Today are three types of debit cards available in Canada. The first is, Interac, which is Canada’s longest serving debit card. The next two are VISA debit and MasterCard debit. Both VISA & MC debit have served as debit cards for Americans for years but are new to Canadians. Fig 1. illustrates the new TD VISA/Interac Debit Card. TD uses this card as an access card for customers to access their bank accounts.
Fig 1, the TD VISA/Interac Debit Card
To understand debit cards you have to understand the difference between a VISA credit card and a VISA debit card. The VISA credit card allows you to make purchases and pay for these purchases at a later date, while a VISA debit card withdraws the funds directly from your personal bank account in real-time.
If you find that you’re being declined on a purchase with a credit card, it’s usually due to the fact that you’ve exceeded your credit card’s credit limit. If you find that you’ve been declined on a purchase with a debit card, it’s usually due to the fact that you don’t have enough available funds in your bank account.
VISA credit cards are given out to those who demonstrate good credit over time. VISA debit cards can be given out to almost anyone. For example, my 11 year old nephew has the TD VISA/Interact card featured in Fig 1. and uses his debit card to make online purchases from retailers like, iTunes.
When registering online, using an ASP, i.e. Application Service Provider, you may find that your VISA debit card doesn’t work or isn’t accepted. This is extremely frustrating to Canadians and occurs often at online registration sites. The decline is due to the fact that the merchant, i.e. owner of the website, has not yet applied to their acquirer to have VISA debit enabled for their existing merchant account. Although, the VISA logo maybe clearly visible on the purchaser’s debit card, the online registration software will not be able to process a VISA debit transaction unless the merchant account has been enabled for it. As you can see below there are more and more VISA/MC debit cards popping up in Canada day by day.
So it’s important for any merchant out there that accepts VISA/MC to check with their acquirer to see if VISA/MC debit has been activated on their terminal IDs.
To read more about TD’s VISA debit card, http://www.tdcanadatrust.com/products-services/banking/electronic-banking/access-card/access-card.jsp
CIBC, as shown in Fig 2., also has a dual VISA/Interac debit card. https://www.cibc.com/ca/how-to-bank/chipcard/advantagecard.html?WT.mc_id=ExtPAIDSum13AC_campFY13-Advantage||Card-Brand_kwdcibc||debit||card_adgrpcibc||debit||card-E100
Fig 2. CIBC’s dual VISA/Interac debit card.
RBC has the Virtual Debit Card as shown in Fig 3.
Fig 3. RBC Virtual Visa Debit card.
Target has a MasterCard Debit Card featured in Fig 4.
Fig 4. Target’s MasterCard Debit.
Watch Out Interac Online, VISA and MC are Tough Competitors!
Fig 5. Interac Online
Interac, is Canada’s oldest debit card offering. Interac is owned by 8 shareholders which turn out to be the biggest banks in Canada. For online purchases, Interac has a service called, Interac Online. Online merchants can incorporate this debit card payment option into their online stores and registration sites. The services works by temporarily redirecting purchasers to a web portal page run by the bank where the purchaser currently banks. The portal page asks the purchaser from which account, Savings or Chequing, the purchaser wishes to have funds withdrawn from for the purposes of paying for the item or registration. Upon completion, the purchaser is returned back to the online merchant’s ASP software or shopping cart.
The big limitation with Interac Online, is that only 4 of the big Canadian banks participate in this program, (i.e. BMO, RBC, Scotiabank & TD). So if you bank at CIBC for example, you’re out of luck using this payment option.