Industry News

30/09/2009 - Earlier reports about Visa and MasterCard entering the Canadian debit card market have yet to see any substantial developments, but the debate about interchange fees and the future of the Canadian payment processing landscape still rages on.

The primary concern is that Visa and MasterCard are looking to challenge the interchange fees offered by Interac, the primary supplier of Canadian debit cards, The Green Sheet reported.

Currently, Interac's median fees average 12 cents, while MasterCard's Maestro debit card pilot program has been charging a flat fee of 5 cents per transaction, said the news provider.

Though these are currently discount rates, experts say that this business model is not sustainable, and speculate that higher fees will be introduced later. In addition, some are arguing that merchants will be the ones to lose out in the interchange competition.

"The crux of the problem with the federations and the associations is their contention that if you introduce interchange, the merchants are going to end up eating the costs," Joseph Iuso, CEO of online debit firm UseMyBank Services, told The Green Sheet. "But on the other side, you're going to increase your ability to take money from consumers."

In fact, Iuso estimated that Canadian merchants could increase business by 30 percent to 40 percent with the ability to accept Visa and MasterCard debit cards, the website reported.

Debit card interchange rates typically vary according to payment processing provider, so merchants concerned about higher costs should check with their provider about fees, and consider a switch to a lower-cost provider.