OTTAWA — Unless credit and debit card companies behave according to a new voluntary code of conduct they will have government regulations imposed on them, warned Finance Minister Jim Flaherty.

The new code was unveiled Thursday and will govern the per-transaction interchange fees credit card companies charge retailers for using their payment systems.

“This proposed code would promote fair business practices and ensure merchants and consumers clearly understand the costs and benefits of credit and debit cards,” Flaherty said. “If we are unsuccessful ... with the voluntary code then we can create an involuntary code, we have that power to do that.”

For some credit or debit cards the fee is low, but for fancier cards the fee can be much higher. Consumer groups, retailers and other businesses have been complaining for years that the disparity between the various interchange fees was hurting their bottom line.

“This is a huge important first step,” said Catherine Swift, CEO of the Canadian Federation of Independent Business. “The higher the charges that merchants pay, as they are imposed upon them by the Visas and Mastercards of this world, that ultimately gets into the price system.”

The voluntary code will require credit and debit card companies to make merchants aware of the costs of accepting each card and will allow retailers to refuse to accept cards with prohibitively high interchange fees.

The opposition said the voluntary nature of the code was flawed and insisted firm government regulations backed up by legislation would be much better.

“We need ongoing vigilant oversight otherwise what’s being proposed is toothless,” said Liberal consumer affairs critic Dan McTeague.

The voluntary code is out for a 60-day consultation period during which time credit and debit card companies, as well as retailers, will have a chance to comment on the proposed rules before they come into effect.

peter.zimonjic@sunmedia.ca