Merchant rights under the Code of Conduct for the Payment Card Industry in Canada

The Code of Conduct for the Payment Card Industry in Canada (the Code) came into effect in 2010. All major payment card network operators (PCNOs) in Canada have agreed to the Code. They are American Express Canada, Discover, Interac, Mastercard Canada, Visa Canada and UnionPay. The Code was revised and updated in 2015 and 2024.

The Code aims to ensure transparency, flexibility, and choice for merchants in managing payment card acceptance. To meet this goal, the Code provides merchants with certain rights.

Your right to information

Code-related information that payment card service providers must disclose to you must be presented in a manner that is:

• simple
• clear
• non-misleading

Card processing applications, quotes and proposals

To help you compare pricing, card processing applications, quotes and proposals must include 2 things.

They must include a Cost per Transaction Disclosure. It will allow you to compare the cost of accepting a certain payment card with different payment service providers.

See an example of Cost per Transaction Disclosure (Annex B).

They must also include a Disclosure of fees that presents additional payment processing costs separately. This is a list of other fees payment processors charge. It will allow you to compare fees, like monthly fees, across providers.

See an example of Disclosure of Fees (Annex C).

Payment processors must explain how they calculated these costs. This includes details such as card mix and volumes. Card types like standard and premium. If there are any promotional offers or bundled services, they must also clearly tell you about these. This includes how long the offers last.

Payment processing agreements

Your agreement for card payment processing must include a cover page with 3 tables. If you receive it electronically, it can be a cover page or a separate document with 3 tables.

These 3 tables are:

• Summary of the Key Elements of the Agreement
• Cost per Transaction Disclosure
• Disclosure of Fees

These tables should include information, such as:

• the name and contact information for each card payment processor and/or service provider
• the effective date of each agreement
• the expiry and renewal dates of each agreement
• how they’ll provide statements, paper or online
• cancellation terms of the agreement with each payment service provider, including any cancellation fees that may apply
• general information on buying, leasing or renting options for the equipment, if they offer services for point-of-sale terminals
• a complaint-handling procedure for each payment service provider, including contact information to file a complaint
• transaction costs for each card offered by each payment card network that you’ve chosen to accept
• detailed information on other applicable fees and rates

You have the right to request these disclosures or updates to these tables from your payment processor.

See an example of Summary of Key Elements of the Agreement (Annex A).

Statements

Every month, you must receive or have access to a statement with:

• the effective merchant discount rate calculated as follows. Take the total acquirer fees and PCNO core fees you paid to an Acquirer or Downstream Participant for processing each PCNO card type you accepted. Divide this number by your total sales volume for that card type
• the rate and total amount the payment processor charged you for:
  • interchange or wholesale discount rates
  • network assessment fees
  • all other charges
• the number and volume of transactions for each type of payment

If you’re on a blended or flat rate pricing plan, your statement must include:

• the rate you pay per transaction, including any percentage discount rates and extra charges
• the rate and total amount for fees charged by the payment processor for that period that are not included in the per transaction rate

Notice of fee changes

It’s important to understand the types of fees the Code covers and those it doesn’t.

The Code applies to core fees. These are the amounts set by a PCNO and your acquirer/processor for accepting and processing payment card transactions.

It doesn’t apply to:

• optional services
• add-on services
• penalties that you could avoid

Acquirers and downstream participants must notify their merchants 30 to 60 calendar days before the effective date of all:

• increases in existing acquirer/processor fees or applicable domestic PCNO core fees they passed on to you
• new acquirer/processor fees or applicable domestic PCNO core fees they passed on to you
• reductions in applicable domestic PCNO core fees they didn’t pass on to you

For all card processing plans, notices to merchants about changes must clearly state:

• previous and new amounts of:
  • interchange or wholesale discount rates
  • network assessment fees
  • any other rate and fee charged by the acquirer or downstream participant
• who has changed the rate or fee, the PCNO, acquirer, or downstream participant
• the amount of the change they’ll pass on to you
• your right to provide notice of your intent to exit your agreement within 70 calendar days after the effective date of the upcoming change

You might have an agreement with no fixed term or penalties for cancellation. If so, you must receive a reminder of your right to exit without penalty at any time.

Acquirers and downstream participants must notify you if they won’t pass on in-full applicable domestic PCNO core fee reductions.

They don’t need to notify you:

• for plans that automatically provide the full benefit of a PCNO core fee reduction to merchants
• if they choose not to increase costs or introduce a new fee
• if they made changes in accordance with a pre-determined schedule. For example, at the end of a promotional period

Notice of intent to exit your card processing agreement

An acquirer or downstream participant might not pass on applicable fee changes to you in full. In this case, you have the right to provide notice of your intent to exit the agreement without penalty. You must do so within 70 calendar days after an applicable fee change comes into effect. This means you have over 2 months to decide if you want to cancel your agreement.

The notice you must receive about the fee change must include the date the 70-day period ends.

You might have an agreement with no fixed term or penalty for cancellation. If you have this type of agreement, and your payment processor doesn’t pass through a reduction in applicable fees or increases them, they must inform you of your right to cancel without penalty at any time.

Cancelling agreements

You have the right to cancel your agreements, including related service agreements, without penalty:

• if you don’t get 30 to 60 calendar days’ notice of applicable fee changes
• within 70 calendar days of the fee change, if you get 30 to 60 days’ notice of the change

After you give notice to cancel, the acquirer or downstream participant must send cancellation documents within 5 business days.

Your cancellation becomes effective on the date you requested it if:

• you have fulfilled your obligations for cancellation. For example, you returned rental equipment and signed necessary forms
• the date is at least 30 calendar days after you submitted required cancellation documents, unless you agreed otherwise

Exceptions

Penalty-free cancellation doesn’t apply to fee increases based on pre-determined schedules that are part of your agreement. For example, those based on sales volume or the end of a promotional offer.

This policy doesn’t apply to services unrelated to card payment processing. This is when provision and charges are independent of card processing services provided by the acquirer or downstream participant.

Renewing card processing services agreements

You have certain rights related to the renewal of your agreements for card processing services.

Notice of non-renewal

You may inform your acquirer or downstream participant that you don’t want to renew your agreement. This notice applies to your main agreement and any related service agreements. You need to do this at least 45 calendar days before your agreement is set to renew.

Fixed-term agreements

If your agreement has a set term, it can’t automatically renew for the same length of time as your initial agreement. Your agreement may be converted to automatically renew for periods of 6 months or less. You may inform your acquirer or downstream participant any time during these periods that you don’t want to renew. You must do this at least 45 calendar days before the end of the term.

Duration of agreements

Any related service agreement can’t have a term longer than your initial card processing agreement. A related agreement isn’t part of your initial card payment processing agreement. If your initial agreement doesn’t have a set duration, your related service agreement must also be without a set duration.

These rights don’t apply:

• to services not related to your card payment processing agreement
• if related services and their price don’t depend on you keeping your initial card payment processing agreement

Choosing which payment options to accept

You may choose to accept domestically issued credit or debit card payments from a PCNO. You don’t have to accept both.

Refusing new products or services

Negative option acceptance is not allowed. You must provide express consent to accept a new payment processing product or service.

Providing discounts

You may provide discounts for different methods of payment. For example, cash, debit card and credit card. You may also offer different levels of discounts among different card networks.

Filing a complaint

If you feel that your rights under the Code weren’t respected, you have the right to file a complaint.

Your card payment processor must have a process for handling complaints that is:

• clear
• simple
• easy to access
• easy to understand
• transparent

Learn more about complaint handling under the Code.

Related link

• Code of Conduct for the Payment Card Industry in Canada