CG-16 Fee disclosure box—Credit and debit card code

From Financial Consumer Agency of Canada

Ove​rview

This guidance provides a consistent and standard approach across the industry by requiring Participants to disclose specific information within merchant–acquirer agreements, thus facilitating merchants’ ability to negotiate their payment options.

Who th​is guidance is for

This guidance applies to payment card network operators (PCNOs) that operate in Canada and their participants, including card issuers and acquirers, independent sales organizations (ISOs) and other service providers, such as terminal leasing firms (“Participants”).

1. Detai​ls and history

Consulted: Public consultation from March 15, 2016, to April 15, 2016

Effective Date: November 13, 2016

2. Backg​round

The 2015 amendments to Element 1 of the Code of Conduct for the Credit and Debit Card Industry in Canada​ (the Code) require the addition of a fee disclosure box that will set out fees for the most common types of domestic payment card transactions and processing methods available to merchants.

Payment Card Network Operators (PCNOs) and their participants, including card issuers and acquirers, independent sales organizations (ISOs) and other service providers such as terminal leasing, are collectively referred to in this Guidance as Participants. Participants are responsible for ensuring that the following Code requirements are met for contracts that are entered into or extended starting on November 13, 2016.

The fee disclosure box requirement is in addition to the requirement in Element 1 of the Code for an information summary box (in accordance with the template in Addendum I). Please refer to CG-15 for guidance on the information summary box.

3. Pu​rpose

This guidance provides a consistent and standard approach across the industry by requiring Participants to disclose specific information within merchant agreements, thus facilitating merchants’ ability to negotiate their payment options.

4. Relevant ele​ments of the Code

Element 1 – Payment card network rules will ensure incre​ased transparency and disclosure by payment card networks and acquirers to merchants

The payment card networks and their participants will work with merchants, either directly or through merchant associations, to ensure that merchant–acquirer agreements and monthly statements include a sufficient level of detail and are easy to understand.

All merchant-acquirer agreements will include a cover page containing an information summary box that provides key elements of the contract in a consolidated fashion and a fee disclosure box, using the templates in Addendum I.

Acquirers must also disclose all other fees charged to the merchant (e.g., monthly minimums, administration fees, etc.).

Payment card networks will make all applicable standard interchange rates and acquiring network assessment fees easily available on their websites. In addition, payment card networks will post any upcoming changes to these rates and fees on their websites once they have been provided to acquirers. Payment card network rules will ensure that merchant statements include the following information:

  • effective merchant discount rateFootnote 1  for each type of payment card from a payment card network that the merchant accepts;
  • interchange rates and, if applicable, all other rates charged to the merchants by the acquirer;
  • the number and volume of transactions for each type of payment transaction;
  • the total amount of fees applicable to each rate; and
  • details of each fee and to which payment card network they relate.

5. Guid​ance on the Fee Disclosure Box

The Code requires Participants to disclose information in a clear, simple and not misleading manner.

Participants must include the fee disclosure box identified in Table 1 at the beginning of every merchant–acquirer agreement, ensuring the following:

  1. the information in the left-hand column and in the top row header of the fee disclosure box is not changed, except in two situations:
    1. the addition or deletion of a common payment card type/processing method (e.g. recurring payment); or
    2. the common payment card type/processing method set out in Table 1 is not offered by the acquirer/processor.
  2. the terminology used in the fee disclosure box and in the merchant–acquirer agreements is identical.
  3. a single rate is disclosed for each common payment card type and processing method regardless of the pricing methodology used.
  4. the single rate disclosed must be the sum of: the network’s interchange rate plus the network assessment fee plus the per-transaction processing fee.
  5. depending on the pricing methodology, the dollar amount and/or percentage ($X /X%) must reflect the single rate disclosed by payment card type and processing method, including all per-transaction processing fees, such as:
    • PCNO interchange rate;
    • qualified rate;
    • non-qualified rate;
    • non-qualified surcharge rate;
    • PCNO brand assessment rate;
    • Interchange differential rate;
    • rate adjustment fee;
    • flat rate;
    • acquirer/ISO processing fee and/or acquirer/ISO merchant discount rate
    • PCNO authorization rate; and
    • PCNO settlement rate.

Table 1: Fee Disclosure Box templateFootnote 2

​Payment card type

These are the most common types of domestically issued cards and their processing methods. They do not represent all the possible fees and variations that are charged to merchants
​Processing method​​ ​
​Card/device present

Means that the card/device was electronically read (contact or contactless interface or mag-stripe)
Card/device not-present
 
Means that the card/device was not electronically read. Generally, the card information is manually key-entered, e.g. mail/telephone order, online, recurring payment)
​American Express cards​ ​$X / X% ​$X / X%
​American Express prepaid cards ​$X / X% ​$X / X%
​Interac debit cards ​$X / X% ​$X / X%
​Interac debit cards - contactless ​$X / X% ​$X / X%
​MasterCard business cards ​$X / X% ​$X / X%
​MasterCard core cards ​$X / X% ​$X / X%
​MasterCard corporate cards ​$X / X% ​$X / X%
​MasterCard debit cards ​$X / X% ​$X / X%
​MasterCard prepaid cards ​$X / X% ​$X / X%
​MasterCard world cards ​$X / X% ​$X / X%
​MasterCard world elite cards ​$X / X% ​$X / X%
​Union Pay credit cards ​$X / X% ​$X / X%
​Visa business cards ​$X / X% ​$X / X%
​Visa business premium cards ​$X / X% ​$X / X%
​Visa corporate cards ​$X / X% ​$X / X%
​Visa corporate premium Cards ​$X / X% ​$X / X%
​Visa debit cards ​$X / X% ​$X / X%
​Visa infinite cards ​$X / X% ​$X / X%
​Visa infinite privilege cards ​$X / X% ​$X / X%
​Visa prepaid cards ​$X / X% ​$X / X%
​Visa standard credit cards​ ​$X / X%​ ​$X / X%

6. Guidance on disclosure of other fees

Participants can use a table to disclose all other fees similar to the example in Table 2.

Participants are expected to ensure that the disclosure of key information set out in merchant-acquirer agreements is in a language that is clear, simple and not misleading. CG-3 Clear language and presentation principles and guidelines for the industry​ should be consulted for more information on clear language, presentation principles and examples.

In Table 2:

  • fees are grouped by theme;
  • descriptive headings and subheadings help the reader scan the information more easily and quickly;
  • the words used are common, short and simple and standard across the industry;
  • a readable typeface and font size are used; and
  • important information is in bold type and/or underlined.

Note: The following example is for illustrative purposes only. Participants must meet the requirement to disclose all other fees to the merchant having regard to their specific agreements, ensuring that all fees payable by the merchant are properly and accurately disclosed.

Table 2: Other Fees Disclosure Box—Pricing schedule exampleFootnote 3 

One time fees ​​ Pricing structureFootnote 4
​Application fee ​$ ​Tier​ed pricing
​Terminal set up fee ​$ Visa i​nterchange rate ​website
​Inte​rac set up fee ​$ Maste​rCard interchange rate website
​Merchant ​set up fee ​$ ​Qual​ified rate ​%
​Season​al set up fee ​$ ​Mid-qu​alified rate ​%
​Seaso​nal activation fee ​$ ​Non-qua​lified rate ​%
​Security set u​p fee ​$ ​Merc​hant discount rate ​%
​E-comm​erce application fee ​$ Inter​ac flat rate ​%
​E-commer​ce mobile application fee ​$ ​​Flat rate  
​Instal​lation fee ​$ Visa fl​at rate ​%
​Trainin​g fee ​$ Mast​erCard flat rate ​%
​Gatew​ay set up fee ​$ ​​Interac flat rate ​%
​Fraud dete​ction set up fee ​$ Cost p​lus pricing​
​Wirele​ss set up fee ​$ ​Fl​at rate ​%
​Softw​are fee ​$ ​Visa inte​rchange rate ​website
​Onli​ne set up fee ​$ ​MasterC​ard interchange rate ​website
Monthly fees ​Non-quali​fied surcharge rate ​%
​State​ment fee ​$ ​Interac fla​t rate ​%
​Monthly m​inimum fee ​$ Interc​hange differential rate​
​Mon​thly fee ​$ ​Visa inter​change rate ​website
​PCI f​ee ​$ ​Visa appl​icable interchange rate ​%
​Non-co​mpliance security fee ​$ ​Interchange differential rate ​%
Annual fees ​Merchant discount rate ​%
​Annua​l fee ​$ ​Rate adjustment fee ​%
Transaction fees ​MasterCard interchange rate ​website
​Visa autho​rization fee ​% ​MasterCard applicable interchange rate ​%
​MasterCard authori​zation fee ​% ​Interchange differential rate ​%
​Interac author​ization fee ​% ​Merchant discount rate ​%
​American Ex​press authorization fee ​% ​Rate adjustment fee ​%
​Visa transac​tion fee ​% ​Interac flat fee ​%
​MasterCard tran​saction fee ​% Other variable fees
​Interac trans​action fee ​% ​Reversal fee ​$
​American Expr​ess transaction fee ​% ​Decline fee ​$
​Union Pay trans​action fee ​% ​Chargeback fee ​$
​Visa cross-​border rate ​% ​Batch fee ​$
​MasterCar​d cross-border fee ​% ​Interac debit surcharge ​$
​Visa assessm​ent rate ​% ​Interac debit monthly minimum ​$
​MasterCard asse​ssment rate ​% ​Online/Web reporting fee ​$
​International assessment fee ​% ​Voice authorization $

7. Con​clusion

This Commissioner’s Guidance is complementary to, and should be read in conjunction with, other FCAC Commissioner’s Guidance documents:

Each PCNO is responsible for ensuring full compliance with the Code by its Participants. FCAC may follow up with PCNOs to ensure that requirements have been met.

8. Contact us

Financial Consumer Agency of Canada
Supervision and Promotion Branch
427 Laurier Avenue West, 6th floor
Ottawa, ON K1R 1B9

Email: compliance@fcac.gc.ca

Fax: 613-941-1436

9. App​endix A

Commi​ssioner’s Guidance 16 (CG-16) questions & answers

Disclosure

1. With respect to automatically renewable merchant–acquirer agreements under Element 12 of the Code, when does the fee disclosure box need to be provided?

The Code states that all merchant–acquirer agreements must include a cover page containing an information summary box providing the key elements of the contract in a consolidated fashion, a fee disclosure box using the templates in Addendum I, and the disclosure of all other fees. This information needs to be included in all new and renewed merchant–acquirer agreements, subject to the following exception:

If a merchant–acquirer agreement, initially agreed to by the merchant, is automatically renewed with an extension of no longer than 6 months and no changes to the initial terms and conditions of the initial agreement are made, there will be no obligation to send a new disclosure package including the information summary box, the fee disclosure box, and the disclosure of all other fees.

2. How do you disclose the fees for a merchant with multiple business types in the fee disclosure box? For example, a merchant may have 3 different totals (grocery, gas station and garage) to include for each processing method: would each column be divided by 3 to reflect each business type?

Divide each processing method column (“Card-Present” and “Card Not-Present”) into separate sub-columns to capture each “business type,” or provide separate contracts for each business type.

3. Can the fee disclosure box display a single rate in a single cell for a merchant having flat-rate billing regardless of the payment card type or processing method?

A Participant providing a flat fee will need to disclose the same fee for each of payment card type and processing method in the fee disclosure box using the same template. This will allow merchants to easily compare the costs by card type with other agreements.

4. With respect to “Card-Present” vs “Card Not-Present” processing methods, how do you disclose other variables that may also impact the rate charged to merchants without suggesting that only the presence or absence of the card will dictate the rate charged?

Other variable fees affecting the rate charged will be disclosed in the contract disclosure, and footnotes can be added in the fee disclosure template or other fees disclosure box to explain those variables.

5. Presenting the fee disclosure box and other fees disclosure at the beginning of the agreement unnaturally places emphasis on the pricing of an account. Is the other fees disclosure box required to be at the front of the agreement with the information summary box and the fee disclosure box?

All agreements entered into on or after November 13, 2016, and all agreements renewed or extended starting on that same date must have a cover page containing the information summary box, the fee disclosure box, and the disclosure of all other fees, in that order.

Terminology

6. With respect to terminology, should all payment network service providers use the same wording when it comes to the fees assessed to merchants? Can a similar approach be used for merchant statements?

Inform​ation Summary Box and Fee Disclosure Box

The Information Summary Box and the Fee Disclosure Box are established by the Code, and therefore the wording cannot be changed.

Participants can:

  • Include the terminology from their pricing schedule (other fee disclosure) in brackets besides the wording in these two documents that the Code requires. For example, the information summary box includes a row that refers to the “cancellation of contract(s) and any applicable penalties”, but the organization may use the word termination rather than cancellation.
  • Mirror the terminology in all documentation to reflect what is included in the information summary box and the fee disclosure box.

Other fee disclosure box

FCAC’s guidance states that the other fees disclosed should reflect what is applicable to the merchant. It is important to note that disclosure of other fees (for example, your pricing schedule) should be disclosed using the terminology used in the agreements, disclosures and monthly statements. Existing pricing schedule to replace the other fee disclosure box can be used as long as it meets the requirements of clear, simple and not misleading language and that all applicable fees are included.

7. With respect to terminology, does “Visa Consumer Credit Cards” mean Classic, Gold and Platinum cards and “MasterCard Core Credit Cards” mean Classic?

According to Visa, “Visa Consumer Credit Cards” means Classic, Gold and Platinum cards, and according to MasterCard, “MasterCard Core Credit Cards” means Classic cards. For consistency purposes, Code Participants may include Classic, Gold and Platinum cards in brackets in the fee disclosure box beside “Visa Consumer Credit Cards” and Classic cards in brackets beside “MasterCard Core Credit Cards”. If the agreements and/or statements refer to these cards as Classic, Gold and platinum, or Classic, respectively, Code Participants can then include this terminology in its documentation to ensure consistency.

International cards

8. Should international cards be included in the fee disclosure box?

To avoid creating confusion and misleading merchants International cards, and all cards that are not issued in Canada, have been removed from the template fee disclosure box.

Guidance

9. Can a glossary and/or scenarios be provided in the Commissioner’s Guidance?

Financial Consumer Agency of Canada suggests that Code Participants adopt the best practice of including a glossary of terms, using industry naming conventions and provide example scenarios.

10. Can these guidance documents be updated in the future if significant changes occur?

The Financial Consumer Agency of Canada will update these guidance documents as required to address any pertinent changes in the industry.

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