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Flaherty wants code of conduct for credit, debit cards

Finance Minister Jim Flaherty makes a purchase at Mrs. Tiggy Winkles toy store before making an announcement regarding credit and debit card conduct in Ottawa, Ont., on Thursday Nov. 19, 2009. (Sean Kilpatrick / THE CANADIAN PRESS)
Finance Minister Jim Flaherty makes a purchase at Mrs. Tiggy Winkles toy store before making an announcement regarding credit and debit card conduct in Ottawa, Ont., on Thursday Nov. 19, 2009. (Sean Kilpatrick / THE CANADIAN PRESS)

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Date: Thursday Nov. 19, 2009 8:41 PM ET

Finance Minister Jim Flaherty is proposing a voluntary code of conduct for credit- and debit-card companies that could mean savings for consumers and small businesses.

He says the code will "level the playing field" and make sure stores and consumers clearly understand the costs and benefits of credit and debit cards.

For consumers, it means gold, platinum cards will only be issued when people specifically apply for them.

For small businesses, the code means credit card companies would have a minimum of 90 days notice to tell stores about any changes to fees they have to pay to be able to accept credit or debit cards.

If stores don't like the changes, they'd be allowed to cancel their contracts and not pay a penalty.

They also won't be required to accept both debit and credit cards from one network unless they want to.

Flaherty is giving businesses two months to give their input on the proposal and says it could be finalized by early next year.

Small businesses are already cheering the move.

"These developments will create a better future for merchants and help ensure a fair and transparent credit and debit market instead of just letting large industry players call all the shots," Canadian Federation of Independent Business president Catherine Swift said in a news release Thursday.

Major credit card company MasterCard said in a statement that it takes will review the measures.

"MasterCard believes that in formulating the proposed code the minister has undertaken a comprehensive and diligent review of a complex matter involving disparate claims."

Comments are now closed for this story

JMA
said
0 0

all credit cards must have a photo ID to make purchases but without one should be denied completely and debit card should have photo ID to make it too because someone did make an copy of debit card number then went to ATM machine to withdrawl and did clean out my bank account. ATM machines should have video camera to verify that credit card and debit card photo is 100% match before making withdrawls so it will stop theives from fraud. that is the only way to protect yourself from fraud and is the only way to stop theives from commit fraud.


LF
said
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This is like a code aof ethics for the Mafia, with a mafia board of directors watching over it.


Spence in Ontario
said
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Did any one else notice the 'voluntary' part of this proposal at the start of the article? Sorry if I sound pessimistic but I really don't trust the credit and debit card companies to submit to a voluntary code of conduct. On substance the proposal isn't really a bad idea but I think it could go a little bit further. The government should be a bit stricter with how the credit card companies decide the fees they charge businesses. I don't think they should dictate it but try to come up with some type of method to help decide what is a fair rate change. For example limit the amount the rate can be changed within a set period of time (with some possible exceptions for extraordinary circumstances) and set the time notification, but make it binding not voluntary.


Plabo
said
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What a wuss!! Flaherty can't face the credit card companies with the real issue. Interest rates remain too friggin high and the government is letting these loan sharks continue with this practice. I am happy for those who can pay off their balances every month but this accounts for a small percentage of card holders. Please do not believe any stats that the government in power may display since they have proven time and time again, and for any level of government, that the figures are wrong and in their favor. Bring down interest rates and people will be able to pay them off instead of having people consolidate their debts and have a $0 balance credit to start all over again.


SS
said
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I agree that things need to be done, like lowering interest rates (since some are insane) and making the contracts simpler and easier to understand for the customers, etc. I'm sure we can all appreciate that.But I also agree that personal responsibilty must play a role as well. If the contracts are simplified, written in plain language, not to mention in a size we can read, then it's time for us as consumers to step up and do our part.It can be hard sometimes, of course, but it may be that not everyone should be getting into using credit cards so much. These cards can be debt traps if you let them become that. I remember that when I got my first credit card, I had little to no knowledge of how to use it properly. Luckily, my folks had taught me to be thrifty, and a savy friend taught me how to use the card in a way where I see the benefits. More education for all, especially the beginner customer would be a big help. Fairness and responsibilty... interesting concept... ;)


R NS
said
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Good work PCs


Doug @ BC
said
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People who demand lower credit card rates really make me laugh.Here's an idea,if you don't like the rates,don't carry a balance on a credit card.If you force government to lower credit card rates,you might not get exactly what you think you're going to get.In the USA,where credit is even tighter than in Canada,credit card compamies are already lowering credit card limit,s,and demanding that those who apply for credit cards,can actually afford to pay their bills. Credi Card interest rates are higher because the risk is higher.Fraud and defaults have to be paid by someone.Take a lesson from your bad experience with credit cards,educate yourself on their PROPER use,and manage your own budget more wisely. There's a show about getting out of debt and living on a budget.Watch it for a while. That said,I favour FULL DISCLOSUE about ALL charges,and the consequences for not paying the bills you accumulate.But,also,if anyone who routinely carries a big balance on a credit card wants to borrow cheap monay from me,they had better have plenty of collateral.Paying those rates is not only a voluntary commitment,it is downright ignorant. Regularly,people use credit cards for coffee and a bagel at Tim Hortons.I suggest you burn your credit cards and pay off what you owe.That kind of spending is not only an extremely poor use of credit,it is entirely YOUR OWN FAULT.


JB in Calgary
said
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@ Judy, hmmmm NO, if you don't like the rate then don't use them. Pay with Cash/Debit. Let me guess...Nobody would be able to buy anything? Here's a concept, save the money first then pay for it. You will probably find that you buy half the stuff you do now, because by the time you save up for it, you wont want it anymore. Woooooh JB, that is just crazy and makes way too much sense.


James from Toronto
said
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This is a bit of a joke coming from a minister that gave the 407 group full rights to be judge, jury and executioner on the public.


Martin
said
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As the new credit card regulations in the US many are now finding that they no longer are eligible to get a card. If in Canada tough new regulations as to charges etc are brought in then the same will occur. As these are unsecured loans, losses of up to 30% on default accounts is normal. These losses are made up by charges applied to all cards. My view is if you can't pay your card of each month to avoid interest then perhaps you should not use it. This is not ,which many believe, your money you are spending when you use your card. It is a loan and not a free one. If you can't afford to pay back what you borrow, don't but don't whine about it when you are called to account.


JustsouthofEd
said
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To Dave in Manotick: I do understand that some of the cost is passed onto the consumer as it is with every fee or tax imposed on business ( they just pass it along to the consumer. See proposed tv tax debate going on for local tv) but in the case of small retailers that usually is NOT the case because for them to keep their doors open they need to be competive with pricing and they are usually paying more for transaction costs than the big box stores do so hence why Flarety wants to even the playing field... God forbid a polician wanting to help small business out over big american corporations ( ie: Wallmarts and Best Buys as examples ).


John from TO
said
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People need to stop their complaining about interest rates. Banks, and credit companies dont lend money, they sell it. And they sell it at an inflated price the same as stores sell their items at an inflated price. Thats how they make their money.
Say you apply for a credit card, and you get it, its not anyones fault but your own if you max it out and either cant afford to pay it off, or you take a very long time and you end up paying for that card 3 times over. As consumers, we have to have enough dicapline to know when we can or cant afford to buy something, and also have to have the knowledge that just because a lending insitution gives you the money, dosent always mean you can afford to buy something!


Dave in Manotick
said
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To JustsouthofEDYou are indeed naive if you believe that the retailers are the ones paying the credit card discounts on sales. YOU are paying the credit card companies as every retailer assumes you will pay by credit card and factors the highest percentage discount into their price. In effect, if you pay cash you are being penalized by still paying the credit card discount. You should ask for a discount on cash purchases.


Island Man
said
0 0

When Flaherty levels any playing field everyone should watch their backs. He has a tendency to cause a lot of collateral damage with his levelling.


Fred N.
said
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Credit card companies need regulation. In particular, with regards to currency exchange rates. I recently got screwed by M/C on US purchases where not only the exchange rate varied in a single date but 10% over two days, not even close to official exchange rates.


Dunany
said
0 0

Yeah....and I'd like a Code of Conduct for Politicians!How about for starters " One lie and you're out"? Although that would spring an election every two weeks or so for a lack of a quorum in the house.


Dunany
said
0 0

Yeah....and I'd like a Code of Conduct for Politicians!How about for starters " One lie and you're out"? Although that would spring an election every two weeks or so for a lack of a quorum in the house.


Catwoman 37
said
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I agree, lower the interest rates.


Neil
said
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I agree that the Government is not about to upset the banks that pay $$ to their campaigns. There are many "nickle and dime" charges that add up to $$. I discouvered one by payind a bill "cash" on the due date. Two days interest was charged on my next bill - explanation - it takes two days to transfer it to our account. After talking to a supervisor it was agreed that the charge was unwarrented "meaning illegal" and dropped.How many people get zinged with that one - any comment Mr Flaherty ?


teri
said
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Own a small retail business. I can SO HAPPY TO BE PAID IN CASH. Consumers can CHOSE to stop supporting the institutions that make the profits. No one needs credit/debit cards for every $1 puchase made as is now the practice for a majority of consumers. CASH CASH CASH - make that the practice. It is possible in most of the business done on a daily basis. Just takes a little extra planning.


CHRIS MILLER
said
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It would serve all well to quit blaming banks, and credit cards for the large interest that they charge, and that the consumer inccures. The interest rates are spelled out very clearly on the paper work when you get a credit card. Why is it the banks resposibility to lend you money, and then wait years to get it back, with out recieving the agreed apon rate of return. People should grow up, be responsible with their money and live within their means. A CREDIT CARD IS NOT A RIGHT, IT IS A SERVICE. when you buy anything from a store, you are paying an average of 75% mark up pn their product/service. the bank is no differet


JustsouthofED
said
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I belive what mr Flarety is getting at is leveling the playing field on what credit card companies and banks charge for transaction costs when people use them in retailers. Im not sure people are aware but to use an AMEX in a store can cost the store 3-5% depending on the retailer ( or more for smaller companies ). That means if it was a $100 purchase, the retailer has to pay $3 of that transaction to AMEX. This holds true with all credit card and debit transactions. ( now you know why alot of places do not take AMEX as they are the most expensive when it comes to transaction costs )What he is proposing is a clear and transparent view of these transactions by allowing retailers to post a cash sale price vs electronic transaction price. He also wants there to be a set standard for these costs and not a variance that exist now in what they are chargin retailers to use these forms and methods of payments. This whole process will allow more retailers to accept more methods of payments therfore allowing us consumers more choice when we purchase goods.After all .. like was mentioned, democracy is freedom of choice after all.


Frank Buchan
said
0 0

Credit card rates are outrageous, but then it is our fault for using them, and maybe there is something to be said for the punishment of a high rate when we live beyond our means. (And, I have a balance on my credit card, so I'm not being holier than the next poor slob.)


htoelle
said
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Like so many codes of conduct. Those who do adhere do so just on the border line and no more. A large majority break the rules Willie Nillie ( just look at what is happening south of us)


the old lady
said
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Maybe we need regulation on credit and debit cards. However what is the matter with People being their own regulator?I am sure the Government has many more important things to do.If you can't pay for it within 3 months don't buy it.


Allo
said
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The companies are the one who does't care if some one use some one's card it is important for them just any one use it and they charge the card.


Jill Taylor
said
0 0

Thank you Mr. Flaherty. Small businesses are easily deceived by the debit companies and can cost the business owner a fortune. I've been through it. There needs to be a stop put to it!


Rick in NB, Ste Marie
said
0 0

Code of conduct, what is that? Its a toothless law concocted by spineless people. Help create laws to protect us Flaherty, or sit down and be quiet.


Judy
said
0 0

This is nothing but a farce. What needs to be done is to lower all credit card interest rates instead of these exhorbatant rates they have now. They are already pulling in millions of dollars in profits.


R. Paul Kneeshaw
said
0 0

Here we go again with the government getting feedback over a 60 day period on a specific issue. This issue on CREDIT CARDS doesn't need a study, then his review, then some form of weak bill for the house to chew apart. Why does this minister not address the problem, which he knows well and that is % RATES CHARGED.He would do the right thing and legislate throught the Finance Bill a maximum of earnings for the credit card companies (not to exceed 6% of Gross Dollars consumed on their card).Our government also needs to take some initiative, and strong financial controls on earnings by our "BANKS".There earnings are sinful, all on the backs of their customers - (which they have NO CONTROL OVER) .TAX All financial earnings @ 6% on all Gross Earnings over a base , reasonable amount (50 - 100 Million) , on total gross earnings over this @ 15%.All this extra tax dollars, should not go to working capital, but, "Directly to Health & Education" costs in the Provinces.What is tough about this concept, besides it makes sense & duable ?Democracy sure has it faults (greed by the elected and privilidged at the expense of the people).However its the only form of Government that offers Freedom & Choice.


WSV
said
0 0

I agree, a photo on the back of credit cards (like they already do in Norway and elsewhere) is indespensible. The problem is that a lot of credit card fraud occurs online where a picture on the card would be no deterrent.


I. Post
said
0 0

I like to see cardholder's photo at back of every credit and debit card. It doesn't cost much but will save lots of money through fraud in the long run.


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