Canadian Code of Conduct for Credit Cards Extended to Mobile Payments

Just ahead of the Wall Street Journal scoop of the November Apple Pay launch in Canada, the federal Finance Minister Joe Oliver has announced that the code of conduct governing credit and debit card transactions will be extended to apply to mobile payments as well (via CBC).

Under these rules, mobile users will have access to full of the default settings on their virtual wallets. Alongside consumers, merchants see some benefits of the code of conduct additions: Visa and MasterCard agreed to limit a maximum of 1.5% of the value of the transaction. Those savings — the transaction fee got lower — will go to the merchants and not the consumers.

But, there are other benefits for merchants: they can end their contract with credit card processors without penalty. Also, merchants can say both yes and no to mobile payments, giving them protection against mobile payments fees. Under the code, a merchant can decide whether or not to accept mobile payments.

Although mobile payments in Canada are far from mainstream, the code offers protection to merchants: if a credit card processor wants to include new fees for mobile payments, they will be able to cancel the contract or just stop accepting mobile payments in-store.

Dan Kelly welcomed the new rules and said following Oliver’s announcement: “Our fear was there that will be a big fee-apalooza when mobile payments go mainstream.”

NPD consumer protection critic, Andrew Cash, highlighted the major issue with the new code of conduct: It’s a voluntary rule, so companies don’t necessarily need to comply. What is missing is strong regulation, he concluded.