In 2013, the Competition Bureau unsuccessfully challenged the No Surcharge Rule for price maintenance within the meaning of the Competition Act. These rules included a prohibition to impose a surcharge on purchases made using any credit card (the No Surcharge Rule). In order to accept payments by certain major credit cards, businesses or merchants must agree to the network’s respective rules, as part of their agreement with their Acquirers. The Merchant Discount Fee is generally a percentage of the price paid by the consumer for a merchant’s good or service. The Merchant Discount Fee is determined by Acquirers based on their business models and is charged to merchants for accepting credit cards. The Merchant Discount Fee is a fee the merchant pays to the business, which processes the payment (the Acquirers). SurchargesĮvery time a business or merchant accepts payment from a consumer by credit card, that business must pay a fee (the Merchant Discount Fee). 6, 2022, these credit card network rules permit merchants to surcharge in Canada. 6, 2022, businesses were prohibited from surcharging when accepting payments by commonly used credit cards due to standard terms and conditions imposed by those credit card networks.Īs part of their settlement in the Class Actions leading credit card networks agreed to amend their “No Surcharge Rule”, permitting merchants to surcharge. ![]() This is considered a deceptive marketing practice and is prohibited under the civil and criminal provisions of the Competition Act. Drip pricing means offering a product or service at an unattainable price because consumers must also pay additional charges or fees to buy the product or service. 2 It should be noted that merchants should consider recent changes to the Competition Act with respect to drip pricing when deciding whether to impose a surcharge. The courts have concluded that this obligation makes it illegal to apply a surcharge.Īside from Québec, no other province or territory in Canada has laws that prohibit surcharging. Québec’s Consumer Protection Act requires disclosing all-inclusive prices except in limited cases, such as sales taxes ( see Section 224 c.). Previous surcharge rulesĪ surcharge is a fee that a merchant or business may add to a transaction where a customer chooses to pay by credit or debit card. 1 One of the outcomes to the Class Actions is that the leading credit card networks whose rules prohibited surcharging to allow Canadian businesses and merchants to apply a surcharge to those credit cardholders from Oct. ![]() Between 20, five class actions involving merchant fees were launched in Alberta, British Columbia, Ontario, Québec and Saskatchewan (collectively, the Class Actions).
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