Major Update to Credit and Debit Card Industry Code of Conduct

Addresses mobile payments and expanded transparency and flexibility

On April 13, 2015, the Government of Canada released its first major update (the Update) to the Code of Conduct for the Credit and Debit Card Industry in Canada (the Code). The Code was first introduced in 2010 with the intention of assisting merchants in selecting payment options and promoting a range of payment options for consumers. The Update extends the Code’s reach into mobile payments and seeks to increase transparency and flexibility for merchants and consumers through disclosure obligations, cancellation rights and dispute resolution mechanisms.

Though not within the scope of this bulletin, a related consultation paper, Balancing Oversight and Innovation in the Ways We Pay: A Consultation Paper, has also been released by the federal government; comments are invited by June 5, 2015.

What You Need To Know About The Update

1. Informing consumers about the cost of premium payment options

Premium cards and payment applets (such as iOS or Android apps) that link to premium card payment credentials must clearly indicate that they are premium products. For payment card networks that have differential acceptance costs for premium cards, consumer cardholder applications must prominently disclose to consumers that such cards can impose higher card acceptance costs on merchants.

2. Consumer control and default settings of mobile wallets and devices

The Update extends the existing requirement that credit and debit card functions shall not co-reside on the same payment card—credit and debit functions residing on the same mobile device or mobile wallet must be clearly separate applications. Further, consumers must have full and unrestricted control over their default preferences for payment options on their mobile devices and wallets.

3. Increased transparency and flexibility in favour of merchants

Contracts. In addition to disclosing all fees and minimums, merchant-acquirer contracts must also include a cover page that includes an information summary box and a fee disclosure box. Changes to credit or debit card fees must be described and clearly identified on the subsequent bill, and acquirers must provide an updated disclosure box upon request. If an acquirer does not pass-though the full savings from any reduction to a payment card networks’ posted interchange rates within 90 days, the merchant can also exit its contract with the acquirer without penalty on 90 days’ notice.

In addition, information regarding cancellation (exercisable up to 90 days prior to contract expiry) and renewal (which is limited to a six-month term) must be clear, simple and not misleading.

Contactless Payment. Merchants are also not required to accept contactless payments or to upgrade point-of-sale terminals to enable contactless payment. A merchant who chooses to accept contactless payment can cancel the service upon 30 days’ notice while maintaining all other aspects of the existing contract without penalty. This cancellation right includes circumstances where mobile contactless payment fees increase relative to card-based contactless payment fees.

Dispute Resolution. Merchants must have access to a clear dispute resolution process that provides for an investigation and timely response to complaints pertaining to the Code. Acquirers must establish an internal complaints-handling process and make information pertaining to the process easily available to merchants. If the acquirer’s complaint process is exhausted and a satisfactory resolution is not achieved, the merchant may submit the complaint to the payment card networks, which are then obligated to investigate.

4. Timeline for coming into force

The Update generally applies within nine months of being adopted by the payment card networks and their participants, with certain elements coming into force either immediately, within 60 days or within an additional nine months.


* With assistance from Ryan Roberts, articling student.

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