Canada: FCAC Guidance Regarding The Code Of Conduct For The Credit And Debit Card Industry

Last Updated: February 18 2013
Article by Suhuyini Abudulai and Terry Hall

CG-10 Code of Conduct for the Credit and Debit Card Industry in Canada – Increased Disclosure in Sales and Business Practices and Cancellation of Contracts without Penalty

On February 13, 2013, the Commissioner of the Financial Consumer Agency of Canada (FCAC) issued guidance addressing three issues related to compliance with the Code of Conduct for the Credit and Debit Card Industry in Canada (Code). This latest guidance (Commissioner’s Guidance) is directed to payment card network operators (PCNOs), broadly understood to include the proprietary credit card networks, card issuers, acquirers, independent sales organizations and service providers such as those engaged in processing and the leasing of point-of-sale terminals. The FCAC is the federal regulatory agency that administers consumer provisions in federal financial institutions legislation, such as the Bank Act. Among other things, the FCAC has statutory responsibility to monitor compliance with voluntary codes adopted by a financial institution or a PCNO.

The Code applies to credit and debit card networks (referred to as payment card networks) and their participants (card issuers and acquirers). It contains 10 policy elements intended to promote fair business practices and assist merchants in understanding the costs and benefits associated with credit and debit cards. Payment card networks and participants have committed to the Code and, consequently, the FCAC monitors adherence to the Code.

The Commissioner’s Guidance relates to two of the core elements of the Code. Element 1 requires payment card networks, acquirers and other participants to ensure transparency in their merchant contracts with easily understood disclosure of information, such as discount rates, interchange rates, other fees and transaction volumes. Element 3 requires payment card network rules to ensure merchants are permitted to cancel their contracts without penalty within 90 days following notification of a fee increase or the introduction of a new fee.

Guidance re sales and business practices

The FCAC has investigated complaints and identified sales practices involving merchant-acquirer agreements that do not promote increased transparency and are inconsistent with Element 1 of the Code, such as:

  • misrepresentation of contractual terms, and promising rates that cannot be honoured;

  • unilateral changes to processing agreements;

  • inconsistencies between the merchant-acquirer agreement and the merchant’s monthly statements; and

  • failure to provide merchants on a timely basis with complete copies of the merchant-acquirer agreement or any terms incorporated by reference.

The Commissioner’s Guidance directs PCNOs to work with their participants to address these sales and business practices in a timely manner and to apply appropriate remedies, where applicable, including amending or voiding contracts entered into using such sales practices.

Guidance re disclosure to merchants in multiple provider agreements

The FCAC has also investigated complaints that merchants often find it difficult to understand agreements with multiple service providers, due in part to complexity involving interconnected payment services, and the merchants are challenged when trying to make reasonable and informed decisions about the service contracts.

The Commissioner’s Guidance calls for PCNOs and their participants to provide clearer disclosure before the merchant enters into agreements with multiple service providers. Information about the effective date of the agreement, expiry and renewal terms, applicable fees and rates for each participant, cancellation terms and fees, and the complaint-handling process, among other things, is considered key and is required to be disclosed with clarity, in a consolidated manner, so that it may be easily located and understood by the merchant. The Commissioner’s Guidance provides an “information summary box” template and “strongly encourages” participants to adopt the template format as a cover page to their disclosure.

Guidance re multiple contract cancellation penalties, costs or fees

The FCAC has investigated situations in which merchant-acquirer agreements with a participant were later found by the merchant to contain related service contracts with different cancellation provisions and associated penalties and costs. Then, following a fee increase, although the merchant may have been able to cancel the agreement with the participant without penalty, as provided in Element 3 of the Code, the merchant often faced additional costs or penalties to terminate the related service contracts. The Commissioner concluded that such contractual arrangements undermine Element 3 of the Code.

The Commissioner’s Guidance states that Element 3 should apply to merchant-acquirer agreements and to any related service contracts with service providers. Where there is a business connection (e.g., holding company or affiliate) between the participant and the service provider, the services should be considered to be related and to be one service package.

Further, merchants should be permitted to cancel the merchant-acquirer agreement and all related service contracts without penalty, as set out in Element 3 of the Code, provided however that where a merchant enters into a separate agreement with unrelated service providers, such agreements should be treated as separate agreements (and may not even be subject to Element 3 of the Code).


The FCAC expects PCNOs to commit publicly to the Commissioner’s Guidance and to incorporate any required amendments into their operating rules within 90 days of February 13, 2013. All participants are expected to comply and incorporate any required changes to their documentation or processes within 180 days of the date that any PCNO operating rules are amended (at the latest by November 12, 2013). The Commissioner’s Guidance complements previously issued guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Suhuyini Abudulai
Terry Hall
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Borden Ladner Gervais LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Borden Ladner Gervais LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions