New Debit Card 'Code Of Conduct' To Protect Small Businesses


The recently announced Code of Conduct for the credit and debit card industry in Canada is described as “a major step toward providing Canadian retailers with greater pricing transparency” regarding the cost of consumer purchases made with credit and debit cards. 

Announced by Finance Minister Jim Flaherty in November, the Code of Conduct aims to protect retailers by providing a clearer view of the actual cost of processing consumer payments made with credit and debit cards. The draft Code provides retailers with the option to route debit transactions through the network of their choice — Interac, or a separate network operated by a credit card company, and provides 90 days' notice to retailers of any change in fees. This level of cost certainty allows dealers to reasonably forecast their monthly costs related to accepting these forms of payment. It provides dealers with increased pricing flexibility to encourage their customers to choose the lowest-cost payment option, and allows retailers to freely choose which payment options they will or will not accept.

“The new Code of Conduct is not only long overdue, but it is the right thing to do” says Jeff van Duynhoven, President, TD Merchant Services. “Merchants deserve a greater voice in the payments market. They also deserve monthly statements that are easy to understand and choice in determining what payment options to accept.”

In the past, processing payments has been a cause of concern for retailers, in part because of ambiguous terms, confusing jargon, and hard-to-read statements from some payment processors. The Code of Conduct was developed, in part, to help eliminate this confusion and provide greater transparency for retailers.

The Code of Conduct is not legally mandated, but most financial institutions in Canada have elected to adopt it. The federal Payment Card Networks Act does provide the Minister of Finance with power to regulate the market conduct of the credit and debit card networks and their participants, if necessary.