Archived - Draft Code of Conduct for the Credit and Debit Card Industry in Canada
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The purpose of the Code is to demonstrate the industry's commitment to:
- Ensuring that merchants are fully aware of the costs associated with accepting credit and debit card payments thereby allowing merchants to reasonably forecast their monthly costs related to accepting such payments.
- Providing merchants with increased pricing flexibility to encourage consumers to choose the lowest-cost payment option.
- Allowing merchants to freely choose which payment options they will accept.
The Code applies to credit and debit card networks, (referred to herein as payment card networks), and their participants (e.g. card issuers and acquirers).
The payment card networks that choose to adopt the Code will abide by the policies outlined below and ensure compliance by their participants. The following policies will be incorporated into the payment card networks' contracts, governing rules and regulations.
Some elements of the Code will apply immediately.For other elements, a transition period will be provided in order to facilitate operational and contractual changes. As such, the Code will be implemented within a period to be determined after the payment card networks sign onto the Code.
Stakeholders are invited to provide comments with respect to implementation timelines for different measures (e.g. elements of the code requiring changes to existing points of sale terminals) and whether grandfathering should be considered.
Recommended Policy Elements
1. Increased Transparency and Disclosure by Debit and Credit Card Networks and Acquirers to Merchants
The payment card networks and their participants will work with merchants, either directly or through merchant associations, to ensure that merchant – acquirer agreements and monthly statements include a sufficient level of detail and are easy to understand. Payment card networks will make all applicable interchange rates easily available on their websites. In addition, payment card networks will post any upcoming changes to these fees once they have been provided to acquirers.
Stakeholders are invited to provide input on specific improvements regarding transparency and disclosure in order to ensure that the information is clear and meaningful (e.g. fees disclosed on merchant statements will use wording consistent with the payment card networks' interchange rate schedule, if applicable, and will include the effective merchant discount rate, the number and volume of transactions and the total amount of fees according to each rate). Such information will be taken into consideration when developing more specific criteria for improving transparency and disclosure.
Stakeholders are also invited to provide input as to whether this provision should only apply to small and medium-sized merchants, and, if so, how such merchants would be defined (e.g. with payment card transactions value of $5 million annually or less).
2. Merchants will receive a minimum of 90 days notice of any fee changes related to any credit or debit card transactions.
Payment card networks will provide acquirers with sufficient notice of any changes to their interchange rates and structure, as well as any other fees. Acquirers will provide merchants with at least 90 days notice of changes to merchant fees.
Stakeholders are invited to provide input on minimum amount of prior notice that payment card networks should give to acquirers of any changes in rates and fees.
3. Following notification of a fee change, merchants will be allowed to cancel their contracts without penalty.
By signing a contract with an acquirer, a merchant will have the right to cost certainty over the course of their contract. As a result, in the event of a fee change, merchants will be allowed to opt out of their contracts, without facing any form of penalty within 90 days following notification.
4. Merchants who accept credit card payments will not be obligated to accept debit card payments from the same payment network, and vice versa.
Payment card networks will not require merchants to accept both credit and debit payments from their payment network. A merchant can choose to accept only credit or debit payments from a network without having to accept both.
5. Merchants will be allowed to provide discounts for different methods of payment (e.g. cash, debit card, credit card). Merchants will also be allowed to provide differential discounts among different brands.
Discounts will be allowed for any payment method. As well, differential discounting will be permitted between payment methods and brands. The advertised price must be available for all payment methods. Any discounts must be clearly marked at the point-of-sale.
Stakeholders are invited to provide input on how to enable differential discounting on co-badged debit cards.1
6. Merchants can decide whether they will accept multiple forms of debit card payment. In such a case, merchants can choose the lowest-cost option on transactions involving co-badged debit cards.
When a consumer uses a co-badged debit card with a merchant who accepts both debit products on the card, the merchant will decide which debit payment option is used for the transaction.
Stakeholders are invited to provide input on the amount of time required to implement this proposal.
7. Co-badged debit cards shall be fairly branded.
Issuers of co-badged debit cards should clearly indicate which payment options are available on that card and not give preferential branding to one network over another.
Stakeholders are invited to provide input on what would constitute fair branding.
8. Debit and credit card functions shall not co-reside on the same payment card.
Debit and credit cards have very distinct characteristics, such as providing access to a deposit account or a credit card account. These accounts have specific provisions and fees attached to them. Given the specific features associated with debit and credit cards, and their corresponding accounts, such cards shall be issued as separate payment cards.
9. Premium credit cards may only be given to consumers who apply for or consent to such cards. In addition, premium cards shall only be given to a well-defined group of cardholders.
Premium cards were created with the intention of appealing to a specific clientele who meet specific spending and income thresholds. This intention shall be fulfilled by the credit card issuers.
1 Co-badged debit cards are debit cards that can have access to multiple debit card networks (e.g. Interac and Visa Debit on one debit card). Note that Visa Debit and Maestro are not allowed to co-exist on the same card, as per Visa and MasterCard rules. However, both Visa and Maestro are allowed to co-exist with Interac on a debit card.