Canadian consumers may need to prepare for changes in the way purchases are made with an enhanced Code of Conduct for the Credit and Debit Card Industry in Canada. The current Code of Conduct is working well, but needs to be strengthened to deal with a variety of mobile payment options and an important upcoming ruling by the Competition Tribunal.
As the options for credit/debit payment methods continue to rise, the Canadian Federation of Independent Business (CFIB) has a responsibility to ensure the current Code is fair to both merchants and consumers.
The CFIB says the current code gives merchants some power to deal with the card industry, but argues the rules need changes to remain relevant.
“The Code that CFIB initially proposed, and the government implemented, was a worldwide first that helped save low-cost debit in Canada and gave merchants some degree of power in dealing with the industry,” said Dan Kelly, CFIB’s new president and chief executive officer. “The Code has been incredibly helpful to small firms, but is in need of enhancements to ensure it remains relevant and effective.”
The CFIB has submitted a list of proposed Code-related changes to ensure a fair, transparent and competitive payments industry. These include:
- Updating the current Code in order to eliminate the “Honour-all-cards” rule and allow merchants to surcharge for certain payment methods as recommended by the Competition Bureau;
- Adding new provisions to address rapidly growing mobile payment options;
- Strengthening provisions related to card processor practices as some players are using loopholes to avoid the merchant protections of the Code; and
- Developing more effective dispute resolution processes.
CFIB’s call for additional measures in the Code of Conduct stemmed last week from a large US settlement which will allow US merchants the possibility of surcharging for credit card acceptance. CFIB called for a similar measure in its original draft of the Code. Canada’s Competition Tribunal is expected to rule on similar provisions in the months ahead. “We believe the best course of action is to allow for limited surcharges and the right to refuse certain high cost cards in the Code itself,” Kelly added. “We do not expect many small firms would ultimately use these powers, but the fact they exist would help Canadian merchants push back against the estimated $5 billion they and consumers pay each year in transaction fees.”
So how does this affect Canadian consumers?
If the proposed changes to the current Code of Conduct are approved, consumers will face the following possibilities:
- Prohibited use of premium credit cards with certain merchants;
- Increased price of goods due to the added surcharges for credit/debit transactions.
Whatever the result may be, OCCA Consumer Debt Relief will continue to keep you informed. We are Canada’s most trusted debt relief firm, having helped thousands of Canadians with their debt trouble for over a decade.
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