A shop-owner forwarded an e-mail from the Retail Council of Canada the other day. It appears the council, which represents some 40,000 storefronts across Canada, is attempting to organize opposition to ongoing increases in credit-card fees, the "interchange fees" card companies charge retailers for the right to conduct business though Visa, MasterCard, American Express or any other credit cards.

As it stands, Canadian retailers fork over about two per cent of the cost of any credit card transactions to card companies: if a customer purchases a lamp from a furniture store for $100, $2 goes to the card company; if the customer purchases a bedroom set for $10,000, $200 goes to the credit card company, and so on.

The retail council says interchange fees already amount to $4.5 billion annually and have been escalating of late with the introduction of "premium" cards that provide lavish awards points to card users, the catch being that the cards come with higher interchange fees, which means retailers and ultimately consumers end up paying for those incentive programs.

On top of that, the card companies charge retailers fees to rent the credit card processing equipment and software necessary to conduct card-based transactions, as well as a variety of additional fees, to the degree that one retailer told me he ends up shipping about one per cent of his annual $6-million in revenue directly to Visa, MasterCard and the like.

Fine, you might say, the cost of doing business. Except the retail council argues that Canadian interchange fees are already among the highest in the industrialized world; Canada is one of the only jurisdictions that doesn't regulate interchange fees; the fees should be charged on a flat fee basis not as a percentage of the total sale cost; and the fees are being increased in an arbitrary and non-transparent way. (My retail contact, who doesn't want to be named for fear of reprisals from card companies, says extra charges related to the issuance of premium cards came "out of the blue" and raised his average Visa interchange fees from about 1.7 per cent to 2.3 per cent).

The most important point is that as their margins get squeezed by interchange fees, retailers have no choice but to pass the costs on to consumers in the form of higher prices for goods and services, leaving less money in the hands of everyone except the card companies.

Profit at Visa Inc., for example, rose 28 per cent to $314 million US in its most recent quarter. Few retailers can boast that kind of quarterly performance in an economic down-cycle.

Rubbing salt in the wound is the fact that Visa has set aside $3 billion from the record $18 billion US it raised when it went public in March in order to settle potential lawsuits stemming from allegations the company conspired to stifle competition and fix prices.

So the Retail Council of Canada has joined with the Canadian Booksellers Association, the Canadian Convenience Stores Association, the Canadian Federation of Independent Grocers, the Hotel Association of Canada, the Canadian Independent Petroleum Marketers Association and others -- more than a dozen organizations representing more than 120,000 businesses -- to say enough's enough.

They call themselves, not unreasonably, the StopStickingItToUs Coalition, and they've vowed to make escalating interchange fees an election issue by encouraging consumers to sign petitions and retailers to contact their members of Parliament and demand that party leaders and candidates take a stand on the issue.

What if, I asked my retail contact, you all just stopped accepting credit cards? "We couldn't do that," he said. "Interchange fees are still better than bounced cheques."

What if you stopped accepting credit cards for a day? All 120,000 of you. And advertised widely in advance, apologizing to customers for the inconvenience and explaining the boycott's being done for their benefit and the benefit of the Canadian economy at large?

"That," he said after a moment, "could be very interesting indeed."

© The Vancouver Sun 2008