Credit and Debit Card Payments

Code of Conduct Aims at Protecting Your Business

Retailer feedback critical to ensuring industry adherence

On August 16, 2010 the federal code of conduct for Canada’s credit and debit card markets came into effect.

The code is the product of almost two years of lobbying by the Retail Council of Canada (RCC) and the Canadian Convenience Stores Association (CCSA) and its Stop Sticking It To Us coalition representing over 250,000 Canadian merchants and aims to provide merchants with increased pricing flexibility, the ability to encourage consumers to choose the lowest-cost payment option and finally the introduction of measures to allow merchants to freely choose which payment options they will accept.

As the code was being drafted earlier this year, we made it clear to policy makers that an oversight mechanism was needed to monitor the code and ensure adherence to its provisions.

Also, laws needed to be changed to provide the Minister of Finance with the powers to regulate the industry if industry players did not follow the code in good faith.

Following consultations with RCC, CCSA and other stakeholders, the government introduced the Payment Card Network Act in the spring of 2010. The Act changed the mandate of the Financial Consumer Agency of Canada (FCAC) to oversee the payments market as it relates to the code and report back to government on the industry’s progress.

The Act also provides the Minister of Finance with the appropriate powers to regulate the industry if it is deemed necessary.

What Does the Code of Conduct Mean For Merchants?

Due Notice
Merchants will receive a minimum of 90 days notice of any new fees or fee increases related to credit or debit card transactions and are allowed to cancel their contracts without penalty within 90 days of receiving notice of a new fee or a fee increase unless the fee increase is part of the original contract.

It’s Your Choice
Merchants who accept credit card payments from a payment network are not required to accept debit card payments from the same network, and vice versa. A merchant can choose to accept only credit or debit payments from a network without having to accept both.

Discounts For Cheaper Payment Options
Merchants are allowed to provide discounts for different methods of payment (for example, cash, debit card and credit card), as well as different levels of discounts among different payment card networks. If merchants choose to offer these types of discounts, they must clearly display the discounts at the point of sale.

No More Negative Option Contracts
If payment card networks introduce new products or services, merchants are not required to accept those new products or services. Negative option acceptance is not allowed.

This part of the Code of Conduct applies to new products and services that payment card network operator’s offer to merchants. For example, a merchant’s express consent would be required for acceptance of contactless cards if the merchant had not accepted any contactless cards previously from the specific payment card network that is introducing them.

Improved, Clearer Monthly Statements
Merchant statements from their acquirers will include the following information presented in a clear and simple manner:

• Effective merchant discount rate for each type of payment card from a payment card network;

• Interchange rates and any other rates that acquirers charge the merchant;

• The number and volume of transactions for each type of payment transaction;

• The total amount of fees applicable to each rate;

• Details of each fee, including the payment card network to which they relate.

Who to Call to Resolve Disputes?
Merchants who have questions or believe that their rights under the code of conduct have not been respected should first contact their payment processor (often called the acquirer) to try to resolve the issue. If the issue is not resolved, merchants should contact the payment card network.

Merchants who believe that their rights under the Code of Conduct have not been respected may also contact FCAC by telephone at 1-866-461-3222.

Retail Council of Canada (RCC) and Canadian Convenience Stores Association (CCSA) will continue to fight on your behalf for a fair, transparent and accountable payments industry.

For more information:

Financial Consumer Agency of Canada: click here