After reading the article “Visa to unveil contactless debt card at games“, Published by the Toronto Star today, one quote in this article really caught my attention.  The article referenced a quote from the Canadian Federation of Independent Business who wrote, “One of our greatest concerns is that Canada would lose its low-cost, flat-fee debit card system”.  The federation was referring to the Interac card system.  I began wondering if there is any merit to this concern.

Interac provides the bridge between payment processing mechanisms and your bank account in Canada.  This means that you can use Interac services to pay for goods at a POS, perform domestic money transfers via email, and withdraw money from ATMs.  The money would be credited directly from your bank account.  In addition, because the Interac service is automatically tied to your Canadian bank account, no additional registration is required from the customer.  Furthermore, you never have to top up your card since it is tied to your bank account.  Fee structures for Interac services are very reasonable and are not even charged by Interac.  Association members such as banks and merchants set the fees.  For instance, a typical domestic money transfer only costs an average of $1.50 CND per transaction.

Looking into this further, I decided to compose a table that compares the features of Visa’s PayWave, MasterCard’s PayPass, and Interac in Canada.

Attached is a quick glance comparison table of the competing products offered by Visa, MasterCard and Interac.

Based on the comparisons above, it seems to me that Interac offers many advantages over the PayWave and PayPass products.  The main advantages that I can see are:

·                Registration not required.

·                Linked to Canadian Bank Account.

·                Low fee structure.

Although Visa and MasterCard will be a major competitor to Interac, I think there are many advantages to the Interac system that cannot easily be replicated.  Tight integration with Canadian banks, low fee structures and bypass of the registration process for the Interac service may be something that only Interac can achieve at this time.  I think both Visa and MasterCard will hold stronger brand recognition internationally, and, will have the capability to scale more quickly in the global market.  Due to the differing advantages in the product offerings between Interac and PayWave/PayPass, consumers may not have to be forced to choose one or the other.  These product offerings may be able to co-exist peacefully in this mobile money transfer arena.

Link to Article:  http://www.mobile-financial.com/node/2951/Visa-to-unveil-contactless-debt-card-at-the-Olympic-Games

---

Name: Long Van Title: Mobile Financial Services Solution Architect Company: DonRiver Inc. View Long Van's Blog