The case against Visa and MasterCard that sought to give retailers the right to impose surcharges on credit card transactions, or to refuse them altogether, has been thrown out by Canada’s Competition Tribunal.

The Commissioner of Competition filed the case in 2010, arguing that Visa and MasterCard, the two most dominant card issuers in the market, impose unfair rules on merchants that increase costs for both consumers and small business.

Related: 4 Dumb Reasons For Not Using A Rewards Credit Card

The uptake in consumers using premium rewards credit cards has led small business advocates to lobby for change to credit card agreements.  Merchants pay a transaction fee of anywhere from 1.5% to 3% every time consumers swipe their credit card.  Some businesses want the right to pass that charge along to consumers, or to simply refuse the high-end cards, something their credit card agreements don’t allow.

If the no-surcharging rule was overturned, it would have allowed retailers to add an extra charge, a retailer checkout fee, to a purchase made with a credit card.  Currently, retailers are allowed to offer a discount for cash or debit transactions, but very few do.

Terry Campbell, president of the Canadian Bankers Association, argues that the whole debate about the cost of credit card acceptance ignores the many benefits that accepting this form of payment gives to retailers.

• Credit cards provide retailers with fast, guaranteed payment that can reduce lines at the check-out.  If every payment transaction took an extra 30 seconds, that would add another 27 million hours of staff time each year.
• Credit card payments allow merchants to offer customers credit without taking on credit risk.  New payment options, such as contactless cards, also benefit merchants and make it easier and faster for customers to make purchases.

“What is often overlooked is that paying with cash is one of the most expensive forms of payment for retailers, if you include time and effort spent handling, counting, reconciling and depositing cash every day, not to mention higher security costs and safety concerns for a store’s employees,” added Campbell.

Related: Richer Rewards, More Fees As Credit Card Landscape Shifts In Canada

A Win For Rewards Cards Users

The Tribunal’s decision is a big win for rewards cards users.  Ask anyone who’s been to Australia in the last decade how credit card surcharges have benefited consumers.  They’ve slapped fees on everything, including online hotel and airline reservations – where you have no choice but to pay by credit card.

Who honestly thinks small businesses would lower prices across the board if this ruling was overturned?  Lower transaction fees means more profit for them, and surcharges would just add another profit centre.  There would be no benefit to consumers.

So good news, rewards cards fans.  We can continue to rack up the travel points and earn cash back without fear of discrimination from retailers.

What’s your take on the ruling?

A significant shift is taking place in the credit card industry as major credit card partnership programs change hands and card issuers fight for more wallet share.

GreedyRates.ca, a credit card comparison site, released its quarterly report on the state of the credit card landscape in Canada.

Of note, the report revealed that Canadians are starting to receive more attractive offers from card issuers, with richer welcome bonus offers, annual fee waivers and more value per point earned.

Related: Aeroplan To Enhance Program, Cancel Expiry Policy

More than 100 Canadian credit cards were reviewed – 35% of which offered a welcome bonus to sign-up for the card – and the majority with an annual fee of $99 or more offered the equivalent of a short-haul flight as a welcome bonus.

Marc Felgar, founder and CEO of GreedyRates.ca, expects the competition to acquire new customers will heat up in the coming months as card issuers take advantage of the turbulence caused by Aeroplan’s potential move from CIBC to TD.

“These are unprecedented times for Canadian cardholders,” says Felgar.

One trend that stands out is how cash back credit cards are growing in popularity and the banks are expanding their line-up to offer more cash back options to meet the growing demand.

Nearly half of annual fee cards do not charge for supplementary cards, including several premium cards.

The report also revealed that the Canadian market does not offer significant competition in the low interest rate card and balance transfer card segments.

There was only one published 0% balance transfer offer, for a promotional period of 12 months.

This is a very different competitive dynamic than the U.S. or U.K. where 0% balance transfer offers are standard and last as long as 27 months.

“We’ve also seen some Canadian banks increase penalty rates, balance transfer fees and over-limit fees,” says Felgar.

That said, there are low interest rate credit card options for cardholders who carry a credit card balance in Canada.  The average interest rate for low interest cards is 12.2% compared to 19.7% for all other cards.

There are several stand-alone low interest credit cards as low as 9.9% with no annual fee.  However, most of the big 5 retail banks offer low-rate options for an annual fee ranging from $20 to $50.

Felgar says the increasingly rich rewards programs are having an impact on penalty rates and hidden fees, as banks try to maintain profitability.

“These rewards programs are, in large part, funded by one of the world’s highest interchange fee schedules,” says Felgar, referring to the fees that Canadian retailers pay each time you swipe your card.

The report revealed more credit card issuers are introducing and increasing their penalty rates by as much as 8% for a missed payment to an interest rate as high as 27.5%.

GreedyRates.ca’s full Q2 2013 Canadian Credit Card Landscape Report is available at: http://www.greedyrates.ca/article/q2-2013-greedrates-ca-canadian-credit-card-landscape-report.html