The Visa and Mastercard networks are now entering the Canadian debit card market. The virtual debit card, offered by three financial institutions, makes it possible to make debit purchases remotely via the Visa network, just like a credit card.
debit purchases via the Visa network, just like a credit card. To make a transaction in person, at a merchant or ATM, consumers must continue to use the Interac network.
In Canada, the legal protection offered to consumers making transactions with such cards is chimerical. At both federal and provincial levels, there is no legislative framework for debit cards, or for electronic payment systems in general. Until now, apart from the rules of the payment networks or the Canadian Payments Association, it has mainly been the voluntary approach, with its advantages and above all its disadvantages, that has been favored by the competent authorities. Even today, credit cards offer the best legislative protection for consumers in Canada.
In the absence of binding rules, the provisions of the cardholder's contract will most often serve as the law of the parties. These contracts are often disadvantageous for consumers. They leave the issuer wide discretion as to the protection afforded to consumers in the event of fraud or theft of their card. Nor is there any clear
Nor is there any clear commitment that the issuer will issue a chargeback in the event of a dispute with a merchant, even if the purchase has been legally cancelled by the consumer.
Not all consumers, or even merchants, are adequately informed about this new product. As the Visa and MasterCard networks are best known in Canada for offering credit cards, consumers and merchants are unfamiliar with debit cards using these networks. More importantly, many consumers are unaware of their rights and responsibilities in relation to virtual debit cards; some, who have great confidence in their financial institution, believe they enjoy equivalent protection regardless of the type of payment card they choose.
As part of the solution, Option consommateurs proposes the adoption of a binding legislative framework for debit cards, including rules on shared liability in the event of unauthorized use, and issuer obligations in the event of a dispute between merchant and consumer. Option consommateurs also recommends a comprehensive approach to the issues raised by the proliferation of payment instruments in Canada, by establishing a harmonized legislative framework capable of adapting to new technologies.
