TORONTO—As credit card companies face a deadline to sign on to a voluntary code of conduct designed to protect consumers and retailers, New Democrat MPs are pushing the government to make regulations forcing them to comply.
Finance Minister Jim Flaherty unveiled the code in April, but New Democrats say the government has too much faith if it expects credit card companies to voluntarily comply. The code would force them to be more transparent and give merchants more options when faced with heavy fees.
Businesses pay steep merchant fees—between two and four percent of the sale covered—to accept credit cards and say they feel forced to do so because customers demand the ability to pay that way.
The code requires credit card companies to be more transparent about the cost of transactions and would allow merchants to offer price discounts if customers pay with cash or debit instead. It would also give businesses the right to terminate contracts with payment processors that raise their fees.
Business and consumer groups have praised the code, but fears remain about how well credit card companies will adhere. Flaherty said the government will give companies 30 days to sign on and 90 days to adhere or he would start looking at regulations. The 30 days expired Wednesday.
But NDP MPs say credit card companies can’t be trusted with a voluntary code. Despite that, they have written to VISA and MasterCard asking them to commit to respecting the voluntary code for a minimum of five years.
“The best way to protect consumers is through regulation. Since the government refuses to consider this approach, we’re reaching out to the major credit card companies and asking them to make a commitment to the code,” said NDP Consumer Protection Critic Glenn Thibeault.
“If the industry says it will comply with the code, it should be law. The voluntary nature of the code leaves the door open for the industry to change their practices and not respect the code,” said Thibeault.
“When the spotlight is on, it’s easy for these companies to commit. It’s also just as easy for them to return to their bad habits once the media and spotlight have moved on.”