Canada: Updated Code Of Conduct For The Credit And Debit Card Industry In Canada

On April 13, 2015, the Department of Finance announced changes to the Code of Conduct for the Credit and Debit Card Industry in Canada (the "Code"). The Code has been in existence since 2010 and consisted previously of 10 Elements applicable to participants in the debit and credit card industry. The updated Code includes 3 additional Elements which allow merchants to reject contactless payments, require new disclosure requirements for merchant-acquirer agreements and require a dispute resolution process for complaints from merchants. In addition, the updated Code will allow a merchant to cancel their agreement with an acquirer if the reductions in interchange rates announced last November are not passed on in full to merchants, will extend the application of the Code to various aspects of mobile payments and prescribe new branding and disclosure requirements for premium cards, all as discussed in more detail below.

The release of the updated Code was announced concurrently with the release of a consultation paper on the oversight of Canada's national payment systems, Balancing Oversight and Innovation in the Ways we Pay: A Consultation Paper. This Consultation Paper may in the end have far more far-reaching impact than the changes to the Code itself, as it raises the possibility of regulatory oversight of national retail payment systems, both bank and non-bank.

Participants in credit and debit card networks (which would include debit and credit card issuers and merchant acquirers) have 30 days from April 13 to review and adopt the Code. Once adopted, the changes to the Code will come into effect in stages, as follows:

Changes with immediate effect upon adoption of the Code

  • Pass-through of interchange rate reductions (changes to Elements 2 and 3): Payment card networks will be required to provide 90 days' notice of any reduction in applicable interchange rates, and merchants will have 90 days to cancel their merchant-acquirer contract (and the related service contracts) without penalty if the full savings of a rate reduction are not passed on to the merchant. This may prove to be very contentious given that Visa Canada and MasterCard undertook in November 2014 to reduce interchange rates to an "average effective rate" of 1.50%. How this will be applied to individual merchant-acquirer contracts remains to be seen.
  • Extension to mobile payments of merchant right to accept only debit or credit card payments from a particular network (changes to Element 4): The extension of Element 4 (which provides that merchants who accept credit card payments from a network are not required to accept debit card payments from such network and vice versa) to mobile payments takes effect upon adoption of the Code. As a result, merchants who accept debit card credentials in a mobile payment context cannot be obligated to accept credit card credentials from the same network, and vice versa.
  • Right not to accept contactless payments (new Element 11): Merchants will have the right to cancel contactless payment acceptance with 30 days' notice while keeping other parts of the contract, without penalty. This right of cancellation will also be available in respect of a merchant's acceptance of mobile contactless payments if fees in respect of mobile contactless payments increase relative to fees applicable to card-based contactless payments.
  • Right to provide notice of non-renewal of merchant-acquirer agreement and related agreements (new Element 12): Merchants will be permitted to not renew a merchant-acquirer agreement and any related service agreement with a service provider, by providing notice of non-renewal at any time up to 90 days prior to the expiration date of the agreement.

Changes to be implemented within 60 days of adoption of the Code

  • Dispute resolution process (new Element 13): A clear dispute resolution process that adheres to detailed standards prescribed in the Code must be made available to merchants to address complaints related to the Code. Element 13 will also require acquirers to report semi-annually to the payment card networks on complaints that they receive and payment card networks will in turn be required to share this information with the Financial Consumer Agency of Canada.

Changes to be implemented within 9 months of adoption of the Code

  • Extension of Code to mobile payments (Elements 6, 7, 8): Competing debit card credentials will need to be represented as separate applets with consumers having full discretion to choose which debit card applet to use at point-of-sale (Element 6), payment card networks will need to ensure equal branding of brands available on mobile devices or in mobile wallets (Element 7) and consumers must be provided with complete control over default settings on their mobile devices and mobile wallets to select debit or credit payment applets (Element 8).
  • Premium card disclosure requirements (Element 9): Premium cards that are subject to different acceptance costs than regular cards will need to have clear and prominent branding identifying them as premium products. Payment applets that link to premium card credentials must be similarly branded. Applications for such cards will have to prominently disclose the fact that those higher acceptance costs may be charged to the merchant.
  • Renewal period for fixed term merchant-acquirer agreement and related agreements (new Element 12): Fixed term merchant-acquirer agreements and related service contracts will not renew automatically for the same period as the initial term, but instead may be converted to automatically renewable agreements for terms of no longer than 6 months.

Changes to be implemented within 18 months of adoption of the Code

  • Specified disclosure requirements for merchant-acquirer agreements (changes to Element 1):Within 18 months of adoption of the Code, acquirers will need to ensure that all new and renewed merchant-acquirer agreements include the additional prescribed disclosure, and that all such agreements contain an information summary box and a fee disclosure box based on the templates attached to the Code. Payment card networks will also be required to make default domestic network assessment fees (not just interchange rates) available on their website and to post any changes to these rates on their website.

Payment card networks will be required to review, at least every 3 years, the market practices of merchant-focused agents, based on the Code, and to report on the results of this review to the Financial Consumer Agency of Canada.

The release of the Code comes as the payments industry is undergoing a period of significant innovation and change, as well as legislative change. The new Code is one of a number of recent or contemplated legal and regulatory reforms affecting the payments industry, including recent reforms to the Canadian Payments Association.

To view original article, please click here.

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 Mondaq.com.

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

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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