OTTAWA – The Conservative Government has introduced a new proposed Code of Conduct for the Canadian Credit and Debit Card Industry. “This proposed Code will help small businesses and merchants by helping to ensure fair practices and accountability, encourage choice and competition and prevent unfair practices in the credit and debit market,” said Leon Benoit, Member of Parliament for Vegreville-Wainwright.
Benoit explained that “consumers and small businesses have raised significant concerns about the practices of credit and debit card providers. Our Conservative Government has listened, and the actions our government announced are a result of discussions with consumer and merchant associations, debit and credit card networks, payment processors and card issuers across Canada.” He added that “on November 19, the Minister of Finance released for public consultations a proposed Code of Conduct for the Credit and Debit Card Industry in Canada.”
Once adopted, the proposed Code would:
- Ensure that merchants are fully aware of the costs associated with accepting credit and debit card payments;
- Provide merchants with increased pricing flexibility to encourage consumers to choose the lowest-cost payment option; and
- Allow merchants to freely choose which payment options they will accept.
“Canadian entrepreneurs work hard to make their businesses successful and create jobs for Canadians. They can’t afford to be distracted by dealing with complicated, unfair and constantly changing practices of big credit and debit card providers” said Benoit.
“Our Government is building on the landmark consumer-friendly reforms we introduced earlier this year to help ensure fairness for Canadians using credit cards” stated Benoit. For example, strong new consumer protection rules with respect to credit cards were proposed in May. Among the new proposed rules:
- Summary Boxes on Contracts and Applications will help improve disclosure to consumers by clearly stating key features such as interest rates and fees;
- Clearer Implications of Minimum Payments by improving consumer awareness of the time it would take to fully repay loans if only the minimum payment is made each month; and
- Timely Advance Disclosure of Interest Rate Changes to protect consumers from sudden and poorly disclosed interest rate hikes.
In addition, the proposed new rules will limit other business practices not beneficial to consumers, including:
- Minimum 21 Day Grace Period: all new purchases made within that period to remain interest fee as so long as the consumer pays their balance in full by the due date;
- Lower Interest Costs with mandatory allocations of favoured consumer payments ;
- Express Consent for Credit Limit Increases;
- Limits on Debt Collection Practices; and
- Prohibit Over-The-Limit Fees by restricting fees due to merchant holds placed on credit cards, protecting consumer from inadvertent fees they are not responsible or aware of.
“Our government has again acted to further protect Canadian consumers by introducing a new proposed Code of Conduct for the Canadian Credit and Debit Card Industry, which would provide a better approach than heavy-handed government intervention. It is more flexible and adaptable, just what stakeholders like the Canadian Federation of Independent Business asked for” concluded Benoit.
