The stated purpose of the updated Code is identical to the
original code and summarized as follows: (i) 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; (ii) providing merchants with increased pricing
flexibility to encourage consumers to choose the lowest-cost
payment option; and (iii) allowing merchants to freely choose which
payment options they will accept.
The updated Code will have implications for all participants in
the credit and debit card industry – payment networks, card
issuers, acquirers and merchants. Given the growing importance of
mobile payments and mobile wallets, the updated Code includes a
number of new elements applicable to mobile payments, wallets and
Participants in the debit and credit card market have 30 days to
review and adopt the updated Code of Conduct. As was the case with
the original code, certain elements of the updated Code will be
implemented on a staggered basis. Most elements of the Code will
come into force within nine months of the date on which the payment
networks adopt the Code, and certain disclosure-related elements
will come into force within 18 months. Some elements, such as
the measures to facilitate the pass-through of interchange rate
reductions to merchants and the new rights for merchants regarding
acceptance of contactless payments, will take effect
In summary, the updated Code of Conduct includes several new
a new requirement that the interchange rate reductions
announced by Visa Canada and MasterCard Canada in November 2014
will be fully passed-through to merchants, or merchants can cancel
their contract without penalty
a new complaints handling process available to merchants with
enhanced disclosure requirements that will require plain
language disclosure in information summary boxes in merchant
contracts of key contract terms and conditions and merchant
greater flexibility for merchants to exit their contracts
without penalty, including a right to provide notice of non-renewal
at any point up to 90 days prior to contract expiry, and limiting
automatic renewal of contracts to six-month increments
a new disclosure requirement for credit card issuers to inform
consumers that apply for premium credit cards that the use of these
cards can impose higher merchant fees
new branding requirements for premium cards to make these cards
more easily identifiable to merchants at the point of sale
new consumer protections for mobile payment users to ensure
that consumers will have full and unrestricted control of the
default settings on their mobile wallets and devices
new protections for merchants who choose to stop accepting
A more detailed summary of the updated Code and the consultation
paper will follow in the coming days.
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.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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