Canadian Government Issues Revised Credit, Debit Card Industry Code of Conduct

The Canadian Convenience Stores Association still has concerns about the way the credit card companies operate.

May 03, 2010

MONTREAL, Ontario - The Canadian government recently issued a revised Credit and Debit Card Industry Code of Conduct, but the Canadian Convenience Store Association (CCSA) is still concerned about how credit and debit card companies can conduct business.

"This is a better position to be in than if Visa and MasterCard were allowed to continue down their paths in both areas," said Dave Bryans, CCSA president.

The code of conduct did not introduce absolute caps on interchange fees. In addition, premium cards that carry higher interchange fees were not restricted to a small group. Also problematic is the restriction on applying service fees at the retail level (i.e., a merchant charging to use a payment network), as many independent stores have long charged nominal fees to help cover the cost of providing debit payment on low value purchases.

"There is certainly room for improvement in the code and we advise that all appropriate opportunities be used to relate to the finance department further possible changes to benefit the convenience store industry," said Bryans.

The code does have some positive aspects, including increased transparency and disclosure by debit and credit card networks and acquirers to merchants. The government now requires all fees to be itemized to make it easier to know the breakdown of the discount rate across all interchange rates and fees.

Also, merchants who accept credit card payments will not be obligated to accept debit card payments from the same payment network, and vice versa. Debit cards issued by credit card companies, including foreign cards, are not to be required to be processed by a merchant that accepts credit cards and vice versa.

The code states that 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.

Meanwhile, the Payment Card Network Act, part of this year??s budget implementation bill, has passed a second reading in the House of Commons and is current before the Finance Committee. "This new act will give the Finance Minister the authority to force compliance with the voluntary Code of Conduct," said Bryans.

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