Government Implements Code of Conduct for the Credit and Debit Card Industry

Ottawa Journal (June 14 – June 18, 2021)

Our Government has taken action to protect the interests of merchants and their customers by implementing a Code of Conduct for the Credit and Debit Card Industry. We are doing this to encourage a competitive environment which allows for fair pricing, practices, innovation, a safe and secure payment system, as well as high quality services for consumers and merchants. Canadian consumers and merchants have asked for such measures and our Government has delivered.

Essentially, debit and credit card companies will voluntarily adhere to the Code which requires increased transparency and notification. For example, merchants must receive a 90-day notice before any new fees or fee increases are put into place. If merchants are unhappy with the fee introduction or increase, they will be able to cancel their contract with the credit card company without any penalty.

Following the implementation of the Code, the Honourable Jim Flaherty, Minister of Finance, stated, "The Code gives merchants more clout in negotiating credit and debit card processing fees and should lead to lower costs for consumers." Under the Code, merchants that allow credit card payments won't be required to accept debit card payments. Furthermore, if the companies introduce a new product or service, merchants won't be required to accept them.

Credit card companies, such as Visa and MasterCard, will include the following provisions for the merchant statements: a discount rate for merchants with the participating payment card network, interchange rates, the number and volume of transactions for each type of payment transaction, the cumulative amount of each fee applicable to each rate, and the details of each fee. The Code will make certain that merchants are aware of the costs, fees, and rates fixed with any credit or debit card company. This knowledge will make it easier for merchants to forecast the costs of their business and incorporate the credit or debit card fees. In addition, the Code ensures flexibility and choice on the payment options for merchants. The Code will apply within 90 days of being adopted by the card networks and their participants.

Most elements of the finalized Code will be effective starting August 16. The Interac Association supports the Code and has stated that it believes the Code will keep the credit and debit card companies equal, while promoting fair competition. For more information on the Code of Conduct, please visit: www.fin.gc.ca.

By implementing the Code of Conduct for the Credit and Debit Card Industry in Canada, our Government has taken important steps forward for merchants and consumers, while ensuring this industry isn't negatively impacted by burdensome regulatory measures.