May 19, 2020

Ruling Could OK User Fee for Premium Credit Cards in Canada

Retail
retail Canada
Mastercard
Canada Regulations
Bizclik Editor
2 min
Ruling Could OK User Fee for Premium Credit Cards in Canada

The July edition of The Business Review Canada is now live!

 

A ruling this week on a complaint against Visa and Mastercard could drastically change how consumers and merchants utilize credit cards in Canada.

The federal Competition Tribunal is set to issue a decision Tuesday on whether rules imposed on merchants by the credit card companies are too restrictive.

Under the current rules, merchants must accept all Visa and MasterCard offering, but are prevented from charging an additional fee to those who pay with premium cards, which come with higher costs. If the court strikes down the rule, it could allow merchants to either reject certain cards that offer incentive points, or charge customers more for using them.

In May of 2012, Canada’s Commissioner of Competition filed a formal complaint with the tribunal, accusing Visa and MasterCard of engaging in anti-competitive behavior. The complaint says consumers have been forced to pay an estimated $5 billion worth of hidden fees each year as a result.

“Without changes to the rules, merchants will continue to face high costs for accepting credit cards, and all consumers, even those who use lower-cost methods of payment like debit or cash, will continue to pay higher prices,” Commissioner Melanie Aitken said in a statement at the start of hearings.

According to the Retail Council of Canada, the current rules allow Visa and MasterCard to charge escalating interchange fees to merchant who accept their cards without allowing them the choice of rejecting those cards that carry higher fees.

Interchange fees are charged by the banks and credit card companies on every credit or debit card transaction. Fees typically range from 1.54 percent for accepting a basic credit card to as high as 2.65 percent for “premium” cards that offer cardholders travel points or other incentives.

If the ruling is struck down, consumers could soon face retailer surcharges for using premium cards.

“If merchants were allowed to surcharge – add an extra cost – that would be a very bad consumer experience,” said CBA president Terry Campbell. “If they were allowed to, in effect, discriminate among cards or accept some cards and not accept others, again that would not be a good customer experience. Changes to those two rules could negatively affect the interests of consumers.”

Overall, critics are hoping the tribunal ruling will move the federal government toward imposing a cap on interchange fees, as is the case in Australia, New Zealand and some European Union countries.

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Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Tax
Compliance
financeleaders
Deloitte
Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

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