MasterCard could be bringing its debit card program to Canada as early as next year. Experts say the move is an effort to grow its debit business outside of the U.S, where Visa rules the market.
According to the Canadian Payments Association, debit is the second most popular form of payment in Canada after cash. But Canadians wanting to pay with debit face limitations online, with most large retailers accepting only credit card and PayPal payments — the number of retailers who accept Interac payments online is growing, but remains small in comparison. MasterCard debit would be accepted online and for international in-store purchases made by Canadians travelling abroad.
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Entering a New Credit Card Frontier
MasterCard’s move will likely be met with scrutiny, especially as the announcement comes on the heels of Visa and MasterCard entering an agreement to cap interchange fees (the fees they charge to retailers to process transactions) — an agreement that did not include debit card transactions. There hasn’t been any hint as to what the fees would be for merchants accepting MasterCard debit but according to the Wall Street Journal, Betty DeVita — president of MasterCard Canada — has said it would be “extraordinarily competitive.”
A Challenge for Visa
According to the Wall Street Journal, DeVita also said that several Canadian financial institutions are planning to introduce MasterCard debit. So far there’s been no confirmation from any of the big banks or credit unions that they plan to offer MasterCard debit or what the offerings would look like.
Visa debit cards have been available in Canada since October 2010 and are currently available at TD, CIBC and RBC branches across Canada. Visa debit is accepted online, by phone and mail, and for international in-store purchases. They connect to a cardholder’s primary chequing account and can most often be used in stores and at automated banking machines (in both cases, the transaction would be processed by Interac, not by Visa).