Canadian Government finalises Credit and Debit Card 'Code of Conduct'
The Government of Canada released its Code of Conduct for the Credit and Debit Card Industry in Canada on 16 April 2010. The Government states the Code promotes fair business practices and ensures that merchants and consumers understand the costs and benefits associated with credit and debit cards.
The Code requires payment card networks to provide merchants with:- prescribed and standardised information on fees within merchant agreements and monthly statements; and
- minimum time frames and advance notice on changes to fees and rates.
Merchants will be able to:
- cancel contracts without penalty should fees rise or new fees be introduced;
- reject debit products even if they accept credit products from the same network;
- reject new products and services introduced by payment card networks; and
- apply differential discounting based on payment method.
Cards having both credit and debit functionality will be prohibited as will be debit cards with competing applications from different networks. Co-badged cards will require logos to be equally branded with brand logos being similarly colour or black and white, same size and located on same side of card.
Most of the Code's provisions are effective in August 2010, with a one year transitional period for certain provisions. The payment card networks, major issuer and payment processors have now agreed to the Code. The Canadian Government had previously indicated it was prepared to legislate without such agreement. Legislation is also before the Canadian Parliament which will empower the Financial Consumer Agency of Canada to monitor compliance and enforce the Code.
More information can be found here.
In late June 2010, the US Congress agreed on amendments to the financial sector reform package that impact on credit and debit card interchange fees and merchant practices. These are based on amendments initially introduced by Senator Dick Durbin in May 2010.
The measures would enable merchants to offer discounts to consumers wishing to use cash or other payment alternatives as well as set a minimum threshold of up to $10 for accepting credit cards. Interchange fees are also to be regulated by the US Federal Reserve which will issue rules to ensure that fees charged to merchants by credit card companies for credit or debit card transactions are reasonable and proportional to the cost of processing those transactions. There are exemptions from the interchange fees regulations covering smaller issuers and government-administered programs that use debit cards.
The measures passed Congress in July 2010 and will become law by the end of this year.
More information is available here.
The UK Payments Council released its report "The Way We Pay 2010" on 14 April 2010. The report investigates developments in UK retail payments over the past decade and predicts where UK retail payments will be in 2018. It predicts that:
- Only 1 in 50 (as opposed to 1 in 20 in 2009) workers will be paid in cash;
- Only 45% of all retail transactions (as opposed to 59% in 2009) will be in cash;
- 1 in 4 retail transactions will be by debit card (as opposed to merely 1 in 20 in 1999); and
- Cheques will only comprise 0.8% of retail transactions (compared to 2% in 2009 and 6% in 1999).
More information is available here.
The Canadian Minister of Finance, the Hon Jim Flaherty, launched the Task Force for the Payments System Review on 18 June 2010 at the Canadian Payments Association's Payments Panorama conference in Vancouver.
The Task Force will investigate the public policy objectives of the Canadian payments system and the regulatory and institutional structures needed to achieve those public policy objectives. It will focus on issues including safety, soundness, competition, innovation and benefit to end users, including consumers and merchants.
The Task Force will provide recommendations to the Canadian Minister of Finance by the end of 2011. The Task Force will be chaired by Dr Patricia Meredith, who previously worked for the Canadian Imperial Bank of Commerce and is currently a consultant.
More information is available here.
On 18 June 2010, the UK Payments Council released a two-year progress report on its 2008 National Payments Plan.
The progress report highlights the on-going research and consultations associated with the setting of a target date of 31 October 2018 for the closure of cheque clearing in Great Britain and Northern Ireland. The Payments Council noted the need to respond to numerous inquiries from the public about the target date. They also noted on-going consultations with charities and other not-for-profit organisations with particular interests regarding the future of cheques.
The Payments Council noted it will be taking a more active role in contactless and pre-paid payments. Its focus will be on standards and interoperability, consumer education and engagement with consumer organisations and other interested stakeholders.
The Payments Council is continuing its work on financial inclusion, mobile payments, e-invoicing and payment reference information. During 2009 and 2010, new groups were established to investigate issues such as fraud, use of cash and online payments.
More information is available here.