Interac

Services

Interac Association is the organization responsible for the development of a national network of two shared electronic financial services:

Interac Direct Payment (IDP)

IDP purchases can be made at all retailers participating in the program, regardless of the financial institution issuing the debit card being used, and normally IDP will not charge any fees to the purchaser for using the program. Banks may levy a charge for withdrawing funds from the account used to fund the purchase, but these fees are not associated with IDP itself. IDP will instead charge flat fee to the retailers. There are just under 550,000 IDP terminals in use throughout Canada; through these terminals 3.5 billion Point of Service POS transactions were completed totaling 156 billion Canadian dollars in transactions in 2007. On December 23, 2005, a new record for single day transactions was set with 15.5 million transactions processed.

Benefits

Fees

Using the Interac system reduces the need to visit an ATM or carry large amounts of cash. The processing fees for merchants are much lower than credit card discounts for the merchants, making Interac the preferred payment option for 52% of Canadian merchants.

Consumer protection in Canada

Consumers in Canada are protected under a voluntary industry code which is overseen by the Canadian federal government. The Canadian Code of Practice for Consumer Debit Card Services (sometimes called the "Debit Card Code") covers all providers of debit card services. Adherence to the Code is overseen by the Financial Consumer Agency of Canada (FCAC), which investigates consumer complaints. According to the FCAC, revisions to the Code that came into effect in 2005 put the onus on the financial institution to prove that a consumer was responsible for a disputed transaction, and also place a limit on the number of days that an account can be frozen during the financial institution's investigation of a transaction.

IDP flaws and features

Interac Direct Payment is a PIN-based system where the information entered on the PIN pad is encrypted and verified at a central server, rather than being stored on the card itself. Because of this, it is significantly more secure than traditional signature or card-based transactions. Despite these security features, there are ongoing fraud concerns, particularly when debit cards are duped or skimmed — a compromised automated teller machine or point-of-sale terminal will record the account information contained in the magnetic strip of the card, allowing for duplicate cards to be created at a later time. The owner of the card is then secretly video taped or observed entering their PIN, allowing a criminal to use duplicate cards to make fraudulent purchases.

Interac Chip Cards

In an effort to combat fraud and increase security, Interac announced it will be moving to EMV Chip Card technology, which began with a market trial in the Kitchener-Waterloo area in Fall, 2007. The main benefit to this technology over the existing magnetic stripes is that the chips are almost impossible to copy due to high levels of encryption. This is seen as being able to reduce the amount of debit card fraud caused by card skimming and duplication. However new Interac Chip Cards will continue to feature a magnetic stripe in the interim in order for them to be used at ATMs or retailers which have not yet been upgraded, as well as in countries which have not yet adopted chip cards, such as the United States.

The purchase experience for consumers will remain largely unchanged, except instead of swiping the card, it will be inserted into a chip reader on the PIN Pad and will remain inserted for the duration of the transaction. PINs will still be used as the means to authenticate transactions.

Interac expects the transition to chip cards to take several years to complete, but will be completed before certain milestone dates:

Shared Cash Dispensing (SCD)

Interac email money transfer

The Interac email money transfer service is offered by CertaPay. It allows online banking customers to send money to anyone with an e-mail address and a bank account in Canada. This is an Interac branded service operated by Acxsys Corporation.

Interac Online

The Interac Online service allows customers to pay for goods and services over the Internet using funds directly from their bank accounts. Because no financial information is shared with the online merchant, the Interac Online service is more secure than online credit card payments. This service, an Interac branded service operated by Acxsys Corporation, began in 2005 and is expanding as more merchants choose to participate. Since November 2007, the service has been available to customers of four of the five largest Canadian banks: RBC, BMO, Scotiabank, and TD Canada Trust (CIBC uses Visa Debit for online payments from bank accounts). As of February 2009, the service is offered by roughly 300 merchants including two large universities (for tuition payments), two major wireless carriers, provincial lottery corporations, and a wide variety of retailers. Interac Online is an Online Banking ePayments service very similar to iDEAL in the Netherlands, Giropay in Germany, and Secure Vault Payments in the United States.