Credit and Debit Card Code for Canadian Merchant Account Holders

Sep 12, 2017

The Canadian code of conduct became operative in August 2010 and is projected to encourage good business practices and ensure retailers and customers identify with the costs and advantages of debit and credit cards.

eMerchantBroker breaks down the benefits of the Canadian Code as well as a few missing items merchants should watch out for.

The Good

Effective Discount Rate

All processors are now required to display their “effective processing rate” on their monthly statements for all debit and credit card types. The effective rate is the equal of the sum of all the fees that apply to a credit card type, e.g., interchange fees, qualified fees, non-qualified fees, per transaction fees and card-brand fees divided by the total sum processed.

90-Day Notice of any Fee Increase

Card-brands like Visa or payment processors no longer have the free will to raise fees without giving the retailer a 90-day notice. On the announcement of a fee increment, the trader is allowed to cancel his/her account without penalty. However, this penalty-free cancellation is only applicable up to 90-days following the price increase.

New Law: Limits on Auto-Renew Agreements

The latest Code addresses Auto-Renew Agreements. Merchants are now free to provide notice to their payment processors if they do not wish to auto-renew an existing contract. They are not obligated to do this within a certain span (e.g., 30 days before the term date). Lastly, Auto-renew agreements are now limited to a max of a 6-month term, which means even if you don’t remember to send a termination notification, your contract won’t be renewed for another two or three years.

The Absent

No Standards Set for Advertisements

The Canadian code has not set any advertising standards for processing fees. Up to now, some processors are still marketing incredible rates such as 1.49% without stating their full processing rates. Most merchants discover this much too late, after signing a contract.

No law on Equipment Leasing

While retailers are allowed to cancel their Canadian merchant account without penalties (terms may vary, look at your contract) if there’s a rise in the processing rates, this doesn’t apply to equipment leasing. Equipment leases for Canadian Merchants are still noncancellable contracts. So even if you hasten to cancel your account, you will still have to sort out the lease payments.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.