Clearer credit card contracts for merchants

Financial savings can help consumers

Life is about to get easier for Canadian business owners who feel confused and cheated by the companies that oversee their credit and debit card transactions.

A document published Wednesday by the Financial Consumer Agency of Can- ada will help bring a halt to “tricks” some credit and debit card processors use to keep merchants in expensive contracts, said Louie-Martin Parent, senior policy analyst with the Canadian Federation of Independent Business. “The saving for businesses is going to be massive.”

In 2010, the Financial Consumer Agency introduced a voluntary code of conduct for the country’s credit and debit card industry. This laid out the rights of merchants entering contracts with players in the debit and credit card industry and stated contracts should be easy to understand and that merchants have the right to exit the contract without penalty if fees are increased. The code applies to debit and credit card networks, such as Visa and MasterCard, and to processors, such as Moneris Solution and Chase Paymentech, that operate as middlemen between the merchants and card networks.

In general, big processors have been able to abide by the terms of the code, Parent said. But some small processors, which often advertise attractively low rates, have found creative ways to get around it.

The Financial Consumer Agency said the guidance document should be worked into the contracts issued by companies in the credit and debit card industry within the next 90 days.

When this happens, it’s not only merchants who stand to benefit, Parent said. If merchants can enter into the best possible contracts with payment card networks, they can save money and pass on those savings to consumers.