The Commissioner of the Financial Consumer Agency of Canada
(FCAC) is seeking comments on three proposed guidance documents it
has published to assist with the implementation of new disclosure
requirements set out in the April 2015 update to the Code of
Conduct for the Credit and Debit Card Industry in Canada (the
Code). Submissions to FCAC regarding the draft guidance documents
are due April 15, 2016.
The April 2015 update amended the code to require, among other
things, that all merchant-acquirer agreements include a cover page
containing an information summary box and fee disclosure box. The
proposed guidance documents (CG-10, CG-15 and CG-16) are meant to
clarify the April 2015 update and to provide further guidance with
respect to compliance.
What You Need To Know
Payment card networks and participants—including card
issuers and acquirers, independent sales organizations and other
service providers such as terminal lessors—must comply with
the amended Code and include any necessary terms and disclosures in
their merchant agreements that are entered into or renewed after
November 13, 2016. Networks can be expected to revise their
operating regulations to reflect the final requirements.
Guidance on increased disclosure in business practices
and contract cancellation without penalty (CG-10): This
guidance document was drafted in response to complaints by
merchants that: (1) they did not clearly understand their
merchant-acquirer agreements due to inconsistent or lack of
disclosure about fees and rates, and unilateral modifications of
those agreements without adequate notice; and (2) when they engaged
in related service contracts, apart from the primary
merchant-acquirer agreement, merchants were being subjected to
cancellation penalties or fees.
As a result, the FCAC draft guidance requires that payment card
networks work with participants to ensure that information is
provided in a clear, simple and not misleading manner, address
merchant concerns in a timely manner, and that appropriate remedies
are available in a timely manner (including amending or voiding
contracts that were entered into in violation of the Code). The
draft guidance also provides that merchants must be permitted to
cancel the merchant-acquirer agreement and all related services
contracts without penalty following any notification of new or
increased fees by participants or related participants.
Guidance providing information summary box examples
(CG-15): For illustrative purposes aimed at clearly
setting out the Government of Canada's expectations, the FCAC
has provided one example summary box for a merchant-acquirer
agreement with no related contracts, and two examples of summary
boxes for merchant-acquirer agreements with multiple related
The summary box includes: (1) date of contract; (2) acquirer
name and address; (3) contract cancellation, renewal and penalties;
(4) complaint handling procedures; (5) payment terminal lessor
information; (6) contactless payment acceptance; (7) transaction
return policy; (8) link to the Code; and (9) method by which
merchants can access their statements. Summary boxes for agreements
with related contracts are required to also include the independent
sales organization or referral agent information and information
about other debit or credit service providers if different from the
Guidance on fee disclosure box (CG-16): To
provide a consistent and standard approach across the industry
regarding disclosure to merchants of payment options, the FCAC has
provided a fee disclosure box template and an example schedule for
disclosure of other fees.
The guidance requires that the box include payment card types
and the associated fees for local device processing and non-device
processing (e.g., by mail, telephone, online or recurring payment).
The terminology used in the fee disclosure box must be identical to
that used in the merchant-acquirer agreement. A single rate must be
disclosed for each payment card type and processing method, and
that single rate must be the sum of the network's interchange
rate plus the network assessment fee plus the per-transaction
processing fee. The schedule of other fees must be grouped by
theme, use descriptive headings, emphasize important information,
and employ common and standard language used across the
Submissions to FCAC regarding the draft guidance documents are
due April 15, 2016. See the FCAC website for more detail on the submission
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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