Canadian Government Moves Closer To Regulating Payments Market

Legislation is a step forward to creating a robust regulatory framework that protects merchants and consumers in Canada's debit and credit card market.

April 06, 2010

ONTARIO - Last week, the Canadian government introduced the Payment Card Network Act as part of the Budget Implementation Act, which includes a number of provisions that are good news for convenience and petroleum retailers and the Stop Sticking It To Us coalition.

The act expands on measures announced in the federal budget earlier this month to rein-in the practices of credit card companies, processors and banks regarding the fees charged to merchants for debit and credit card acceptance.

"Given that this is a confidence motion, it is unlikely that any amendments to the Act are forthcoming. We believe that the government hopes the bill will pass before the House rises for the summer break," said Dave Bryans, president of the Canadian Convenience Store Association and Ontario Convenience Store Association.

Lyle Beckwith, NACS senior vice president of government relations, told NACS Daily, "Add Canada to the growing list of countries proactively dealing with the hidden tax known as interchange swipe fees. Will the U.S. Congress be the last government to act?"

Following the recommendations of Retail Council of Canada (RCC) and its Stop Sticking It To Us coalition, the act provides the Minister of Finance with the legislative powers to regulate the Canadian payments market.

This legislation illustrates Finance Minister Flaherty??s continued commitment to regulate the conduct of the credit card companies, banks and processors if they do not adhere to the forthcoming voluntary code of conduct for Canada??s payments market. Though RCC and the coalition members understand the government's push for voluntary measures as a first step, the coalition has continued to assist in setting the groundwork for future government regulations in light of card company practices seen in other countries around the world.

The act also outlines amendments to the Financial Consumer Agency of Canada (FCAC) mandate, empowering them to monitor compliance with the voluntary code of conduct, once finalized. Strict FCAC oversight of code of conduct compliance was a key RCC recommendation and its coalition. The Payment Card Network Act goes even further, outlining possible fines of up to $200,000 for card companies, processors and/or banks that are found in violation of its provisions.

View the complete text of the act.

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