The Canadian Minister of Finance’s draft code of conduct for the credit and debit card industry is too restrictive, contends Visa Canada, while MasterCard Canada contends “vigorous debit competition can thrive” under the proposed code. Both card brands submitted their comments on the proposal Jan. 18.
Observers expect the code to open the door to debit card competition in Canada, currently controlled by a single network, Interac. Visa Canada hopes to reach agreement with a Canadian bank to issue PIN-debit cards by the end of March. The cards would be dual-branded with Visa and Interac, Byron Pollitt, Visa chief financial officer, recently told analysts. MasterCard debit cards would carry the Maestro PIN-debit brand.
Visa took issue with a number of the code’s aspects. “As currently written, the draft code suggests that merchants will decide which debit network is used and allows the merchant to override a consumer’s choice of payment without consent,” Tim Wilson, head of Visa Canada, wrote in the company’s comments. “While Visa strongly supports a merchant’s right to choose what method of payments they accept, the code does not appropriately balance the interests of merchants and consumers.”
The code does not go far enough to protect consumer choice at the point of sale, so it may discourage innovation, such as use and acceptance of payWave, Visa’s contactless-payment technology, Visa Canada contends. Visa plans to test payWave credit cards, but not payWave debit cards, at the 2010 Vancouver Winter Olympics and Paralympic Games that begin Feb. 12.
“If a merchant chooses to accept Visa debit cards, it can still direct and influence customer behavior at the point of sale, steering customers to a preferred network and by offering discounts for the other forms of payment,” Wilson wrote.
Visa is committed to working with the government to address its concerns while encouraging “choice, competition and innovation” in the Canadian payments industry, he wrote. A spokesperson for Canada’s Department of Finance declined to address Visa’s comments.
MasterCard Canada appeared more accepting of the code. “Overall, MasterCard supports the objectives of the code and is not recommending dramatic changes to the draft,” the card brand noted in a statement. “The draft code balances the interests of the various players in the payments system, including addressing the concerns of small merchants. MasterCard recommends the maintenance of that equilibrium as the code is finalized.”
Finance Minister James M. Flaherty has not set a deadline for finalizing the code of conduct, according to the finance department spokesperson. But the department wants quickly move on the issue, the spokesperson says.
