The Canadian government is extending its code of conduct for payment cards to any mobile transactions, while also assuring retailers that any savings from reduced interchange will be passed along to them.
Finance Minister Joe Oliver said merchants would be able to opt out of their contracts if payment processors raise rates or don't pass on savings from the interchange reduction to 1.5% that Visa and MasterCard agreed to late last year, according to reports from Canadian news outlets.
Oliver made his comments at the Arts Market on April 13, a small business setting in Toronto, according to a Canadian Federation of Independent Business press release. The announcements came during the same week in which the reduced interchange fees are to take hold in Canada.
Payment processors can only auto-renew a contract for up to six months, allowing merchants to get out of what they might consider a bad contract, according to the new code, which also requires that networks and processors more clearly define fees and contract terms, as well as a dispute resolution process.
All of the new code requirements apply to mobile payments, including a provision giving mobile wallet users control over the default cards used in a system. In addition, the code protects merchants against new mobile fees, with options to drop out of a contract or stop accepting mobile payments if new mobile fees are introduced.
The Retail Council of Canada released a statement declaring the code to be "real progress," but also pointed out that Canadian retailers pay some of the highest transaction fees in the world.
In September 2014, the government's moves to reduce merchants' credit-card fees picked up steam, resulting in the card networks' agreement a month later.
In addition, pressure was building in Europe over the past several months, culminating in the European Parliament capping interchange fees last month for domestic and cross-border transactions.
The card networks were fresh off a similar dispute in the U.S. that resulted in lower debit card interchange rates and routing procedures of at least two different networks as mandated through the Durbin amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Durbin took effect in October of 2011. Rather than adjust credit card fees, the amendment offered a provision in which networks would allow merchants the option to apply a surcharge to credit card transactions.
The networks made that provision official as part of a settlement with merchants over a longstanding court battle over swipe fees, though many merchants were reluctant to put a surcharge in effect.