Appearance before the Standing Committee on Finance (July 7, 2020): Payment trends during the pandemic


The COVID-19 response has had a significant impact on how Canadians shop for and pay for goods and services and how businesses can meet these needs. Several Payment Card Network Operators (PCNOs) responded quickly to meet consumer needs in various ways, notably by working with their merchant acquirers to increase transaction limits for contactless payment (tap) and by rolling out contactless capability to businesses. For consumers, there has been a marked rise in online purchases and the use of contactless payments and a decline in the use of cash. This raises important questions about whether we will see a corresponding increase in fraud related to non-Chip and PIN payments and how vulnerable groups that rely heavily on cash will be able to transact in the “new normal”.


With one exception (Amex), PCNOs in Canada operate as ‘4-party’ networks. The 4 parties are:

The 4-party networks set per transaction interchange rates, paid by acquirers to issuers. These rates are typically passed on to merchants. Unlike the primary 4-party networks (Visa, Mastercard and Interac), Amex Bank, a ‘3-party’ network, acts as its own merchant acquirer and card issuer and therefore has direct relationships with merchants and cardholders and sets all its own merchant processing fees and cardholder interest rates.

FCAC monitors the adherence of PCNOs to the Code of Conduct for the Credit and Debit Card Industry in Canada (the Code). The Code protects merchants by ensuring they have access to adequate information about payments products and fees. Investigations for fraud and unauthorized transactions are conducted by the bank that issues a consumer’s credit or debit card and are subject to limited liability rules. FCAC treats the PCNOs’ zero liability policies for unauthorized transactions as public commitments to be managed by FRFIs. Interac e-transfers are not covered by the zero-liability commitment. 

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