The federal Competition Bureau is investigating the credit card industry, a top official told a Senate committee Wednesday.

The agency is looking into whether the card companies breached the Competition Act by abusing their dominant position in the industry, the Retail Council of Canada said. It has been monitoring a Senate hearing into credit cards.

According to the council, the bureau's deputy commissioner, Richard Taylor, revealed the investigation in Wednesday's hearing.

Diane J. Brisebois, president and CEO of the council, welcomed the bureau's investigation. Retailers have made many complaints about the credit card companies' fees, she said in a news release.

"As merchants across the country are struggling to survive, VISA and MasterCard have used their dominance in Canada to drive up the fees merchants and consumers pay to use the cards."

MasterCard Canada has been defending the industry. "The many benefits Canadian merchants receive from card acceptance continue to be downplayed," president Kevin Stanton said in a release Wednesday.

The company has a website, InterchangeTruth, where it rebuts complaints about the interchange fee, the amount retailers pay card companies for accepting card payments.

As well as her Retail Council position, Brisebois chairs the StopStickingItToUs Coalition, led by the council. Its website said "consumers paid over $4.5 billion in hidden credit card fees last year alone — fees we all pay at the checkout to cover the cost of lavish incentive programs and corporate credit card benefits, even if you don’t have one!

"Now these companies want to raise these skyrocketing hidden fees. With their plan, you pay more, your local retailer pays more and the only ones getting rich are the big credit card companies."

But InterchangeTruth said interchange "is a small fee" which covers part of the card issuer's risks and costs incurred to maintain cardholder accounts.

"Recent information produced by retail lobbyists contains inaccurate, incorrect, and partial information which seriously misrepresents the reality of the payments market," the site said.

It rejects the idea that the company gets money from the fees. "MasterCard does not receive any revenue from interchange or merchant fees. The retail lobbyists’ statements are wrong," the website said.

Australian fee cut hurt consumers

It also attacks the Australian cap on credit card fees banks can charge businesses and consumers.

The idea has received some support in Canada, but MasterCard said it was a mistake because "retailers pocketed the reductions and prices didn’t come down."

The Senate committee on banking, trade and commerce announced March 3 that it would study the credit and debit card systems "and their relative rates and fees."

The Commons standing committee on industry, science and technology is looking into a proposed change to the Interac debit card system.

Interac is consulting with the Competition Bureau about changing from a not-for-profit structure to a for-profit operation, and the committee wants to look at the impact on debit card fees paid by retailers.

It will also consider credit card fees paid by retailers, but won't be studying the rates and fees card companies charge consumers.