Interac Association’s top executive is optimistic further discussions with Canada’s Competition Bureau eventually will result in Interac changing its not-for-profit business model to a for-profit one to compete with Visa Inc. and MasterCard Worldwide in the country’s PIN-debit card market. The bureau rejected Interac’s request to change its business model on Feb. 12.
Interac operates Canada’s sole debit network and since 1996 has operated under a consent order governing its structure and how it collects and sets fees. However, both Visa and MasterCard have announced plans to introduce their own PIN-debit initiatives to Canada, possibly as soon as the second quarter of this year.
In a statement, the competition bureau, an independent law-enforcement agency that promotes competitive markets, noted it “does not agree removal of the restriction against for-profit activities by Interac would be procompetitive or is necessary to allow Interac to remain competitive.” However, it did not completely close the door on Interac’s request.
“While the bureau will not support an application to vary the consent order at the present time to remove the restriction against for-profit activities by Interac, the commissioner is prepared to re-examine Interac’s request in the future if there is new information or material changes in the marketplace, or if Interac advances an alternative proposal,” the statement notes.
Mark O’Connell, Interac president and CEO, said in statement he believes the bureau eventually will change its mind. “We have always believed that arriving at an effective business model requires a number of changes to the consent order beyond a for-profit status, particularly in the areas of governance, funding and our organizational structure,” he said. “We are pleased that the competition bureau will engage in discussions with us regarding these critical issues.”
Nearly 60% of Canada’s card transactions involve debit cards, which last year were used to initiate 4 billion transactions, according to Interac. All debit card transactions in Canada require the use of PINs.
