Canadians rely on Interac® brand to make more than 13 million transactions a day. Using one’s debit card has emerged as the most prevalent payment method amongst small businesses (Interac Payment). It is no surprise that Canadians love using Debit payment processing as their go-to payment choice because people often prefer using their own money instead of borrowing money (via credit card) to conduct day-to-day small purchases. Other reasons why Debit card has risen in popularity are largely due to the cards’ practicality, safety and convenience features.
What is Interac®?
The Interac Association, or simply Interac, is a Canadian nonprofit interbank network that links financial institutions to exchange electronic financial transactions. Interac was founded in 1984 as a cooperative venture between RBC, CIBC, Scotiabank, TD, and Desjardins. Interac serves as the Canadian debit card system, as the traditional debit card providers (Visa and MasterCard) now rarely provide debit cards in Canada. By 2010, there were over 80 member organizations and 59,000 Automated Banking Machines that can be accessed through the Interac network in Canada and over 450,000 merchant locations accepting it (What is Interac?).
How Debit Payment Processing Works
There are essentially four steps when a transaction occurs with a Debit card:
- The procedure begins when a customer makes a purchase with his or her debit card; it is processed with the Interac Direct Payment service. The merchant will enter the sales amount into the POS terminal
- The customer will then either Tap the contactless reader or insert the EMV chip card into the chip reader (usually integrated into the pin pad). At this point, the customer will enter their PIN into the reader. The amount of the transaction is verified, and the account to be debited is selected by the consumer
- The sale is transferred throughout the Interac system where the purchaser’s financial services firm verifies the debit card, the PIN, and that the funds are available in the account. The purchase is complete after these three steps are verified by the purchaser’s institution
- A receipt of the transaction is returned to the purchaser along with the banking or debit card
What are the benefits of using Debit Payment Processing for Transactions?
There are several advantages of using a Debit card payment method:
Consumers enjoy the convenience of paying with a Debit card, which reduces their need to visit an ATM or carry large amounts of cash.
Take a coffee shop for example; although a cup of coffee is typically under $5 dollars, consumers will not necessarily need cash to pay for their drink as they can rely on their Debit card to make the purchase. Most people no longer carry cash and most coffee shops will have a POS terminal that allow for this to happen. Furthermore, it is economical for merchants to accept Debit card because they will only have to pay for a small flat processing fee.
A private Personal Identification Number (PIN) is selected by each card holder to access their individual accounts. This “Two Factor Authentication” (Card/PIN combination) increases the security and confidentiality of the system, helps eliminate the worry of theft, and makes it impossible to access funds without the corresponding PIN.
Consumer Protection in Canada
Consumers in Canada are protected under The Canadian Code of Practice for Consumer Debit Card Services (or the “Debit Card Code”) which aims to cover all providers of debit card services. Adherence to the Code is overseen by the Financial Consumer Agency of Canada (FCAC), which investigates consumer complaints.
Privacy & Security
Only a limited amount of information is revealed with each Debit payment processing transaction. The only personal information found on a typical receipt will be the client’s card number, usually consisting of only the last four digits of the card, and the account selected (chequing/savings). In comparison, when a cheque is made out to a merchant, the customer’s name, address, and phone number are in the top left hand corner of a cheque and the MICR encoded account number is printed on the bottom of the cheque.
Debit Payment Processing for Consumers
According to the Interac website, using Interac Debit helps consumers take control over how much they are spending and control their finances. Using one’s Debit card is like using cash, but more secure, as the money is exchanged electronically between the bank and the merchant through the Interac network. Another convenient feature of Debit card is the less cumbersome monthly statements that customers have to review. Instead of having to check line-by-line on a Credit card statement, consumers can rest assured that everything they voluntarily paid for is on the bill and they won’t be charged for items they didn’t pay for.
Interac debit cards are extremely secure and are protected from fraud tactics such as counterfeiting, transaction replay and card-not-present transactions, thanks in large part to chip technology. All ABMs and Interac debit cards have been converted to chip, and all point-of-sale (POS) terminals have been converted in 2015. In fact, Debit payment processing fraud has plummeted by 88 percent since the introduction of chip technology.
Benefits of Debit Payment Processing for Small Businesses
Interac Debit is a flat-fee, low cost payment acceptance option for Canadian merchants. Credit cards may sometimes result in higher costs as fees are percentage based. Similar to consumers who enjoy numerous benefits of using a Debit card, there are advantages for merchants as well:
The everyday payment solution
Interac Debit is the everyday payment solution that is in nearly every Canadian’s wallet. When a small business owner offers Interac Debit, they will benefit from the following:
- No chargeback – The funds are always good as the financial institution authorizes the payment.
- Economical transaction fee – Interac Debit is a low cost payment acceptance option for merchants at a single flat-fee, regardless of the purchase price
- Lower chance of losses – accepting Interac Debit means reduced chance of loss due to cash mishandling or theft
- Easy implementation – Interac Debit can be simply integrated into your existing technology with a POS terminal system from a trusted payment processing provider
As a merchant, you are guaranteed funds with every approved transaction. They will receive a deposit directly to their bank account the next business day for all Interac Debit transactions.
Changes to Interac Flash Interchange Pricing Structure
As of April 18, 2016 a small flat-fee interchange pricing structure for Interac Flash (Tap only) transactions was introduced. The flat fee ranging from 2 cents to 3.5 cents only applies to Interac Flash transactions, and the interchange rate for other Interac Debit transactions will remain at zero. Interac has introduced this pricing in order to remain competitive with credit card options in the eyes of financial institutions that are incentivized by revenue when issuing different types of cards. Although, there will be a slight cost increase for merchants to deploy Debit payment processing in their stores, it remains an affordable and convenient option.
How does MONEXgroup assist with Debit Payment Processing POS systems?
Those a part of merchant services Canada who are looking for Debit Payment Processing Terminals should look no further! MONEXgroup has more than a decade of experience in providing industry leading POS terminals and merchant services for both In-Store and Online applications.
Our competitive rates result in monthly savings and our reliable technical support assures our merchants a good-night’s sleep. MONEXgroup clients don’t need to worry about uncertain cash flow as they receive consistent Next Day Deposits.
What are the benefits of partnering with MONEXgroup for Debit Payment Processing and POS Solutions?
MONEXgroup offers businesses in Canada with the latest debit payment processing solutions for their everyday business needs. Security, reliability and innovation in the latest POS technologies are readily available to every merchant. With latest advancements in E-Commerce, Countertop, Mobile, Wireless and Integrated Systems, the payments market has been constantly changing and that’s due to the evolution in the methods of payment, improved merchant services and sophistication of the built-in secured technologies. MONEXgroup takes on a leadership position in staying one step ahead, and we look forward to demonstrating our value-add.
When partnering with the number one Canadian merchant services in Canada; MONEXgroup will ensure you are equipped with the latest, safe and secure online payment systems with low cost. Request a Cost Comparison Analysis today.