Canadian Code of Conduct for Payments Released

Just released today by the Minister of Finance, the Code of Conduct for the Credit and Debit Card Industry outlines business practice standards that the Canadian payments industry must adhere to.  Most non-payments industry folks would read this and think, “Sounds fair.  Don’t they do all of this already?”  But, those that have followed the payments industry in other parts of the world (read: U.S.) see that much of this goes directly against the normal business practices that industry leaders have used for decades.  Of the ten Policy Elements detailed in the Code of Conduct, here are three that I have found interesting:

5. Payment card network rules will ensure that merchants will be allowed to provide discounts for different methods of payment (e.g. cash, debit card, credit card). Merchants will also be allowed to provide differential discounts among different payment card networks.

6. Competing applications from different networks shall not be offered on the same debit card. However, complementary applications from different networks may exist on the same debit card.

7. Payment card networks will ensure that co-badged debit cards are equally branded.

The first one hits one of the basic rules that has always been a part of the credit card proposition – there is no surcharge of using a credit card.  Forceably allowing not only discounts, but different discounts based on payment scheme, really threatens the pricing practices of the past decades.  Additionally, having only one application of a card (unless complementary) and requiring equal branding real estate on the card change other hallmarks from the credit card industry.

But the ones that could have protected the card associations from themselves is this:

9. Payment card network rules will require that premium credit and debit cards may only be given to consumers who apply for or consent to such cards. In addition, premium payment cards shall only be given to a well-defined class of cardholders.

It is my belief that the mass issuance of the premium cards, like the Infinite card, and the resulting significant increase in merchant fees is the main impetus for the calls for regulation.

I am eager to hear each payment network’s response.  I can only guess what they are saying internally today.

(Read the entire release at: http://www.fin.gc.ca/n10/data/10-029_1-eng.asp)