The following press release was posted on the Interac Inc website:

“The draft Code certainly had good bones and Minister Flaherty didn’t just add flesh to them, he added muscle,” emphasized Mark O’Connell, President and CEO of Interac Association. “It is clear that Minister Flaherty has heard the concerns of merchants and consumers, concerns that we share, and has responded with an appropriate and pragmatic Code of Conduct.”

INTERAC is a low-cost, world-class debit system and has served Canadians well. Millions of Canadians depend on debit every day. Almost 60 per cent of all card payment transactions in Canada are debit. In 2009, consumers carried out nearly 4 billion debit transactions.

“Maintaining complementary co-badged debit cards is an elegant solution to a whole host of concerns caused by competitive co-badged cards,” said Mr. O’Connell. “It upholds what exists in Canadians’ wallets today and, at the same time, enhances the competitive debit landscape in Canada by promoting fair and healthy competition.”

Canada now has a multi-network debit environment and all competitors should play by the same transparent rules that provide adequate protection for merchants and consumers.

“As we have said repeatedly, a level playing field is an essential foundation of a healthy competitive market and one that truly works for all stakeholders,” reinforced Mr. O’Connell. “Without question, the Code helps build that by re-establishing choice and transparency in the marketplace for merchants and consumers, which we support.”

“Clear information about service offerings and their associated costs, and allowing stakeholders to make informed choices should be hallmarks of Canada’s debit system,” added Mr. O’Connell. “They are certainly at the heart of the INTERAC business model.”

The Honourable Jim Flaherty, Minister of Finance, has released a Code of Conduct for the Credit and Debit Card Industry in Canada that “promotes fair business practices and ensures that merchants and consumers understand the costs and benefits associated with credit and debit cards.” (See Code of Conduct and an associated Backgrounder).

“Businesses have voiced real concerns about the lack of choice they have had in accepting debit and credit card payments, and about the costs involved. These added business costs are borne by merchants and may be passed on to consumers, which makes this an issue of importance to all Canadians,” said Minister Flaherty. “The Code of Conduct encourages choice and competition. It gives merchants the freedom to choose which card networks they use, helps them control their costs, and allows them to pass on savings to their customers.”

Under the Code, merchants will be:

• Provided with clear information regarding fees and rates.
• Given advance notice of any new fees and fee increases.
• Able to cancel contracts without penalty should fees rise or new fees be introduced.

Given new tools to promote competition, and in particular, will have the freedom to accept credit payments from a particular network without the obligation to accept debit payments and vice versa.

The Code of Conduct is the result of extensive consultations with merchant and consumer associations, debit and credit card networks, payment processors and credit card issuers across Canada. The credit and debit card industry will have until May 17th to review and adopt the Code of Conduct.

“Payment card networks, credit and debit card issuers, and payment processors are now being invited to adopt this Code,” said Minister Flaherty. “We are confident that they will do so voluntarily. Our Government has, however, taken steps in Budget 2010 to ensure that we have the legislative authority to regulate the industry if necessary.”

“The Government has listened to the concerns of Canadian merchants and consumers,” said the Honourable Josée Verner, Minister of Intergovernmental Affairs, who joined Minister Flaherty for the announcement. “The Code will help ensure accountability; prevent unfair business practices in the credit and debit card market; and help protect businesses from rising costs that may be passed on to consumers.”

On March 29, the Government introduced legislation in Parliament to implement certain provisions of the Budget. The legislation enacts the Payment Card Networks Act, which would give the Minister of Finance the power to regulate the market conduct of the credit and debit card networks and their participants, if necessary.

Legislation tabled would also expand the mandate of the Financial Consumer Agency of Canada to supervise payment card network operators to monitor their compliance with the Code of Conduct and with any regulations introduced under the new Act.