Canadian Code of Conduct for the Credit and Debit Card Industry

In August 2010, the Code of Conduct came into effect in CANADA. It is intended to promote business practices and ensure merchants and consumers are aware of the costs and benefits of using credit and debit cards.

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What the Code of Conduct is Missing?

At Duro Pay, we think the code moves the payment industry in the right direction, but we would like to see it go further and cover more information. 

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Frequently Ask Question

payment industry frequently asked questions

The Code of Conduct became effective in August 2010 and is planned to make the Credit card and debit card processing industry more transparent and ensure merchants and consumers are aware of the fees, details and benefits of using credit and debit cards in their business in CANADA.

YES, any payment processor can increase the rate at any time, however by law they are supposed to notice the merchant 90 days prior to the rate increase.

Merchants must be given 90-day advance notice before fees can be increased by card brands (such as Visa/MasterCard) or processors. 

Merchants could cancel their accounts without penalty 90 days after a rate increase is announced. This clause does not apply to equipment leasing.

Effective Discount Rate or Effective Merchant Discount Rate is calculated as the total fees paid by the merchant to an acquirer, related to the processing of a specific type of payment card from a payment card network, divided by the total sales volume for that type of payment card.

Processors are now required to display the "effective processing rate" for each credit card type and debit card type on their monthly statements. To calculate the effective rate, add up all the fees applied to each credit card type, such as qualified fees, interchange fees, card-brand fees, nonqualified fees, and per-transaction fees, and divide by the total amount processed. Merchants can discover that the "1.49%" they were promised is now over "2%".

Auto-Renewal Agreements are addressed in the latest Code of Conduct. Merchants can notify their processors at any time if they do not wish to auto-renew their agreement. They are not required to do this during a specific period (such as 30 days before the termination date). In addition, auto-renewal contracts have been limited to six-month terms, so that even if you forget to notify your payment processor, the company cannot review your contract for more than 6 months.

In April 2015, both Visa and MasterCard introduced lower interchange rates. According to the updated Code of Conduct, merchants can immediately cancel their existing agreement if the reduction in interchange costs is not fully passed on to them. Due to Canada's tiered (qualified/nonqualified) price structure, price reductions might not fully reflect the lower interchange costs.

While merchants can cancel their merchant account without penalties if processing rates go up. However, this does not apply to equipment leasing. In Canada, equipment leases are still non-cancelable arrangements, so even after cancelling their account, merchants must pay lease payments.

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