are 3 members of my executive committee. 

We have Dr. Supriya Syal, Deputy Commissioner of Research, Policy and Education.

We also have Frank Lofranco, Deputy Commissioner of Supervision and Enforcement. 

And finally, we have Jason Bouzanis, Assistant Commissioner of Public Affairs.

Each of these three functions work together to advance the Agency’s mandate, and support and protect Canadians. 

It is my hope that their knowledge and insights will aid the Committee and inform our meeting today.

In my opening statement, I will begin by outlining FCAC’s mandate. 

Then I will turn to FCAC’s role as it relates to the payment ecosystem. 

I will also explain the regulatory requirements related to electronic payments that FCAC oversees.

Finally, I will address interchange fees and e-Transfers before concluding.

FCAC mandate

FCAC is an independent federal agency that protects the rights and interests of consumers of financial products and services. 

This includes the rights of merchants who process payment cards.  

The Agency’s mandate includes many important elements. 

First, as a strong and effective regulator, we supervise the compliance of federally regulated financial entities with consumer protection measures set out in legislation, public commitments, and codes of conduct. 

That short summary of the regulatory side of our mandate carries great significance. 

Compliance with market conduct obligations leads to consumer protection and, ultimately, more positive financial outcomes for Canadians. 

Protected consumers leads to trust and consumer confidence in financial institutions.

Consumer confidence contributes to the safety and soundness of the financial system. 

The financial literacy side of our mandate is equally important.

Through FCAC’s National Financial Literacy Strategy, we work with stakeholders from across the country to build the financial resilience of Canadians.

FCAC also conducts research and evidence-based analysis on trends and issues that impact financial consumers. 

This is particularly important as an avenue through which we inform and support the Department of Finance’s role in developing financial sector policy and legislation.

As we look forward, FCAC’s mandate is expanding to include responsibility for overseeing, administering, and enforcing Canada’s Consumer-Driven Banking Framework. 

As a leader and innovator in financial consumer protection, FCAC is well-placed to take on this responsibility.

FCAC’s mandate as it relates to the payment ecosystem

Given that the Committee is furthering its study with a more specific area of focus, I will concentrate my remarks on FCAC’s mandate as it relates to the payment ecosystem. 

As discussed at our previous appearance before this committee, FCAC oversees the market conduct obligations of payment card networks operators—also known as PCNOs—under the Code of Conduct for the Payment Card Industry. 

Examples of payment card network operators in Canada include VISA Canada, Mastercard Canada, American Express, Discover, Union Pay, and Interac for its debit card product.

Payment card network operators must incorporate the Code—in its entirety—into their contracts, business practices, and governing rules.    

Payment card network operators are responsible for ensuring that the payment processing companies using their network comply with the obligations under the Code.  

That means that payment processing companies must understand and work proactively to meet the market conduct obligations in the Code. 

Revised Code of Conduct for the Payment Card Industry

Recently, the Government announced a revised Code of Conduct for the Payment Card Industry. 

Most elements came into effect on October 30th, and the remaining – more technical – elements will follow on April 30th, 2025. 

Merchants in Canada who process payment cards now benefit from protections designed to ensure transparency, flexibility and choice.   

Disclosure and complaint handling are critical components of protection, whether that be for consumers in retail banking or merchants. 

And enhanced disclosure and improved complaint-handling are key elements of the new Code. 

For example, merchants will receive more information on card processing fees at the time of quote, when they sign their agreement with their service provider, and in their monthly statement.  

Importantly, merchants also now have access to a complaint handling process that is clear, simple, transparent, and that requires that their complaint be handled in a timely manner. 

In addition, merchants have a longer period to cancel agreements and may do so if certain fee reductions are not passed on in full. 

FCAC expects payment card network operators to implement the revised Code, and it is our role to supervise their compliance with their market conduct obligations.

While FCAC does not comment publicly on its ongoing supervisory activities, the Agency’s conclusions on the compliance of federally regulated financial entities are described in our Annual Report.

I should also mention that FCAC provides unbiased and authoritative information to help merchants understand their rights under the Code.  

Interchange fees

I believe it would also be valuable to take this opportunity to briefly touch on FCAC’s oversight of interchange and other core payment card processing fees.

Regarding payment card fees, payment card networks and their participants are expected to meet their commitments related to fees under the Code.

The commitments related to interchange fees are: 

• to disclose fees in language that is clear, simple and not misleading; 

• to notify merchants of fee changes within a minimum of 90 days of the effective date; and 

• to respect merchants’ right to cancel agreements.  

It is important to note that the market sets interchange fees. 

E-Transfers

We also recognize the Committee’s interest in e-Transfers, a service provided by the Interac Corporation. 

Data from Payments Canada continues to suggest that Canadians primarily use online transfer services such as Interac e-transfer for peer-to-peer money transfers, rather than for purchasing good or services.

Interac is one of the payment card network operators that has signed on to the Code of Conduct for the Payment Card Industry. 

FCAC protects both consumers and merchants with regard to services offered by Interac.

For consumers, e-transfers are a service provided by banks. Banks must disclose the fees they charge for Interac e-Transfers to their customers. 

There are very specific and stringent rules around the disclosure of fees charged by banks to their customers. 

These are one of many obligations overseen by FCAC under the Financial Consumer Protection Framework.

For merchants, Interac must ensure that payment processing companies that enable merchants to accept debit cards at the point-of-sale disclose the fees charged for this service. 

This is one of many requirements under the Code of Conduct for the Payment Card Industry that is overseen by FCAC. 

In both these cases, for consumers and merchants, disclosure of fee information enables consumers and merchants to make informed decisions about the products and services available to them.

Interac fees are commercial decisions. 

Conclusion – FCAC role in financial system safety and consumer confidence

To conclude, I briefly outlined FCAC’s mandate and how we protect financial consumers and merchants. 

I have described FCAC’s role in the payments ecosystem.

And, I have addressed FCAC’s oversight as it relates to interchange fees and e-Transfers.

FCAC’s role is an important one. We safeguard consumers and merchants, and equip them with the knowledge to make informed decisions.

FCAC’s regulatory, research, and financial education resources all work together, and contribute to supporting a strong, safe and stable financial system for the benefit of Canadians. 

Through effective consumer protection and a commitment to strengthening financial literacy, FCAC fosters trust. 

A trust that enables Canadians to navigate their financial journeys with confidence and peace of mind.

Mr. Chair, that concludes my opening remarks. I look forward to the Committee’s questions.