The Canadian Federation of Independent Business is calling for a stronger code of conduct for the credit and debit card industry, including rules that give merchants more flexibility and includes provisions for new electronic forms of payment.

The association, which has more than 100,000 member businesses across Canada, says the current code gives merchants some power to deal with the card industry but argues the rules need changes to remain relevant.

The CFIB says store-keepers and others who accept credit and debit cards as payment need the right to refuse high-cost cards or add limited surcharges.

The association is among those arguing against industry rules that require businesses that accept Visa or MasterCard to treat all types of their cards equally, regardless of the cost of processing the payments.

The CFIB says the recent settlement of a U.S. legal battle between Visa, MasterCard and merchants last week was encouraging.

Under the settlement reached last week, Visa, MasterCard and major banks agreed to pay retailers in the United States at least $6 billion US to settle a long-running lawsuit that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards.

Under the settlement, the U.S. merchants will also be allowed to charge their customers more if they pay with credit cards.

Code needs updating

The dispute between U.S. retailers and banks dates back to 2005.

The CFIB says Canadian merchants need the same rights.

It also argues Canada's code of conduct needs provisions for new mobile types of payment, such as by cellphone.

Dan Kelly, the CFIB's new president and chief executive, said that the current Canadian code of conduct was a worldwide first at the time when it was implemented by the federal government.

"The code has been incredibly helpful to small firms, but is in need of enhancements to ensure it remains relevant and effective," Kelly said in a statement Tuesday.

"In the past two years, CFIB has become the payment industry's unofficial watchdog, and this role has allowed us to stay on top of credit and debit card developments," Kelly said.

"These are reasonable reforms, and we're hopeful government will take our advice and create a more level playing field between the payment industry and hard-working small business owners."