Competition Bureau decision on Interac troubling for small business

TORONTO , Feb. 12 /CNW/ - Today's decision of the Bureau of Competition Policy to deny Interac's application to change its status from a not-for-profit to a for-profit entity is regrettable as it is likely to constrain the ability of Interac to compete on a level playing field with new entrants into the Canadian debit marketplace.

As multinational behemoths VISA and MasterCard gear up to enter Canada with new debit card products, Interac should be permitted the scope to compete as fairly as possible with these much larger competitors. CFIB president Catherine Swift says, "Since the mid-1980s, Interac has served Canadian consumers and businesses very well with its low cost debit network, and small businesses in particular will be outraged if it is permitted to be substantially diminished or eliminated by these new market entrants." Adding, "When VISA and MasterCard have entered the debit markets in other countries, the result has typically been to eliminate the domestic incumbent debit provider in one way or another, following which debit costs would be ratcheted up to merchants. This should not be allowed to happen in Canada ."

A more positive component of the Competition Bureau's decision is that Interac will be permitted to make changes to its currently dysfunctional governance model to enable it better flexibility going forward. Currently, Interac's Board consists of industry players who are potential competitors to Interac. Swift says, "Interac's current governance structure is akin to having Colonel Sanders looking after your pet chicken. Interac absolutely needs to be able to restructure so that it can not only survive, but ideally expand and thrive in this rapidly changing marketplace." This component of today's announcement is vague, however, and time will tell if Interac will be permitted the leeway it needs to meet competitive challenges going forward.

Swift added "Prior to today's decision, Interac was operating with two hands tied behind its back. It seems that one hand has been somewhat untied today, but the ability of Interac to compete with VISA and MasterCard on a truly equal basis remains limited. Going forward, we hope further changes can be made so that this valuable Canadian debit provider can continue to serve consumers and businesses in the efficient and affordable way it has throughout its existence to date."

For further information: or to speak with Catherine Swift, please contact Gisele Lumsden (cell) [phone]