PAC comment on credit card draft code
Jan. 21, 2010 – The Payments Accountability Council (PAC) applauds
government's efforts to bring clarity, transparency and merchant choice
to the debit and credit card market in Canada through the government's
Code of Conduct for Credit and Debit Card Markets.
The Payments Accountability Council (PAC) applauds government's efforts
to bring clarity, transparency and merchant choice to the debit and
credit card market in Canada through the government's Code of Conduct
for Credit and Debit Card Markets.
PAC is a coalition representing 250,000 Canadian merchants, co-chaired
by the Retail Council of Canada (RCC) and the Canadian Council of
Grocery Distributors (CCGD).
"The Code is a solid starting point to address the imbalances in
Canada's payments system," says Diane J. Brisebois, President and CEO,
Retail Council of Canada. "It has the potential to bring the choice and
price discipline that will allow the creation of a truly competitive
debit and credit marketplace."
"PAC members continue to believe a robust regulatory framework is
necessary in Canada for debit and credit card markets," added David
Wilkes, Senior Vice President of Trade and Business Development,
Canadian Council of Grocery Distributors. "PAC members support the Code
as much needed incremental progress, and have provided government with
balanced and thoughtful recommendations."
PAC's review and commentary is based on three key principles:
– The need to provide clarity – for consumers and merchants
– The need to provide merchants with effective tools to manage costs
associated with debit and credit cards
– The need to ensure that the costs built into the system through
loyalty and other programs are paid for by those who introduce and
benefit from these costs
PAC members will continue to advocate for flat merchant fees for debit
card transactions, the elimination of higher merchant fees for premium credit
card transactions, real competition for merchant acceptance and a formal
stakeholder-driven rules-based oversight mechanism for all elements of the
Canadian payments system.
What Merchants Want in the Code:
– Merchants are asking for plain English language contracts, with
clearly defined terms. Merchants must have a clear understand what
they are buying and be given all the rules that apply to the payment
options they are accepting in their establishments.
– Merchants are asking for full disclosure of all components of the
total cost of accepting a card before processing a transaction. These
components include: interchange fees associated with different card
products, assessment fees, marketing fees, processing fees and the
– "Fee changes" must be defined in plain language. Merchants are asking
for the right to cancel their contracts with processors without
penalty in the event of changes in terms, conditions or fees that may
increase merchant costs, whether or not those costs have actually
increased within our expanded 180-day period.
– Merchants are asking for the right to accept credit card payments
without being obligated to accept debit card payments from the same
payment network and vice versa.
– Express written consent of the merchant must be obtained from
merchants in order to activate acceptance of debit payments from the
same payment network from which they accept credit payments and vice
versa. Merchants have noted that discounting, and additionally,
surcharging, will not be taken up broadly if credit and debit fees are
kept in check by a more competitive environment, but the option to do
so should reside with the merchant.
– Merchants must have the ability to choose the lowest-cost option on
transactions involving co-badged debit cards. The credit card network,
the issuing bank or the processor cannot determine the routing of the
debit transaction. For this, several elements must be in place:
transparent and timely disclosure on pricing, technology in the hands
of the merchant, and the absence of prohibitive barriers to making any
switch in routing.
– The Coalition agrees that co-badged debit cards shall be fairly
branded; that debit and credit card functions shall not co-reside on
the same payment card and that so-called premium credit cards should
be set aside for the use of a clearly defined group of high-spend
Click here to download the full PAC_submission