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16/02/2010 -
The Competition Bureau of Canada has decided not to allow Interac to shift from a nonprofit model to a for-profit model, and the Canadian Federation of Independent Business is crying foul. The CFIB says that the ruling will likely "constrain the ability of Interac to compete on a level playing field" when Visa and MasterCard enter the Canadian debit card market.
"Since the mid-1980s, Interac has served Canadian consumers and businesses very well with its low-cost debit network, and small businesses in particular will be outraged if it is permitted to be substantially diminished or eliminated by these new market entrants," said Catherine Swift, president of the CFIB.
Swift also cited examples of Visa and MasterCard entering debit card markets in other countries, which she said has often knocked out the incumbent debit provider "in one way or another" and caused debit payment processing costs to rise.
The CFIB did, however, praise the fact that Interac will be allowed to change its "currently dysfunctional governance model," adding that this might give the association more flexibility to compete.
The CFIB has been vocal about its wariness of Visa and MasterCard's entry into the Canadian payment processing industry, urging Finance Minister Jim Flaherty to protect merchants with the code of conduct for debit and credit card processing.
