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 Footnote1).
The payment card networks that choose to adopt the Code will abide by the policies outlined below and ensure compliance by their participants. The Code of Conduct will be incorporated, in its entirety, into the payment card networks’ contracts, governing rules and regulations.
The Code will apply within 90 days of being adopted by the card networks and their participants. Networks and acquirers will have up to nine months to implement Element 1. Issuers will have up to one year to re-issue cards already in circulation that contravene Element 6 or 7.
Requirements for payment card networks
By adopting the Code, payment card networks agree to provide any requested information regarding actions taken by themselves or participants to the Financial Consumer Agency of Canada, for the purpose of monitoring compliance with the Code. In addition, payment card networks agree to pay for the fees associated with monitoring compliance with the Code, as determined by the Financial Consumer Agency of Canada.
1. Increased Transparency and Disclosure by Payment 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.
Payment card network rules will ensure that merchant statements include the following information:
- Effective merchant discount rate Footnote2 for each type of payment card from a payment card network
- Interchange rates and, if applicable, all other rates charged to the merchants by the acquirer
- The number and volume of transactions for each type of payment transaction
- The total amount of fees applicable to each rate, and
- Details of each fee and to which payment card network they relate.
This information must be presented in a manner that is clear, simple and not misleading.
2. Payment card network rules will ensure that merchants will receive a minimum of 90 days notice of any fee increases or the introduction of a new fee related to any credit or debit card transactions. Payment card networks will provide at least 90 days notice to acquirers for rate and/or fee changes and at least 180 days notice for structural changes Footnote3.
Notification is not required for fee changes made in accordance with pre-determined fee schedules, such as those based on merchant sales volume, provided that the schedules are included in the merchant’s contract.
3. Payment card network rules will ensure that following notification of a fee increase or the introduction of a new fee, 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 increase or the introduction of a new fee, merchants will be allowed to opt out of their contracts, without facing any form of penalty, within 90 days of receiving notice of the fee increase or the introduction of a new fee.
Merchants may not cancel their contracts in relation to fee increases made in accordance with pre-determined fee schedules, such as those based on merchant sales volume, provided that the schedules are included in the merchant’s contract.
4. Payment card network rules will ensure that merchants who accept 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.
Payment card networks will not require merchants to accept both credit and debit payments from their payment card network. A merchant can choose to accept only credit or debit payments from a network without having to accept both.
5. Payment card network rules will ensure that 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 payment card networks.
Discounts will be allowed for any payment method. As well, differential discounting will be permitted between payment card networks.
Any discounts must be clearly marked at the point-of-sale.
6. Competing domestic applications from different networks shall not be offered on the same debit card. However, non-competing complementary domestic applications from different networks may exist on the same debit card.
A debit card may contain multiple applications, such as PIN-based and contactless. A card may not have applications from more than one network to process each type of domestic transaction, such as point-of-sale, Internet, telephone, etc. This limitation does not apply to ABM or international transactions.
7. Payment card networks will ensure that co-badged debit cards are equally branded.
Payment card network rules shall ensure that the payment networks available on payment cards will be clearly indicated. Payment card networks will not include rules that require that issuers give preferential branding to their brand over others. To ensure equal branding, brand logos must be the same size, located on the same side of the card and both brand logos must be either in colour or black and white.
8. Payment card network rules will ensure that 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. Consumer confusion would be minimized by not allowing debit and credit card functions to co-reside on the same payment card.
9. Payment card network rules will require that premium credit and debit cards may only be given to consumers who apply for or consent to such cards. In addition, premium payment cards shall only be given to a well-defined class of cardholders based on individual spending and/or income thresholds and not on the average of an issuer’s portfolio.
Premium payment cards have a higher than average interchange rate. They must be targeted at individuals who meet specific spending and/or income levels.
If payment card networks introduce new products or services, merchants shall not be obligated to accept those new products or services. Merchants must provide their express consent to accept the new products or services.
Merchant rights under the Code of Conduct for the Credit and Debit Card Industry in Canada
The Code of Conduct for the Credit and Debit Card Industry in Canada, which all payment card networks operating in Canada have adopted, sets out several rights that merchants have in relation to their contracts for payment card processing services. FCAC’s Commissioner has issued further guidance on some of the issues addressed by the Code to clarify the expectations of payment card networks and service providers that enable merchants’ access to the networks.
Before accepting any agreement with a payment service provider, merchants are strongly encouraged to read the merchant agreement completely and carefully to ensure they understand its terms and their obligations. If you do not receive an agreement, ask for it. If the agreement is online, print a copy, save it and make a note of the date for your records. Ask questions about any points that are not clear, and make sure any commitments or modifications to the terms are included in the written agreement.
- Merchant statements from their payment service providers must include the following information presented in a clear and simple manner ( Element 1):
o effective merchant discount rate that applies to each type of payment card from a payment card network
o the number and volume of transactions for each type of payment transaction
o the total amount of fees applicable to each rate
o details of each fee, including the payment card network to which they relate.
- Payment card networks must make all interchange rates applicable to their products and any upcoming changes to these fees easily available on their websites. ( Element 1)
- Merchants must receive a minimum of 90 days’ notice of any new fees or fee increases related to credit or debit card transactions. ( Element 2)
o The 90-day period will begin when the merchant has been provided with sufficient information about the change in fees to allow the merchant reasonably to assess the implications for its costs. See the FCAC Commissioner’s Guidance on the 90-day notice period for additional information.
o If a fee change is made in accordance with a predetermined fee schedule included in the merchant’s contract with an acquirer, the 90-day notification is not required.
- As of November 12, 2013, when a payment service provider is offering a merchant a package that includes contracts with more than one party, the merchant must be given a consolidated summary of key information about each contract before an agreement is entered into.
o Specific information to be provided in this summary includes:
- the name and contact information for each payment service provider, and the nature of the services it provides
- the effective date of each agreement
- information on the expiry and renewal of each agreement (for example, if your agreement will automatically be renewed unless you cancel by a certain date). Check carefully to see if the agreement builds in any fee increases at renewal.
- detailed information on applicable fees and rates for each payment service provider
- how your statements will be provided to you (paper or online)
- cancellation terms of the agreement with each payment service provider, including any cancellation fees that could apply
- if services for point-of-sale terminals are offered, general information on buying, leasing or renting options for the hardware (for example, terminals) so that merchants can make informed decisions
- complaint-handling process for each payment service provider, including contact information for complaints.
o FCAC strongly recommends that this summary be presented in an information box, but this requirement can be met in other formats. See the Commissioner’s Guidance addressing Disclosure in Multiple Service Provider Agreements.
- Merchants are allowed to cancel their contracts without penalty within 90 days of receiving notice of a new fee or a fee increase. ( Element 3)
o This right to cancel does not apply if a fee increase is made in accordance with a predetermined schedule included in the merchant’s contract, such as a schedule based on the merchant’s sales volumes.
o FCAC’s Commissioner has issued guidance, effective November 12, 2013, on scenarios where a payment service provider has arranged for a package of related payment processing services that resulted in the merchant having contracts with more than one organization.
- Upon receiving notice of a new fee or fee increase by one of the parties, the merchant has the right to cancel all related payment services contracts with these organizations within 90 days without penalty.
- Contracts merchants establish with other parties on their own will not be considered related contracts and therefore will not be exempt from cancellation fees.
- Similarly, contracts merchants can keep when moving to another payment processor, without additional cost to them, will not be considered related contracts.
- For more information, see the FCAC Commissioner’s Guidance on enhanced disclosure and the right to cancel contracts without penalty.
- Merchants who accept credit card payments from a payment network are not required to accept debit card payments from the same network, and vice versa. ( Element 4)
o A merchant can choose to accept only credit or debit payments from a network without having to accept both.
- Merchants are allowed to provide discounts for different methods of payment (for example, cash, debit card and credit card), as well as different levels of discounts among different payment card networks. ( Element 5)
o If merchants choose to offer these types of discounts, they must clearly display the discounts at the point of sale.
- If payment card networks introduce new products or services, merchants are not required to accept those new products or services. Negative option acceptance is not allowed. ( Element 10)
o A merchant must explicitly consent to accept new products or services.
o This element of the Code of Conduct applies to new products and services that payment card networks offer to merchants.
o It does not apply to new products and services offered to consumers, such as a new credit card product.