Canadian merchants still pay some of the highest fees in the world for processing payments, despite improvements announced Monday by the finance minister, said a Retail Council of Canada spokesperson.

“MasterCard and Visa provide exactly the same services to merchants in France, Britain, Australia, Switzerland and India as they do in Canada, but they’re charging up to five times as much or more to merchants. Canadians are paying through the nose in consequence,” said Karl Littler, vice-president, provincial government relations and strategic issues for the RCC.

Finance Minister Joe Oliver announced updates Monday to the voluntary code of conduct governing credit and debit card payments in Canada, adding mobile phone payments to the agreement.

The growth in contactless smart phone payments was not considered in the original code, struck in 2010. Although it remains a small part of the industry in Canada, it is expected to grow meaningfully in the next few years. According to the results of a recent survey of 7,000 shoppers, provided by the RCC, 46 per cent of Millennials with mobile phones feel comfortable using their smartphone to make mobile payments.

Oliver also announced measures to ensure that savings from a reduction in payment processing fees announced in late 2014 will be passed along to merchants and not absorbed by the companies that issue cards and other companies involved in the payments process.

Merchants will be able to cancel their contracts without penalty if the savings are not fully passed along to them.

Littler said the savings represent about $400-million annually to Canadian merchants who pay about $5-billion a year in payment processing fees.

The updates announced by Oliver on Monday also include:

A new complaints process for merchants

A requirement that plain language be used in card agreements with merchants

More flexibility for merchants to exit their contracts without penalty and limiting automatic renewals to six months

A requirement that credit card issuers inform consumers applying for a premium credit card that using it can result in higher fees to merchants

New branding requirements for premium cards, to make them more easily identifiable to merchants

Ensuring consumers have unrestricted control of the default settings on their mobile wallets and devices

Protections for merchants who choose to stop accepting mobile payments.

Participants in the debit and credit card market will have 30 days to review and adopt the enhanced code of conduct, according to a release on the finance ministry website.

The RCC, which was involved in drafting the code of conduct and the updates released Monday, said it intends to continue to press for deeper cuts to bring interchange rates in Canada in line with the fees charged elsewhere.

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The Small Business Matters Coalition, comprised of trade associations representing just over 98,000 businesses in Canada, applauded the improvements but also pointed to the need to lower rates for merchants.

Coalition chair Gary Sands said the organization would be closely monitoring voluntary rate reductions over the next few months.

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