The Canadian Code of Conduct for merchants became operational in August 2010. It was put into effect to uphold fair business practices and make sure retailers and consumers understand the costs and benefit of debit and credit cards. For a smooth experience, while running your online businesses, it is important to have the good, the bad and the ugly at your fingertips. Find below a breakdown of the benefits of the Code of Conduct as well as matters that are lacking for a better business experience by all Canadian merchant account holders.


The New and the Good



  • Lower Interchange Rates- New law



In April 2015 MasterCard and VISA announced a reduction in interchange rates. The updated code now allows you to instantly terminate an existing agreement if the provider does not abide by the lowered interchange cost. Always check to confirm that the price reductions comply with lower interchange costs.



  • New law on Auto-Renew Agreements



There is a new code addressing Auto-Renew Agreements. You can now provide notice to your processor if you wish to renew your contract automatically. However, this rule will apply until a stipulated period, after which the window will be shut maybe 30 days to the renewal date. Also, auto-renew agreements are now limited to a maximum of 6 months per term. Therefore you can’t have your contract renewed for another extended period.



  • 3-months notice on fee increases



The card issuer (e.g. MasterCard) or payment processor should give you (the merchant) a 90-days notice in case of a price increase. Also, there are no penalties if you wish to cancel your account following the announcement of an increase in rates until the 90-days notice expires. However, note that this rule doesn’t apply for equipment leasing.


The absent



  • No law on Equipment Leasing



While you can now cancel your Canadian merchant account due to an increase in processing rates, this code does not apply to equipment leasing. In Canada equipment leases are still non-cancelable contracts, the consequence is you will be made to pay lease charges even after terminating your account.



  • No law on Advertising Standards



The new code of conduct has not set advertising standards for processing charges. Most processors still advertise low rates without disclosing the details of the fees. Hidden costs only come as a surprise to many merchants when it’s too late to turn; when papers are signed, and terms are non-cancelable.


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