The heads of Canada's largest credit card companies are cautioning against government meddling in their business, saying it could hurt consumers.

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Visa and MasterCard say a mandatory code of conduct for credit card companies could result in higher charges and less perks for consumers. ((Jochen Krause/Associated Press))

The presidents of Visa and MasterCard told a Senate committee Thursday that a recently enacted voluntary code of conduct in the industry is working just fine, and a mandatory system could have unintended consequences.

The defence did not sway Liberal senators on the committee, who said the companies and banks are part of a system that charges customers and retailers exorbitant fees and interest.

Liberal Senator Pierrette Ringuette said the industry needs to be reined in and a voluntary code, introduced by Finance Minister Jim Flaherty earlier this year, is not sufficient.

Another senator said he was told by one merchant that the fees he was charged rose 45 per cent in a period of four months.

And a third gave the example of receiving notice that the interest rate on one card was being raised to nearly 30 per cent.

But MasterCard's Canadian president, Betty De Vita, maintained the experience of capping credit card fees in Australia shows savings by merchants are not necessarily passed on to customers.

If fees are reduced by government fiat, she said, banks will be forced to take action by charging card users more for cards and offering fewer benefits.