MasterCard Inc.'s Canadian unit has agreed to adopt the code of conduct for Canada's debit and credit card industry that the country's finance minister approved April 16. However, Visa Inc.'s unit there and Moneris Solutions Corp., the country's largest processor, said they need more time to determine how it might affect their business.
Finance Minister Jim Flaherty's decision to issue the code came as MasterCard and Visa prepare to enter Canada's PIN-debit market.
Flaherty said the code is designed to promote fair business practices and ensure that merchants and consumers understand the costs and benefits of using credit and debit cards. Payments companies have until May 17 to review and adopt the code. If they decide not to do so, lawmakers have said they might impose policies to regulate the industry, under Canada's Payment Card Networks Act, which gives the minister of finance the power to regulate credit and debit card networks and their participants.
If credit and debit card networks, processors and merchant acquirers adopt the code voluntarily, it would take effect within 90 days of its adoption. During this period, they would need to change their processes in order to comply.
MasterCard Canada immediately accepted the code of conduct.
"MasterCard believes the code creates benefits and burdens for all of the participants in the payments value chain," the company said in a press release. "Importantly, the code allows the continued presence of Maestro on Canadian debit cards, allowing consumers to retain the benefits of international debit-purchasing power." Maestro is MasterCard's international PIN-based point of sale debit network.
Visa Canada, however, expressed concerns about adopting the code. "Visa is concerned that it does not go far enough in creating an environment that encourages meaningful competition in the Canadian payments arena and favors merchants at the expense of consumers," the company said in a press release.
Tim Wilson, the head of Visa Canada, said in March 2009 that it planned to offer a cobadged PIN-debit card with both a microchip and a magnetic stripe once it enters Canada's debit card market. The code of conduct would require such cards to be competitive and to supply access to more than one debit network.
A Moneris representative said that the Toronto processer is evaluating the code.
It requires merchant acquirers and processors to disclose their fees for each type of payment. The code also requires card networks to give merchants a minimum of 90 days notice before raising fees or introducing debit and credit card fees.
In addition, merchants that accept credit card payments from a particular network would not be obliged to accept the network's debit cards and vice versa. The code also allows merchants to offer discounts for using different payment methods, such as cash and debit or credit card payments.
Flaherty issued the code after consulting with businesses, the card industry, card processors and merchant acquirers.
The code would protect businesses, he contended. "Businesses have voiced real concerns about the lack of choice they have had in accepting debit and credit card payments and about the costs involved," Flaherty said in an April 16 press release. "These added business costs are borne by merchants and may be passed on to consumers, which makes this an issue of importance to all Canadians. … The code of conduct helps [merchants] control their costs and allows them to pass on savings to their customers."