FCAC Commissioner Clarifies Code of Conduct for Credit and Debit Cards

^[1]The Financial Consumer Agency of Canada ^[1] (FCAC) today issued Commissioner’s Guidance ^[2] to clarify three issues related to the Code of Conduct for the Credit and Debit Card Industry in Canada ^[3] (the Code). The Commissioner’s Guidance, which stems from the Code, applies to payment card network operators (PCNOs) that operate in Canada and their participants, including independent sales organizations (ISOs) and other service providers (e.g. processing, terminal leasing).

The Code was introduced in April 2010 and was developed with the industry to help promote greater transparency for Canadian merchants and consumers who use credit and debit cards. FCAC is responsible for monitoring adherence to the Code, and since its adoption has worked proactively with PCNOs to implement the key elements of the Code within their networks.

The Commissioner’s Guidance will help merchants, payment card network operators, card issuers and acquirers better understand their obligations under the Code.

The Commissioner’s Guidance focuses on three major issues identified by FCAC through its supervisory work:

• inappropriate sales and business practices
• disclosure to merchants in multiple provider agreements
• multiple contract cancellation penalties, costs or fees.

“The Code was created with the intention of encouraging choice and competition, while also helping merchants control their costs and allowing them to pass on savings to their customers,” said Ursula Menke, FCAC Commissioner. “I believe that the Code has helped merchants understand the costs and benefits associated with credit and debit cards. However, over the past year, we have seen certain practices by some in the industry that undermine the letter and spirit of the Code. This Guidance is meant to address these issues by providing better disclosure to merchants and eliminating inappropriate sales and business practices that result in increased costs for merchants, and consequently for consumers as well.”

This Commissioner’s Guidance was developed through consultation with merchant associations and the credit and debit card industry. The PCNOs have publicly committed to the Code and have 90 days to implement the Guidance into their operating rules.

“I would like to acknowledge the input we received from all stakeholders in developing this Guidance,” added Commissioner Menke. “I fully expect that the PCNOs will continue to work with FCAC to ensure that the Code and this Guidance are adhered to within each of their networks.”

FCAC monitors compliance to the Code through proactive engagement with PCNOs to encourage a complete implementation of all elements of the Code, as well as the ongoing monitoring of complaints and concerns brought to FCAC by merchants and consumers.