Presentation Transcript

1. Proposals to Strengthen the Code of Conduct For discussion at the FinPay meeting of January 9, 2014
2. Overview Issues to be addressed Criteria for assessing options Overview of the Code Options Next Steps
3. Issues to be addressed Merchants concerned about: the high cost of credit card acceptance, due partially to growth in use of premium cards. questionable sales practices of some card processors. Competition Tribunal found that Visa’s and MasterCard’s rules have an adverse affect on competition, resulting in higher fees/prices. Minister of Finance committed to develop options to address the competition Tribunal’s finding. 2013 Speech from the Throne: “Canadians deserve to know the real cost of paying by debit and credit card”.
4. Criteria for assessing options Solutions to be assessed against the following criteria: Enhancing choice and competition in the Canadian credit card market; Enhancing transparency and disclosure of the costs and benefits of payment cards; Cost of credit card acceptance should be balanced, transparent and predictable Minimizing impacts on consumers; Minimizing complexity and cost; Enhancing merchant and consumer understanding of the payment products they accept/use; and Maintaining Canada’s ability to develop a digital and innovative economy.
5. Code of Conduct for the Credit and Debit Card Industry (The Code) The Code sets out 10 elements to promote fair business practices in the credit card market, including: Element 1: acquirer agreements and merchant monthly statements must present information in a manner that is clear, simple and not misleading. Element 2: merchants receive minimum of 90 days notice for any fee increases or the introduction of a new fee. Element 3: allows merchants to cancel contracts without penalty should fees rise or new fees be introduced. Element 7: requires clear branding of cards so that merchants know the network(s) available on the payment cards. Element 9: restricts the issuance of premium credit cards on spending and income thresholds.
6. Merchant Concerns with the Code The Financial Consumer Agency of Canada (FCAC) is responsible for oversight of the Code. Since the Code’s inception, the FCAC has received 1139 enquiries and initiated 409 investigations. The FCAC investigations revealed the following concerns: Transparency and disclosure of information in merchant-acquirer contracts remains a concern (e.g., notification of cancellation fees); and Merchants do not receive notice from acquirers regarding the expiry of contracts, leading to contracts being automatically renewed, or payment of cancellation penalty fees. Merchant associations have identified the following issues: Transparency and disclosure of fees could be further strengthened; Improve dispute settlement procedures with service providers; and The growth of premium cards has contributed to higher acceptance costs for merchants.
7. Options for strengthening the Code
8. Proposal 1Add new Code element on dispute resolution
9. Proposal 2Amend Element 1 to enhance disclosure of fees on merchant contracts
10. Proposal 2 (continued)Example of summary box
11. Proposal 3Amend Element 1 to require notice before automatic contract renewal
12. Proposal 4Amend Element 1 to enhance disclosure of card acceptance fees
13. Proposal 5Amend Element 3 to provide for contract cooling off period
14. Proposal 6Amend Element 1 to enhance disclosure of flat fee pricing models
15. Proposal 7Amend Element 2 to enhance notification of fee increases
16. Proposal 8Amend Element 9 torestrict migration to premium cards
17. Proposal 9Amend Element 7 to require the identification of cards
18. Proposal 10New Code element on the disclosure of fees at POS
19. Next Steps We encourage members to provide written comments on the options for our consideration. We are also interested in any other additional options members may have for consideration.