A ruling expected this week on a complaint against Visa and MasterCard could significantly change how consumers use 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 giants are too restrictive.


Striking down the rules could allow merchants to either reject certain cards that offer incentive points, or charge consumers more for using them.


Under the current rules, merchants are required to accept all Visa and MasterCard offerings, but are prevented from charging an additional fee to those who pay with so-called premium cards, which come with higher costs.


Longstanding battle


Canada's Commissioner of Competition filed a formal complaint with the tribunal in May 2012, accusing Visa and MasterCard of engaging in anti-competitive behaviour.


Consumers have been forced to pay an estimated $5 billion worth of hidden fees each year as a result, the complaint says.


"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.


The rules allow Visa and MasterCard to charge ever-increasing interchange fees to merchants who accept their cards without allowing them the choice of rejecting those cards that carry higher fees, says the Retail Council of Canada.


"We're very hopeful that the tribunal recognizes that there needs to be changes in the way this market functions," said David Wilkes, the council's senior vice-president.


Interchange fees are charged by the banks and credit card companies on every credit or debit card transaction.


Credit card interchange fees range from a low of 1.54 per cent for accepting a basic card to as high as 2.65 per cent for so-called "premium" cards that offer cardholders travel points or other incentives.


Debit transactions, meanwhile, are based on a flat fee per transaction.


If the requirements are struck down, consumers could soon face retailer surcharges for using premium cards, or at the very least confusion at the cash register, warns the Canadian Bankers Association.


"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."


Merchants don't want to impose surcharges because that wouldn't address the root cause of the problem, said New Democrat consumer critic Glen Thibeault, who launched a summer-long public consultation on the issue.


But they do want the power to decide whether to reject certain cards that carry higher interchange fees, he added.


"They're not going to (impose a surcharge) because they're saying their customers will go somewhere else," Thibeault said.


"(But) by ensuring that small businesses don't have to take every single credit card that is brought in the door, this actually helps small businesses."


At the very least, 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.