Canada’s Code of Conduct Expands to Include Mobile (April 15, 2015)
Canada’s Financial Consumer Agency this week has released amendments to Canada’s code of conduct for credit and debit card transactions that extend to mobile payments. Although some retail groups are applauding the amendments, which they say give merchants more control, payments industry experts say the rules could put a damper on mobile commerce.
The purpose of the code, according to the agency, is to ensure merchants are aware of the costs associated with various electronic payments, choose which payment types to accept and enable consumers to choose the lowest-cost payment option.
The amendments to the code might present challenges to the growth of mobile payments in Canada because there’s no incentive or requirement of merchants to accept contactless payments, mobile or plastic, at the point of sale, nor are they required to upgrade POS terminals to enable contactless payments,” according to Jacqueline D. Shinfield, partner, Blake, Cassels & Graydon and a Paybefore Top 10 Payments Lawyer.
“Moreover, if a merchant chooses to accept contactless payments at the point of sale—whether by mobile device or otherwise—the code allows the merchant to cancel contactless payment acceptance on 30 days’ notice, without otherwise altering or canceling their merchant acquiring agreements,” Shinfield tells Paybefore.
Some retail associations, like the Canadian Federation of Independent Business (CFIB) applaud the rules because, for example, they empower merchants to cancel contracts or stop accepting mobile payments if processors introduce new fees for mobile payments. “Our fear was there will be a big ‘fee-apalooza’ when mobile payments go mainstream,” Dan Kelly, CFIB president, told The Canadian Press. The new rules make that less likely, he added.
The code also includes provisions for consumer payment preferences. Credit and debit payment credentials can be stored on, or accessed by, the same mobile device or wallet, but they must have clearly separate payment apps, and consumers must be able to select which payment app is used for a contactless payment, according to the code. Also, payment apps cannot have preset default preferences that cannot be changed. Only consumers may determine default payment preferences and they must be provided with a clear and transparent process through the mobile user interface to do so, according to the code.
“It will be interesting to see what effect the new amendments have on the broad adoption of mobile payments in Canada, as they do not provide a very ‘friendly’ regulatory environment that would tend to encourage the development of the mobile ecosystem in Canada,” Shinfield says.
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