August 17, 2011

CFIB report card on credit/debit card code of conduct one year later

TORONTO---Marking the first anniversary of the implementation of the Credit Card/Debit Card Code of Conduct, the Canadian Federation of Independent Business (CFIB) today released a report celebrating the many substantial accomplishments of the Code, as well as noting areas for further improvement.

"The Code of Conduct's biggest achievement has been to protect Canada's low-cost flat-fee debit system," said Dan Kelly, CFIB's senior vice-president of legislative affairs. "Few Canadians understand how close we were to losing our low-cost debit system to a US-style high cost system where rates would be as much as 10 times higher." The Code does allow for credit card companies to offer debit cards, but appropriately requires them to build their own networks and convince merchants and consumers of the benefits.

In addition to the assistance with debit, the Code's other big accomplishment is providing merchants with some power in their relationship with credit card companies, banks and card processing companies, CFIB noted. "The Code's effectiveness has already been tested several times," Kelly said, "and CFIB is pleased to report that it has passed on every occasion." CFIB has used the Code to resolve issues on debit cards for e-commerce, disclosure of important merchant fee information, and exit penalties for fee changes in processing agreements. "Merchants have new powers under the Code that have helped them achieve tangible results in their dealings with the industry," stated Kelly. Adding, "This simply wouldn't have happened without the Code."

Earlier this year, CFIB launched a merchant campaign to encourage consumers to consider paying with cash or debit cards, instead of credit cards, which can cost a merchant between two to three per cent of the sale (campaign materials available at Again, this campaign would have been impossible without the powers granted to merchants by the Code.

"Still, to maximize the effectiveness of the Code of Conduct and other activities to keep merchant costs down, further refinements are needed," Kelly said. A short while ago, many banks launched new 'premium' credit cards that offered consumers extra benefits, but imposed a much higher processing fees on merchants. "We are asking government to build on the initiative taken by the Competition Bureau and allow merchants to accept lower cost cards from one brand without the requirement to accept higher cost 'premium' cards or to surcharge for accepting higher cost cards," Kelly said.

Furthermore, all higher cost cards should be required to be separately branded as 'premium' as most consumers still do not know that some cards charge extra fees for merchants. "This would be a good step in giving small business power in the relationship with credit card companies and the banks," said Kelly.

While there have been major strides in providing merchants with better information and additional powers, progress is still needed on the high cost of some premium cards. "In the coming days, CFIB will be releasing a comprehensive examination of each of the credit cards in Canada to assist merchants and consumers to know more about the costs involved. We ask merchants to check out our website for further information," concluded Kelly.

As Canada's largest association of small- and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 108,000 members in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.



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