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On September 18th, 2012, the federal government announced the
proposed expansion of the Code of Conduct for the Credit and Debit
Card Industry in Canada (the "Code") to apply to credit
and debit network participants that provide point-of-sale payment
services through mobile devices. The government undertook to amend
the Code, which currently does not expressly address mobile
payments transactions, following the release of the final report of
the Task Force for the Payments System Review (released in March
2012).
A copy the Consultation Paper and proposed Addendum to the Code,
together with Backgrounder issued by the Department of Finance can
be accessed through the following links:
The proposed Addendum clarifies that the rules relating to
payment cards will apply at the payment application level and not
the mobile device itself, and provides specific guidance in
relation to four key elements of the Code, stated as
follows:
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 proposed Addendum also specifically seeks comments on:
whether the amended Code should apply to other entities
enabling mobile payments (the Code currently applies to credit and
debit card networks and their participants (e.g., card issuers and
acquirers)); and
whether express consent should be required from merchants to
accept debit or credit payment applications through a mobile
device where there are no changes to fees and no new infrastructure
purchases are required.
The proposed Addendum could impact on mobile payment projects
that are currently being in the process of being developed.
Industry participants wishing to comment must do so within the 60
day comment period. Comments can be submitted to codeconsult@fin.gc.ca.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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