ORHMA Presentation to the Standing Senate Committee on October 9 - - PDF document

Ontario Restaurant Hotel & Motel Association

Suite 8-201, 2600 Skymark Ave l Mississauga, ON L4W 5B2 l www.orhma.com

ORHMA Presentation to the Standing Senate Committee on Banking, Trade and Commerce - Bill S-202 An Act to amend the Payment Card Networks Act (credit card acceptance fees) October 9 2014

ORHMA Presentation to the Standing Senate Committee

Ontario Restaurant Hotel & Motel Association (ORHMA) 1 | P a g e

My name is Tony Elenis President and CEO of the Ontario Restaurant Hotel & Motel Association known as the ORHMA. Thank you for the opportunity to speak on this Act which is truly important and has a major impact on our membership. With 11,000 establishments the ORHMA is Canada’s largest hospitality provincial association representing the interests of Ontario’s foodservice and accommodation

• sectors. ORHMA is dedicated to fostering a positive business environment for the

industry located throughout Ontario communities. Over sixty five per cent of our membership represents small independent operators of restaurants, hotels, inns and

• ther accommodation.

Canada has one of the highest credit card acceptance fee structures in the world, the federal government must act in bringing a merchant system policy that works fair for all involved. ORHMA continues to hear from our members “out cry’s” of the high credit card merchant fees and the extreme impact to their business bottom line. They see these fees as “stealing away “the staff and their hard earned income. This unfairness is increasingly compounded when it is imposed on the hospitality business that struggles in Ontario to be sustainable. The hospitality industry is a significant component of Ontario’s economy and character, yet is vulnerable to economic volatility. In recent years the industry has experienced tremendous pressures on due to a number of events and measures, such as 9/11; SARS; border issues: low consumer confidence and lack of disposable income. Perhaps Canada survived the latest Global Recession well but makes no mistake about it the hospitality industry in Ontario has changed and not for the better. Unprecedented economic pressures have forced the industry to become more resourceful - to do more with less. Besieged by rising labour as well as food and energy costs, restaurant operators continually scuffle with the threat of shrinking

• perating margins. Since the year 2000, the accommodations sector across Ontario
• perates on 50% reduction in profit margins while Ontario restaurants operate on a

2.0% pre tax profit margin. Many even less.

ORHMA Presentation to the Standing Senate Committee

Ontario Restaurant Hotel & Motel Association (ORHMA) 2 | P a g e

Yes….Some business segments in certain areas of the province are starting to see an upward trend but it’s not about revenue growth anymore it’s about pressure from the expense lines impacting the bottom line. In these tough times the industry sees the Credit Card companies taking advantage

• f the business owner in exploiting loopholes available to them. Hospitality and other

businesses are penalized by actions of the Big Credit Card companies. These companies continue to line their pockets without any government oversight. Several jurisdictions have looked at the impact of high credit card fees and adopted payment sector reforms. For example, a model that was implemented by the Reserve Bank of Australia in 2002 capped processing fees at 0.5 per cent of a transaction’s value, which produced net welfare gains of $100 to $150 million for Australian retailers each year. Canada has some of the highest acceptance fees in the world. Bill S-202 will set benchmarks at 0.5% for standard transactions, 0.3% for government, and 0% for

• charities. With an average of 2.5%, those acceptance fees cost Canadians around

$9 billion and with this legislation in place; Canadian merchants and consumers could save upwards of $7.2 billion annually. Small and medium sized businesses are the lifeline of Canada’s economy. They drive competition and offer choice for the Canadian consumer. However, as high credit card swipe fees continue to diminish the profit margins of such businesses, it ultimately puts their survival at risk which also affects job growth. We ask the Senate and in turn Parliament to support Bill S-202. On behalf of ORHMA thank you for your time and consideration – we urge you to support Bill S-202. I thank you. Tony Elenis President and CEO Ontario Restaurant Hotel & Motel Association (ORHMA)