TORONTO - The federal government's proposed code of conduct for Canada's credit and debit card system is too weighted in favour of merchants at the expense of consumer choice, Visa Canada alleged Monday, the deadline for comments on the plan.
Four of Canada's five biggest banks issue Visa cards while Bank of Montreal (TSX:BMO) and many non-bank issuers support MasterCard, Visa's chief rival in that business.
However the two leaders of the credit card industry are both expected to offer debit cards as well, putting them in competition with the bank-owned Interac system.
Visa said Monday that it's concerned because the code gives merchants the power to decide which debit network is used, overriding a consumer's choice without consent.
"Our main concern, and one that we've highlighted in our submission to the government, is that the draft code does not go far enough to protect consumer choice at point of sale and may discourage innovation," Tim Wilson, head of Visa Canada, declared in a statement.
"Consumer transparency and choice are particularly important because of the meaningful differences that exist between networks."
The Federation of Independent Business, which has been pushing the federal government to rein in the card companies, called on the government to put the new code into effect as soon as possible.
"CFIB believes the most important element of this code is that merchants will be able to choose how debit transactions will be routed," said Catherine Swift, CFIB's chief executive and president.
"Merchants should be the ones to choose how credit and debit transactions happen as they are the only ones who actually pay the cost of transaction fees."
MasterCard Canada said that overall it supports the objectives of the code "and is not recommending dramatic changes to the draft."
"The draft code balances the interests of various players in the payments system, including addressing the concerns of small merchants," it said in a release Monday.
"MasterCard recommends the maintenance of that equilibrium as the code is finalized."
MasterCard added that it was confident that under the current principles of the draft code that vigorous debit competition can thrive in Canada. "Such vigorous competition will benefit all parties including consumers and merchants," it said.