While a better framework for electronic payments in Canada is urgently needed, the scope of the consultation currently held by the Department of Finance and the process it has put in place appear unlikely to lead to significant improvements.
The process must allow for real debate and must therefore provide a fairly specific basis for discussion An effective framework must be based on a set of overarching principles. It would also preferably be established by legislation. In addition, experience shows that the current Canadian Code of Practice for Consumer Debit Card Services is not a sound basis for discussion, yet the process proposed by the Department curtails debate, it is based on the current code and it is so imprecise as to scope and other issues that it is difficult for stakeholders to frame comments.
We propose eight principles on which a new framework should be based: universality, neutrality, security, accountability, transparency, liberty, enforceability and legitimacy. We note the growing complexity of the electronic payments field in Canada.
We submit that a new code should have the broadest scope and, in particular, not be limited to a subset of card-based payment mechanisms. We disagree with the view that such new code should not cover payment methods which may be partly regulated otherwise, as a number of important issues remain in fact unregulated. Regulatory underlap and gaps can be more damaging than overlap.
The rationale for risk allocation between market participants must be discussed in depth before issues such as liability and redress can be addressed.
Increased disclosure is not an adequate remedy to unconscionable contractual requirements or business practices, which should be prohibited outright.
Finally, governance issues regarding the payments universe in Canada should be considered carefully, taking heed in particular of current developments in Australia and the United Kingdom.
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thumb_pdfPIAC Comments on Proposed Electronic Funds Transfer Code
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