Industry News

15/02/2010 - The Competition Bureau of Canada has just announced that it denied debit card processing network Interac's request to shift from a nonprofit model to a for-profit model, "to prevent Interac from engaging in anti-competitive practices designed to substantially lessen competition."

The request had been due to the proposed entry of Visa and MasterCard into the Canadian payment processing market - particularly the debit card market, in which Interac currently holds dominant market share.

Interac, as well as Canadian merchants, has feared that Visa's and MasterCard's presence in the debit card market would squeeze out Interac - along with its low interchange rates - so the request would allow nonprofit Interac to remain more competitive.

However, "the bureau does not agree that the removal of the restriction against for-profit activities by Interac would be pro-competitive, or is necessary to allow Interac to remain competitive," the bureau announced.

Yet the bureau did enact changes that would allow Interac to continue being run by independent directors, under a not-for-profit status, "to provide Interac with greater flexibility to respond to any material entry in the future by a competitor."

In an effort to regulate the rapidly shifting Canadian payment processing industry, Finance Minister Jim Flaherty has released a proposed code of conduct for debit and credit card processing, which is currently being finalized after the close of the comment period.