Interac is a Canada-based organization of enterprises that communicate and exchange financial transactions in an electronic form. Founded as a cooperative body in 1994, Interac was established by the Royal Bank of Canada, CIBC, Scotiabank, TD Bank and Desjardins.

Two types of members participate in Interac: direct connectors and indirect connectors. The latter connect to the Inter-Member Network through Direct Connectors. Direct connectors, on the other hand, are members that connect to the Inter-Member Network directly. The purpose is to provide Interact Direct Payment and Shared Cash Dispensing services. With the first service, customers are able to pay easily and quickly using their debt cards at points-of-sale while the Interac Inter-Member Network is used to route transactions. With Shared cash dispensing, card holders use valid debit cards at an automated banking machine, by entering their personal identification numbers. They have to identify an account they want to withdraw cash from and specify the amount needed. Once this transaction is approved, the ATM will dispense the money, together with a printed record for use by the cardholder.

It should be kept in mind that members of the Interac Association can choose to impose surcharges for transactions. A surcharge represents a fee which is charged to users by owners of ATM terminals. However, the association has set strict rules which make sure that such fees are properly displayed on ATM screens. Transactions take place only after users accept the surcharge amount disclosed on the screen.

The Interac online service is another option for payment. Through it, consumers can pay for services and goods online by accessing their bank accounts. When a client has selected this payment option and is ready to proceed to checkout, the merchant’s page redirects the customer to the gateway page of Interac. It passes basic details such as the invoice number and amount of money, letting customers choose their financial institution. After the transaction has been approved, clients are redirected to the merchant’s website and given a unique transaction code. The code will be sent to the payment service provider or acquirer who checks its validity. Then, they inform the merchant that the transaction has been funded successfully. The merchants that feature Interac Direct Payment may also offer to their customers a courtesy service. Offered to retail customers, this service is known as cashback. The client receives certain amount of cash together with the items purchased. Not all merchants offer this option as it is up to them to decide whether they wish to have it or not.

The services offered by Interac come with a number of advantages. In contrast to other payment options, a limited amount of information gets disclosed with every transaction. A standard receipt contains only the card number of the client, together with the selected chequing or savings account. When a cheque is sent to the merchant, for example, the client’s name, phone number, and address should be present at the cheque’s top left corner while the MICR account number stands at the bottom. And because cheques are easy to forge, most merchants will require some form of identification with a photo. This serves to confirm that the information matches what is on the cheque. Some argue, however, that fraud is still a concern, in particular when debit cards are skimmed or duped. A compromised point-of-sale or ATM may record the account’s details from the magnetic strip, making it possible for duplicate cards to be created.