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02/10/2009 -
The landscape of the credit card processing market in Canada may change considerably on January 1, 2010, as minister of finance Jim Flaherty announced this week that new credit card regulations will go into effect on that date."Our government understands the pressures Canadians face in these tough economic times," Flaherty said. "By increasing transparency, our government is taking real action to protect consumers."
Although some regulations apply to other financial products, such as fixed- and variable-rate loans and lines of credit, the majority of regulations apply to consumer credit cards.
The new mandates will require credit card companies to provide a summary box on credit contracts and application forms that sets out key features, such as interest rates and fees, as well as to inform consumers how long it would take to fully repay their balance if they only make a minimum payment every month.
The law also prohibits overdraft fees arising solely from holds placed by merchants, limits debt collection practices, and mandates an effective minimum 21-day, interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full, among other regulations.
The regulations are an attempt to protect consumers' rights, but will also likely have an impact on Canadian credit card use; as consumers increase their credit card spending accordingly, merchant accounts in Canada may see a sales boost.
