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Canadian Code of Conduct for Credit and Debit Card

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Nic Beique | September 16, 2020

“The Canadian Code of Conduct sets out standards for the Credit and Debit Card industry in Canada, since August 2010.”
2 min read
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    What's the Code of Conduct?

    The Code of Conduct came into effect in August 2010 and is intended to promote business practices and ensure merchants and consumers clearly understand the costs and benefits of credit and debit cards.

    You can view the latest version of the code of conduct on the Government of Canada's website.

    Helcim is proud to go above and beyond the requirements set in the Code of Conduct. Below is a breakdown of the current benefits of the Code as well as items we feel are lacking in order to better product merchants.

    90-Day Notice of Fee Increases

    No merchant fees can be increased by the card-brand (such as Visa) or the processor without a 90-day advance notice to merchants. When a fee increase is announced, the merchant is allowed to cancel their account without penalty; up to 90 days after the rate change takes place. However, it is important to note that equipment leasing does not fall within this clause (see below).

    Effective Discount Rate

    Processors are also now required to display on their monthly statements the "effective processing rate" for each credit card and debit card type. The effective rate is calculated by taking all the fees that applied to the credit card type, such as qualified fees, interchange fees, card-brand fees, non-qualified fees, and per-transaction fees; and dividing that number by the total amount processed. This is a great way for merchants to discover that the "1.49%" they were promised actually turned into "3.5%".

    NEW: Limitations on Auto-Renew Agreements

    The latest Code of Conduct addresses Auto-Renew Agreements. Merchants can at any point provide notice to their processor that they do not wish to auto-renew their agreement. They are not required to do this during a certain window (such as 30 days prior to the termination date). Auto-renew agreements have also been limited to a maximum of 6-month terms, meaning that even if you forget to notify your payment processor, the company cannot review your contract for another 3-year term.

    NEW: Reduction in Applicable Interchange Rates

    Visa and MasterCard both introduced lower interchange rates in April 2015. Under the updated Code of Conduct, merchants are able to immediately cancel their existing agreement if the reduced interchange cost is not passed on in full back to the merchant. Since most Canadian merchants are in a tiered (qualified/non-qualified) price structure, very often price reductions do not fully reflect the lower interchange costs.

    What is the Code of Conduct Missing?

    The code moves the payment industry in the right direction, but at Helcim, we'd like to see it go further and cover more information.

    No Advertising Standards

    The Code of Conduct does not establish any advertising standards when it comes to processing fees. There are many processors still advertising rates "as low as 1.49%" without disclosing the complete pricing rates. Too many merchants, the complete pricing rates are only discovered once it's too late "“ after they've already signed a contract or even a non-cancelable lease agreement.

    Equipment Leasing Not Covered

    While merchants can cancel their merchant account without penalties if processing rates go up. This does not apply to equipment leases. Equipment leases in Canada are still non-cancelable agreements, so even after canceling their account merchants still have to make lease payments.

    At Helcim, we're committed to going above and beyond the Code of Conduct. Learn about our true transparent pricing.

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