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MasterCard Canada yesterday responded angrily to the Retail Council of Canada's request that Finance Minister Jim Flaherty block Visa Canada and MasterCard Canada from entering the country's PIN-debit market (CardLine, 3/3). "It is an extraordinary suggestion on the part of the [council] to call upon a politician to preserve Interac's debit monopoly," MasterCard wrote in a statement, referring the Interac Association, which oversees Canada's PIN-debit system. All debit cards issued in Canada require the use of PINs. "This is especially extraordinary since the [council] has full knowledge of the competitive pricing structure of MasterCard's debit offering," MasterCard wrote. MasterCard Canada also blasted Interac's monopoly, contending the network does not have the financial wherewithal to offer Canadians innovative products. "Interac is a domestic monopoly that in its current association structure cannot grow or fund technical or service innovation. MasterCard's debit offering will allow Canadians to shop globally and international travelers to shop locally with debit," MasterCard said. Maestro and Cirrus are MasterCard's PIN-debit products. The Canadian debit market is undergoing a metamorphosis. In anticipation that Visa and MasterCard banks will issue debit cards there, Interac has applied to the Canada Competition Bureau to change from being a low-cost nonprofit to a for-profit business. The Toronto-based Retail Council estimates merchant fees would more than triple if banks sign up with Visa's and MasterCard's debit systems, according to published reports. In turn, merchants likely would pass on the higher fees to their customers, the council contends. The council, however, did not find a sympathetic ear from the Finance Minister's office, which does not plan to intervene in the matter. "The government aims to have a financial sector regulatory framework, which promotes competition and innovation. The government does not regulate the day-to-day business practices of financial institutions, including fees," the department wrote in a statement. The council, which represents 40,000 retail outlets in Canada, did not respond to calls for comment from ATM&Debit News, a CardLine sister publication.
