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

From: Financial Consumer Agency of Canada

​​The Code of Conduct for the Credit and Debit Card Industry in Canada (the Code), which all payment card networks operating in Canada have adopted, sets out several rights that merchants have in relation to their contracts and their statements 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 of the service providers that enable merchants to access the networks. 

Your right to receive information in statements

All disclosures that merchants receive under the Code must be presented in a clear, simple, and not misleading way.

Statements that merchants receive from their payment service providers must include the following information:

  • the 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. 

Your right to access information on rates and fees

Payment card networks must make all standard interchange rates and acquiring network assessment fees applicable to their products and any upcoming changes to these rates and fees easily available on their websites.

Your right to be notified about changes related to fees and rates

Merchants must receive a minimum of 90 days’ notice of any new fees or fee increases related to credit or debit card transactions, or of a reduction in applicable interchange rates. 

The 90-day period will begin when the merchant has been provided with sufficient information about the change in fees to allow the merchant to reasonably assess the cost implications of the change.

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.  

Learn more about the Commissioner’s guidance on the 90-day notice period. 

Your right to receive a summary of multiple service provider agreements

Multiple service provider agreements include contracts with different companies for various services, such as debit card processing, credit card processing and payment terminal leasing. Payment service providers must provide merchants with a consolidated summary of key information about each contract before entering into a multiple service provider agreement.  

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 the agreement will be renewed automatically unless the merchant cancels 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 statements will be provided (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
  • a complaint-handling procedure for each payment service provider, including contact information for complaints.

FCAC strongly recommends that this summary be presented in an information box, but this requirement can be met in other formats.

Learn more about the Commissioner’s guidance on disclosure in multiple service provider agreements.

Your right to cancel your contract

Merchants are allowed to cancel their contracts without penalty following the introduction of a new fee, a fee increase or when a reduction in applicable interchange fees is not passed on to the merchant. 

Merchants have 90 days from the date they receive the notice of the new fee or fee increase to cancel their contract without penalty. This notice should provide merchants with enough information for them to reasonably assess the impact of the new fee or fee increase on their business. FCAC’s Commissioner has issued guidance that if a merchant can assess this impact only at a later date after receiving the notice, then the 90-day period to cancel without penalty should start at that point and not when they received the notice.

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. 

Merchants will also have the right to give service providers 90 days’ notice of contract cancellation and to cancel their contracts without penalty, if payment service providers do not pass on the full savings from any reduction in applicable interchange rates.

As part of this right, merchants cannot be charged penalties for any related service contracts with payment service providers, such as terminal leases or third-party payment processing.

FCAC’s Commissioner has issued guidance 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. 

Learn more about the FCAC Commissioner’s guidance on enhanced disclosure and the right to cancel contracts without penalty. 

Your right to refuse credit or debit card payments

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. 

The same applies to credit or debit payment credentials accessed through a mobile wallet or mobile device.

Your right to provide discounts

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.

If merchants choose to offer these types of discounts, they must clearly display the discounts at the point-of-sale.  

Your right to refuse new products or services

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.

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.

Your right to refuse contactless payments

Merchants are not required to accept contactless payments or upgrade payment terminals to accept contactless payments.

Merchants can cancel their acceptance of contactless payment for all payment card networks with 30 days’ notice, while keeping the rest of their contract the same. By canceling acceptance of contactless payment, merchants will be able to accept only credit and debit card payments that use chip and PIN.

If fees to accept payments made with mobile wallets or mobile devices increase in comparison to those for contactless payments made with a physical credit or debit card, merchants are allowed to cancel payment acceptance for mobile wallets and mobile devices. This means that merchants will not be able to accept mobile payments, but will still be able to accept payments made with physical credit and debit cards using either contactless payments or chip and PIN.

Merchants can opt out of accepting contactless payments made using a mobile wallet or mobile device with 30-days’ notice without penalty.

Your right to provide notice of non-renewal

Merchants are allowed to provide notice that they do not intend to renew their contract with their payment service provider.

Merchants can provide this notice at any time during the contract, except during the final 90 days of the contract period.

Fixed term contracts will not be automatically renewed for the full initial term, but may convert to automatically renewable contract extensions of no longer than six months. Merchants may provide notice of non-renewal at any point during the extension period, up to 90 days prior to the end of each term.​

Your right to make a complaint

Merchants must be able to access a clear dispute-resolution procedure for resolving complaints related to the Code.

If a merchant believes that their service provider has acted in a way that is contrary to the Code, they can report the issue to their acquirer. Service providers can include acquirers, processors, independent sales organizations and referral agents. 

The acquirer will review and investigate the issue and will respond to the merchant within 90 days. 

If the merchant has completed the acquirer’s complaints procedure and is not satisfied with the result, the merchant can escalate their complaint to their payment card network. 

Payment card networks will also investigate any complaints received from the acquirer, the Financial Consumer Agency of Canada (FCAC) or directly from the merchant. The payment card network will inform the merchant of the results of its investigation within 45 days of receiving the complaint.

At any point in time, merchants can also submit a complaint directly to FCAC​ for investigation. FCAC’s responsibility is to monitor whether payment card networks are compliant with the Code. FCAC does not provide redress or compensation and does not get involved in individual disputes with acquirers or payment card networks. To help with the investigation, FCAC may share information from the complaint with payment card networks, acquirers, processors or financial institutions.

Learn how to file a complaint with a payment card network operator.

Minimum standards for the complaints proce​ss

Working in co-operation with payment card networks, FCAC has developed a summary of the complaints procedure and a common template for submitting complaints that payment card networks and acquirers can provide to their merchants. Payment card networks and ac​quirers are allowed to make small changes to the template as long as it captures the necessary information. The complaint form must allow merchants to keep a copy of the information they submit.

The procedure for resolving complaints must meet certain minimum standards. Acquirers and payment card networks must:

  • have a complaints procedure in place and must provide a form that merchants can use to submit complaints. A summary of the complaint procedure, together with the form, must be easily available and posted on the websites of acquirers and payment card network
  • acknowledge that they have received the merchant’s complaint within five business days
  • investigate all complaints and reply with an offer to resolve the complaint or provide reasons to explain why they will not resolve it
  • provide their final decision in writing within 90 days of receiving the complaint for acquirers and 45 days of receiving the complaint for payment card networks, along with:
    • a summary of the complaint
    • the final result of the investigation
    • an explanation of the final decision
    • information on how the merchant can escalate the complaint if they are not satisfied
  • inform merchants if they cannot provide a response within 90 days of receiving the complaint for acquirers or 45 days of receiving the complaint for payment card networks, along with the reasons for the delay and the date when the merchant can expect a response

Information should merchants provide when making a complaint

When making a complaint, merchants can assist acquirers and payment card networks in their review by providing the following infor​mation:

  • a summary of the complaint
  • details, such as the name of the representative the merchant was dealing with, the date that the issue occurred, the date that the merchant reported it to the acquirer, payment card network or representative
  • copies of any supporting documents, such as agreements, statements and correspondence from the acquirer or payment card network

Merchants can also provide su​ggestions for what should be done to resolve their complaint.

What to do before you​ accept an agreement

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 merchants do not receive an agreement, they should ask for it. 

If the agreement is online, merchants should print a copy, save it and make a note of the date for their records. 

Merchants should 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.​​​​​

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