Debit Cards

A debit card is a plastic magnetic card which gives you access to funds in your bank account(s). You can use your debit card to withdraw cash from a ATM, pay for goods and services (if the merchant or the service provider accepts debit card payments).

Your bank debit card has PIN (personal identification number) number, which acts as a password and protects your bank accounts from unauthorized access in case your debit card is stolen or cloned. Always keep your PIN safe and never share it with anybody. Always swipe your debit card yourself at the point of sale terminal and never let the card out of site. When entering your PIN on a bank machine or at point of sale terminal, hide the keypad with your free hand.

Recent statistics show that Canada has the second largest debit card market in the world after Sweden. The Canadian Bankers Association claims that Canadian citizens are some of the heaviest debit card users on a global scale. In 2007, for example, the Canadian citizens used their debit cards in more than 3.45 billion direct transactions. It is hardly a wonder, then, that credit card giants such as VISA and Mastercard, who have already laid their hands on over 75 percent of the debit market in the USA, are searching for options to set their foot on Canadian soil.

Presently, the Canadian debit card market is dominated by Interac, a not-for-profit organization owned by the Canadian banks, credit unions, and other companies that issue debit cards to their consumers or sign contracts with the merchants to accept their cards. The cards issued by Interac are accepted at more than 400,000 locations in the country. At the same time, the ability of Canadians to make point-of-sale purchases abroad is quite limited; so, citizens are denied the opportunity of making debit card payments when traveling abroad.

According to Mr. Kevin Stanton, President of the Canadian arm of MasterCard, there is something wrong with the now functioning debit card system in Canada. According to him, the non-profit monopoly of Interac has resulted in irrational pricing that prevents healthy market competition.

No doubt, VISA and MasterCard's aggressive marketing policy with generous bonus programs for the card holders will soon make them a serious threat to Interac’s monopoly, but this is hardly the major concern of the Canadian citizens. Merchants and small business owners are worried that the credit card giants' invasion into the Canadian debit market will unleash higher debit card acceptance fees, which many of them cannot afford. Some store owners may charge you a convenience fee if you pay with your debit card. If the merchant charges convenience fee they have to disclose it to you, and you should be able to cancel the transaction.

According to Diane Brisebois, President and CEO of Canada's retail council, the debit card fees for merchants may reach as high as twelve or seventeen cents per transaction. Because many small business owners do not have the margins to allow for such an increase, they will find themselves compelled to pass it down to the consumers.

Latest technological innovations such as contact-less cards (Pay Pass), allowing their holders to make small purchases quickly without signing a slip of paper, have made it possible for credit card companies such as Visa and MasterCard to set their foot on traditional debit card soil. Their invasion is also backed up by a new generation of chip-based terminals that can read VISA and Mastercard's credit and debit cards, as well as the traditional Interac cards.