Debit card debate heats up

Credit-card companies are going head-to-head with business groups in the fight to influence Ottawa’s plan to regulate the debit-card market in Canada.

The Canadian Federation of Independent Business is pushing for quick adoption of Finance Minister Jim Flaherty’s draft code of conduct for the debit-card industry in Canada, largely run by the Interac Association.

At the heart of issue lies the merchant’s ability to choose the debit processing network on cards that operate on dual networks, such as Interac and Visa for instance.

The entrance of new market players such as MasterCard, Visa and some banks means a retailer’s fee associated with debit transactions can vary.

"CFIB believes the most important element of this code is that merchants will be able to choose how debit transactions will be routed,” said Catherine Swift, CFIB president and chief executive officer.

Visa threw in its two-cents on Monday, arguing the code as it stands could kill competition in the debit card market.

"Our main concern, and one that we've highlighted in our submission to the government, is that the draft code does not go far enough to protect consumer choice at point of sale and may discourage innovation,” said Tim Wilson, head of Visa Canada.

Monday is the final day to make submissions for consideration under the proposal first introduced by Flaherty last November. Small businesses owners have expressed concern that processing fees could climb as credit-card companies and banks wade into the debit-card market.

In the meantime, measures to ensure credit-card companies and banks don’t flood the market with their debit cards is needed, Swift said.

“An interim strategy is extremely important as it is difficult to unscramble the egg once the cooking begins," she said.