Archived - Backgrounder: Code of Conduct for the Credit and Debit Card Industry in Canada and Addendum for Mobile Payments

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The Code of Conduct came into effect in August 2010 and is intended to promote fair business practices and ensure merchants and consumers clearly understand the costs and benefits of credit and debit cards by giving businesses:

  • clear information regarding fees and rates;
  • notification of any new fees and fee increases;
  • the ability to cancel contracts without penalty should fees rise or new fees be introduced; and,
  • the ability to choose to accept only credit or debit payments from a network without having to accept both.

With the release of the final report of the Task Force for the Payments System Review, and with industry close to seizing the potential of mobile payment, the Harper Government committed to review and update the Code to ensure its principles of transparency, fairness and competition would apply to emerging mobile payment products.

As new technologies and business models are emerging in Canada for delivering mobile payments, payments system participants are preparing to launch innovative mobile payments options.  The Government is proposing amendments to the Code to ensure its principles are upheld for mobile payments initiated by consumers at the point of sale. 

The Code currently applies to credit and debit card networks and their participants (e.g. card issuers and acquirers). The Government is proposing that the Addendum would apply to these same networks and their participants that offer mobile payments. The Government is inviting stakeholders to comment on whether the Addendum should apply to other mobile payment network participants.

The Addendum clarifies the application of the Code’s policy elements to mobile payments. Specifically, the Addendum provides guidance on elements four, six, seven and eight of the Code:

  • Element 4 ensures that merchants have choice in the type of payments they accept: a merchant who accepts credit card payments from a particular network will not be obligated to accept debit card payments from that same payment card network, and vice versa. The Addendum clarifies that merchants who accept credit and debit card payments through a mobile device from a particular network will not be obligated to accept all products in that payment network’s mobile wallet.
  • Element 6 provides that competing domestic applications from different networks shall not be offered on the same debit card. The Addendum clarifies that competing domestic debit applications can reside on or be accessed by the same mobile device provided they are represented as separate mobile payment apps.
  • Element 7 provides that co-badged debit cards are equally branded. The Addendum clarifies that equal branding applies to all virtual or electronic representations of payment applications. It also clarifies that establishing default preferences for payment should be done by consumers based on a clear and transparent process and users should be able to easily change default settings.
  • Element 8 provides that debit and credit card functions shall not co-reside on the same payment card. The Addendum clarifies that separate credit and debit applications may reside on the same mobile device provided they are represented as separate mobile payment apps.

The Addendum also requests that stakeholders provide comments on whether express consent should be required from merchants to accept debit or credit applications through a mobile device, where fees to merchants remain unchanged and no new infrastructure purchases are required.

It is expected that the consumer protection principles that apply to credit and debit card payments, such as the principles in respect of the Canadian Code of Practice for Consumer Debit Card Services, the Personal Information Protection and Electronic Documents Act and the Principles of Consumer Protection for Electronic Commerce, would continue to apply to payments made using a mobile device.

The Financial Consumer Agency of Canada will be responsible for monitoring compliance with the Code and the Addendum.

The Addendum is being circulated for a 60-day comment period. During this period, stakeholders are invited to submit their views on the specific language of the proposed Addendum. Comments can be submitted to