April 2025 Payment Code Updates: What Canadian Merchants Need to Know
Upcoming Enhancements Effective April 30, 2025
The forthcoming updates to the Code of Conduct for the Credit and Debit Card Industry in Canada are designed to further empower merchants by enhancing transparency, flexibility, and control over payment processing arrangements.
Key changes include:
- Enhanced Disclosure in Merchant Agreements
Acquirers and payment processors will be mandated to provide merchants with comprehensive disclosures in their agreements. This includes:
- A Summary of Key Elements outlining the main terms of the agreement.
- A Cost per Transaction Disclosure, detailing the fees associated with each transaction.
- A Disclosure of Fees, listing all applicable charges.
These disclosures aim to facilitate easier comparison between service providers and ensure merchants are fully informed about the costs involved.
- Detailed Monthly Merchant Statements
Merchants will receive monthly statements that provide a clear breakdown of:
- The effective merchant discount rate for each type of payment card accepted.
- Interchange rates, network assessment fees, and any other charges incurred.
- The number and volume of transactions processed for each payment type.
This level of detail will enable merchants to better understand their processing costs and identify any discrepancies.
- Extended Notice Periods for Fee Changes
Payment card network operators (PCNOs) will be required to provide:
- At least 120 days’ notice for non-structural fee changes.
- At least 210 days’ notice for structural fee changes.
This extension from the previous 90- and 180-day notice periods gives merchants more time to assess the impact of fee changes and make informed decisions.
- Shortened Cancellation Window
Merchants will have 70 days to cancel their agreements without penalty following a fee change notification, reduced from the prior 90-day period. This change encourages timely decision-making while still providing a reasonable window for action.
Contextualizing the October 2024 Reforms
The April 2025 changes build upon significant reforms that took effect in October 2024, which aimed to address longstanding concerns in the payment processing industry:
- Reduction in Credit Card Fees
The federal government announced a 27% reduction in interchange fees for small businesses, directly lowering the cost of accepting credit card payments.
- Improved Transparency in Merchant Agreements
Processors were required to include detailed fee breakdowns in all merchant agreements, helping businesses clearly understand the total cost of processing transactions.
- Legal Counsel for Opt-Out of Disclosures
Merchants and acquirers wishing to waive any disclosure requirements must now consult legal counsel, ensuring that merchants fully understand the implications of opting out.
- Enhanced Consumer Protections for Mobile Payments
The Code’s application was extended to mobile payments, introducing new consumer protections and ensuring that mobile payment credentials are issued only to devices that allow users to set and change default payment preferences.
Action Steps for Merchants
To prepare for these changes, merchants should:
- Speak with your Telos One representatives as to how these changes can benefit your business.
These regulatory enhancements represent a significant step forward in promoting fairness and transparency in Canada’s payment processing industry. By staying informed and proactive, merchants can leverage these changes to optimize their payment processing arrangements and better manage their operational costs.
