Canadians are some of the most regular debit card users in the world, but when they travel across the border they must use either cash or credit cards to pay for goods.
Canadian banks do not authorize signature-based debit transactions, effectively barring their cardholders from the U.S. point of sale. The country's major debit network, Interac Association, does not extend into the United States. And though some Canadian debit cards carry MasterCard's PIN debit Maestro logo, it has limited merchant acceptance here.
But a deal announced Wednesday by NYCE Corp. will allow Canadians to use their debit cards at a good number of American merchants for the first time beginning this fall, NYCE and its partner said.
The Montvale, N.J., company's agreement with Acxsys Corp. of Toronto will move NYCE transactions through Acxsys to Canadian banks, NYCE chief executive Dennis Lynch said in an interview Wednesday. NYCE is majority-owned by First Data Corp. of Denver but will soon be divested with Concord EFS Inc.'s purchase of First Data.
The contract with Acxsys does not apply to NYCE automated teller machines. Canadians already have access to U.S. ATMs through Visa's Plus and MasterCard's Cirrus networks. James S. Judd, a senior vice president with NYCE, in an interview that his company decided to focus on merchant POS terminals instead. "We wanted to go where we'd have the biggest impact first."
Acxsys spokeswoman Sara Feldman, said it was too early to say if Canadian banks would benefit from the partnership in terms of interchange fees generated by Canadian debit use at U.S. merchants. The transactions will be governed under the NYCE rules and standard NYCE interchange. It will be up to Acxsys to decide what to do with the revenue. Canadian banks do not receive interchange from merchants in their own country; instead they draw revenue from cardholder fees.
Neither Mr. Lynch nor Mr. Judd could not say just how many transactions NYCE will gain from the deal, but they said it probably will be a large amount. About 13 million Canadians a year visit the United States, and about one in two Canadians prefers debit payment to cash, credit card, or check, according to Interac research.
Mr. Lynch said he expects most Canadian banks and credit unions to participate in the service. Acxsys is a for-profit private company, and its eight shareholders are BMO Financial Group (Bank of Montreal), Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotia Bank, Toronto Dominion Canada Trust, National Bank of Canada, Desjardins Group of Montreal, and Credit Union Central of Canada. Some of the companies were responsible for founding and designing Interac, Ms. Feldman said.
Very little technical modification will be needed to make the cards compatible, apart from moving the Canadian card data to NYCE, Mr. Lynch said. "There's no technical rewiring, no change at the terminals, no change of the cards. It's simply loading the card files on to our system and away you go."
