2009.44 | e-Payments in Canada

The controversy around Visa debit in Canada continues.  Merchants say the new negative option process is unfair.  Visa says that the current Interac ‘monopoly’ stifles innovation.   The Retail Council of Canada says fees will go up.  

It’s hard to say who is right in this battle, but they both assume that Interac will not change itself in any way to deal with the entrance of Visa to the market, which is not likely the case.  Retailers and consumers alike can expect increasing complexity in the electronic payments area.  As a myriad of services come available, the current simplicity of debit and credit in Canada becomes increasingly complex with new players as well as the interfaces – tapping, dipping, and using debit online (which you can do now, by the way, contrary to Visa’s Mike Bradley’s comments).    It is now possible to pay with mobile numbers online as well, via Zong and Obopay.  More options will come as other posts have indicated. 

While the end game is hard to see at present, the organizations that can bring value to clients for a reasonable fee stand to gain a great deal given the size of the electronic payments market.  The challenge is that payment processors and banks hold the keys to the kingdom at present and will demand a piece of any fee charged – directly or indirectly.  This will restrict new players unless they can find a way to get around these behemoths, as consumers and retailers alike will resist additional fees without some tangible benefit.  Unless there is a real game changer, the most likely future scenario is a plethora of new players with niche solutions chipping away at the current players with small incremental gains.

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