A Canadian shopper’s use of a debit card at a Dean & DeLuca store in Charlotte was the first cross-border PIN debit payment through the NYCE network.
A lot more should follow using the service – it will allow millions of Canadians to shop in the United States with their PIN debit cards.
NYCE, of Montvale, N.J., announced the start of the service Friday. It originally announced in March that it was working with Acxsys Corp. of Toronto to let Canadian debit customers use their cards at the roughly 1 million NYCE-affiliated merchants. NYCE was owned then by First Data Corp. but was acquired in August by Metavante Corp., the financial technology subsidiary of the Milwaukee banking company Marshall & Ilsley Corp.
Steven A. Rathgaber, the president of NYCE, said the initial goals were modest and that interest in the program has far exceeded expectations.
“We’re pleased that so many” Canadian financial companies, “representing over 60% of the card base, have been quick to sign up for the service,” Mr. Rathgaber said in an interview Friday.
Acxsys is a private company whose eight shareholders are among the largest banks in Canada. The banks are responsible for founding and designing Interac, by far the most extensive electronic funds transfer network in Canada. Interac functions much like NYCE, which helped pave the way for a gateway between their networks.
Canadians have embraced PIN debit but until now could not use their PIN debit cards to buy goods in the United States, and some Canadian banks have complained about this limitation.
Sara Feldman, a spokeswoman for Acxsys and Interac, said Friday that several Acxsys surveys found that consumers overwhelmingly prefer to use PIN debit over any other payment, including cash. Checks are almost unheard-of in Canada and signature debit is virtually nonexistent.
Canadians’ debit purchases in the United States will have the same “look and feel” as any other NYCE transaction, Mr. Rathgaber said. The processing will not be the same, however.
First the transaction will be switched to the Canadian gateway processor CGI Group Inc., which will then shift it to the Interac network. Interac, in turn, will move it to the issuing banks. Mr. Rathgaber said the transaction will take on average about five seconds to complete.
The NYCE-Interac link does not include any automated teller machines, Mr. Rathgaber said. However, most of the world’s debit cards are part of Visa’s Plus ATM network and MasterCard International’s Cirrus ATM network.
Canada is large but sparsely populated and has only about 22 million adults, Ms. Feldman said. As of 2003 there were 35 million banking cards in Canada, she said.
“Eighty percent of the population lives within 100 miles of the 49th parallel, which is the border between Canada and the United States,” Ms. Feldman said.
According to Statistics Canada, a government agency, Canadians take about 34 million day trips to the United States per year, Ms. Feldman said.
The first Canadian bank to offer the service is Royal Bank of Canada. Scotiabank, Toronto-Dominion Bank’s TD Canada Trust, National Bank of Canada, and Desjardins Group are to follow in the coming weeks.
