The Code of Conduct came into force in August 2010. It’s called to promote business practices, and guarantee merchants and customers fully understand the costs and benefits associated with credit/debit cards.
Credit and Debit Canadian Code of Conduct
The Code is developed to:
- Ensure merchants clearly understand the costs associated with accepting credit/debit card payments, thus allowing merchants to have a reasonable forecast of their monthly costs concerning the mentioned payments.
- Enable merchants to enjoy increased pricing flexibility, thus encouraging consumers to choose the lowest-cost payment option.
- Provide merchants with a free choice of their desired payment options.
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The Benefits and Missing Points of the Code
Below is the breakdown of current benefits of the Code, and items that seem to be missing. First, let’s start with the benefits:
- Effective Discount Rate
Processors must display the “effective processing rate” for each credit/debit card type on their monthly statements.
- Limitations on Auto-Renew Agreements
Merchants can at any point notify their processor that they don’t wish to auto-renew their agreement.
- Reduction in Applicable Interchange Rates
Both Visa and MasterCard introduced lower interchange rates in April 2015. The updated Code of Conduct allows merchants to immediately cancel their existing agreement if the reduced interchange cost isn’t passed on in full back to the merchant.
- 90-Day Notice of Fee Increases
Fees can’t be increased by the card-brands such as Visa or the processor if merchants haven’t received a 90-day advance notice. If a fee increase is announced, the merchant can cancel his/her account without penalty. The penalty-free cancellation is applicable up to 90-days following the fee increase.
Now, let’s concentrate on the missing points:
- Equipment Leasing Not Covered
Merchants can cancel their merchant account without penalties if processing rates increase. However, this doesn’t refer to equipment leases.
- No Advertising Standards
Under the Code of Conduct, no advertising standards are established when it comes to processing fees.
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