MasterCard Inc.'s Canadian unit has blasted a trade group's effort to bar it and Visa Inc. from entering the country's PIN debit market.
"It is an extraordinary suggestion on the part of the" Retail Council of Canada "to call upon a politician to preserve Interac's debit monopoly," MasterCard wrote in a e-mail statement Wednesday, referring to the Interac Association, a bank-founded group that oversees Canada's PIN debit system and handles all debit transactions there.
The trade group expects the evolving debit market in Canada could attract Visa and MasterCard.
The Toronto trade group has issued a letter asking that Canada's finance minister, Jim Flaherty, prohibit Visa and MasterCard from entering the Canadian debit market, according to several reports published Tuesday.
The group claimed that granting Visa and MasterCard access to the Canadian debit market would significantly increase interchange costs for retailers and probably drive up retail prices for consumers.
Flaherty's office said it has no plan to comply, however. "The government aims to have a financial sector regulatory framework [that] promotes competition and innovation. The government does not regulate the day-to-day business practices of financial institutions, including fees," it said in a press release Tuesday.
MasterCard said the trade group's intervention was "especially extraordinary since" it "has full knowledge of the competitive pricing structure of MasterCard's debit" products.
"Interac is a domestic monopoly that in its current association structure cannot grow or fund technical or service innovation," MasterCard's letter said. "MasterCard's debit offering will allow Canadians to shop globally and international travelers to shop locally with debit."
Interac has applied to the Canada Competition Bureau to change from a nonprofit to a for-profit structure.
Visa did not make executives available to discuss the Canadian debit market.
