Merchant rights under the Code of Conduct for the Credit and Debit Card Industry in Canada

​​The Code of Conduct for the Credit and Debit Card Industry in Canada, which all payment card networks operating in Canada have adopted, sets out several rights that merchants have in relation to their contracts for payment card processing services. FCAC’s Commissioner has issued further guidance on some of the issues addressed by the Code to clarify the expectations of payment card networks and service providers that enable merchants’ access to the networks.
 
Before accepting any agreement with a payment service provider, merchants are strongly encouraged to read the merchant agreement completely and carefully to ensure they understand its terms and their obligations. If you do not receive an agreement, ask for it. If the agreement is online, print a copy, save it and make a note of the date for your records. Ask questions about any points that are not clear, and make sure any commitments or modifications to the terms are included in the written agreement. 
  • Merchant statements from their payment service providers must include the following information presented in a clear and simple manner (Element 1​):
    • effective merchant discount rate that applies to each type of payment card from a payment card network
    • interchange rates and all other rates that payment service providers, such as acquirers, charge the merchant
    • the number and volume of transactions for each type of payment transaction
    • the total amount of fees applicable to each rate
    • details of each fee, including the payment card network to which they relate. 
  • Payment card networks must make all interchange rates applicable to their products and any upcoming changes to these fees easily available on their websites. (Element 1)
  • Merchants must receive a minimum of 90 days’ notice of any new fees or fee increases related to credit or debit card transactions. (Element 2)
    • The 90-day period will begin when the merchant has been provided with sufficient information about the change in fees to allow the merchant reasonably to assess the implications for its costs.  See the FCAC Commissioner’s Guidance on the 90-day notice period for additional information.  
    • If a fee change is made in accordance with a predetermined fee schedule included in the merchant’s contract with an acquirer, the 90-day notification is not required.  
  • As of November 12, 2013, when a payment service provider is offering a merchant a package that includes contracts with more than one party, the merchant must be given a consolidated summary of key information about each contract before an agreement is entered into. 
    • Specific information to be provided in this summary includes:
      • the name and contact information for each payment service provider, and the nature of the services it provides
      • the effective date of each agreement
      • information on the expiry and renewal of each agreement (for example, if your agreement will automatically be renewed unless you cancel by a certain date). Check carefully to see if the agreement builds in any fee increases at renewal.
      • detailed information on applicable fees and rates for each payment service provider
      • how your statements will be provided to you (paper or online)
      • cancellation terms of the agreement with each payment service provider, including any cancellation fees that could apply
      • if services for point-of-sale terminals are offered, general information on buying, leasing or renting options for the hardware (for example, terminals) so that merchants can make informed decisions
      • complaint-handling process for each payment service provider, including contact information for complaints.
  • Merchants are allowed to cancel their contracts without penalty within 90 days of receiving notice of a new fee or a fee increase. (Element 3)
    • This right to cancel does not apply if a fee increase is made in accordance with a predetermined schedule included in the merchant’s contract, such as a schedule based on the merchant’s sales volumes.  
    • FCAC’s Commissioner has issued guidance, effective November 12, 2013, on scenarios where a payment service provider has arranged for a package of related payment processing services that resulted in the merchant having contracts with more than one organization. 
      • Upon receiving notice of a new fee or fee increase by one of the parties, the merchant has the right to cancel all related payment services contracts with these organizations within 90 days without penalty.  
      • Contracts merchants establish with other parties on their own will not be considered related contracts and therefore will not be exempt from cancellation fees. 
      • Similarly, contracts merchants can keep when moving to another payment processor, without additional cost to them, will not be considered related contracts.  
      • For more information, see the FCAC Commissioner’s Guidance on enhanced disclosure and the right to cancel contracts without penalty
  • Merchants who accept credit card payments from a payment network are not required to accept debit card payments from the same network, and vice versa. (Element 4)
    • A merchant can choose to accept only credit or debit payments from a network without having to accept both.
  • Merchants are allowed to provide discounts for different methods of payment (for example, cash, debit card and credit card), as well as different levels of discounts among different payment card networks. (Element 5)
    • If merchants choose to offer these types of discounts, they must clearly display the discounts at the point of sale.  
  • If payment card networks introduce new products or services, merchants are not required to accept those new products or services. Negative option acceptance is not allowed. (Element 10)
    • A merchant must explicitly consent to accept new products or services.
    • This element of the Code of Conduct applies to new products and services that payment card networks offer to merchants. 
    • It does not apply to new products and services offered to consumers, such as a new credit card product.