Small businesses have just gained new protection against unfair credit card practices, according to the Canadian Federation of Independent Business (CFIB).
The CFIB has welcomed today's decision by the Financial Consumer Agency of Canada (FCAC) to "clarify and strengthen" rules that prevent abusive practices by credit card companies.
According to the CFIB, the changes respond to many concerns the CFIB had raised, including the practice by "rogue players in the credit card industry" of circumventing the Code of Conduct for the Credit and Debit Card Industry in Canada by splitting contracts to trap small merchants into paying "exorbitant" fees.
"We commend the FCAC and other industry players for siding with small merchants by clarifying acceptable business practices in the Canadian payments industry," said Dan Kelly, CFIB president and CEO.
The FCAC clarifications respond to various issues raised by the CFIB, including:
- stopping inappropriate business practices, such as altering signed contracts without merchant consent and quoting rates that won't be honoured;
- increasing disclosure and clarity in contracts for debit and credit card processing services, especially for businesses with multiple provider agreements; and
- protecting merchants' ability to cancel credit and debit contracts without penalty if their fees go up, to end practices such as independent sales organizations trapping merchants by applying large exit penalties to contracts for leased equipment.
The CFIB spearheaded the creation of the code in 2010.
