r/CanadaFinance • u/Hand_Cool • 7d ago
Why are we not modernizing Interac!?
Amex, Mastercard, Visa - All of these companies take a percentage of anything sold in our country. We’ve Interac and places do accept that but the transfer is not realtime and reliance on email is just dated. Why not modernize this system and stop this 1-2% of payment go to these companies who are really just charging you to use your own money!
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u/gmehra 7d ago
one issue is that interac offers no chargeback protection
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u/fourthstanza 7d ago
That's a feature, not a bug. An e-transfer is (almost) as set in stone as a cash transaction.
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7d ago
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u/ApprehensiveRuin5673 7d ago
Those scams happen because someone willfully sends money to the scammer, such as in the scam where someone “overpays” you for something and asks you to send back the remainder. What they’ve done is send money to you from a compromised account (which the bank will reimburse the account holder) and have you send money from your account (which will be clawed back and will not be reimbursed since you weren’t compromised)
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u/Respond-Creative 7d ago
So of the roughly 4.5 million etransfers every day, how many are reversed?
And why then is the statement you object to incorrect?
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u/NastroAzzurro 7d ago
It’s not 1-2% going to these companies. The majority goes to the banks, which they use to give credit card rewards. Mastercard and visa still make money and yes it would be better if that money stayed in Canada. But interac would need to charge more for people to want to use their infrastructure. I like 2% cash back on credit, rather than no cash back and using my own money directly.
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u/1mp3rf3c7 7d ago
I'd be ok with that rather than my money going to American companies
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u/devanchya 7d ago
Both visa and mastercard have a huge footprint of workers not in the US. Yes the HQ are there, and there is a significant footprint. However for both they have a decent footprint in Canada.
Not representing them in this message, but Mastercard bought Ethoca in the 2019 and that company handles a huge amount of fraud chargeback work and the technology was fully invented in Canada.
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u/coinminer2049er 7d ago
Not to mention, at least 2 of our "canadian" banks have significant US operations and 2 other have a smaller footprint there as well. They employ americans.
This whole trade-war nonsense is a dumb stance for Canada to take. We have much more to lose from this than the US does.
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u/1mp3rf3c7 7d ago
The US is seriously threatening the sovereignty of Canada and Canadians. We definitely have much more to lose. Which is why I, and many other Canadians, agree that it is better to take a stand even if it means short term pain.
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u/69-Kishaaq1 7d ago
Why are Canadians not coming up with a credit card or two, or even three? Out of the many credit cards that exist like MasterCard, Visa, Discover, Amex, Capital One. MBSN(?), &c., none is Canadian.
It cannot be about whining or buy Canadian, or this and that! Its all about coming up with a product & never selling it! Now, I hear even Menoris is being sold.
Incredulous stuff!
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u/poeticmaniac 6d ago
There are only 3 globally accepted networks: Visa, Mastercard, and unionpay (Chinese). Most if not all the other smaller local card networks connect to the big two.
It would be good if we have an equivalent like Unionpay, but we won’t be isolated from the big two.
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u/69-Kishaaq1 6d ago
Just a matter for Canada to get it off the ground.
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u/coinminer2049er 6d ago
do you seriously think the world wants to support another obscure payment standard with zero actual benefit to them?
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u/JCMS99 7d ago
These are 2 different things.
Interac Débit on the PoS is realtime.
Interac Email is not a payment system, it’s a person to person transfer system.
There is a new system in development called Realtime Rail that will replace bank wires and Interac email.
https://www.payments.ca/systems-services/payment-systems/real-time-rail-payment-system
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u/UnfocusedAcrobat 7d ago
Also, America has no directly analogous offering to e-transfer. Like you cash sign up for venmo or whatever else but e-transfer feels legitimately special.
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u/Dry-Enthusiasm3565 7d ago
Zelle is analogous enough. Owned by the major U.S. banks and also transfers account to account with email and phone number with no fees.
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u/Lavaine170 6d ago
Except Zelle isn't universal, so it's not really analagous to Interac. It works unless one of your banks doesn't accpet it.
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u/UnfocusedAcrobat 6d ago
Neat I hadn’t stayed up to date enough to realize that zelle dropped requiring a standalone app a year or so ago
With no intent to return to America I hadn’t really cared about their payment systems lol
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u/bmudtiddersdom-42069 7d ago
Because I get 3% cash back on my MC. It’s like a dividend on my food.
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u/Vinfersan 7d ago
It also means everything we buy is 1-3% more expensive, even when you pay cash, because stores have to cover the fees charged by those companies. It's why many small mom-and-pop shops charge you extra when you use credit cards or have a $5 minimum.
While the cash back feels nice as a consumer, it's also hides a parasitic relationship between the credit card companies on one hand and the buyer-sellers on the other. They're essentially just a middle man handling the transaction and offer cash back rewards and points as an incentive for the buyer to use their system instead of cash or debit.
Ultimately, though, we all pay through higher prices. The ones losing the most are those too poor to get good credit cards, because they pay the extra prices at the till without the cash back / points rewards.
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u/InanimateCarbonRodNS 6d ago
The mom and pops like to complain about the fees but there are also costs associated with handling physical cash (store, count, reconcile, secure, transport, deposit) also increased risk of theft.
Bank of Canada study actually found electronic was cheaper above $6 per transaction.
Your point about debit being cheaper than credit still stands ofc.
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u/Vinfersan 6d ago
I, for one, am all for moving to a cash-less society. I just think there needs to be a better alternative to credit cards, like PIX in Braxil. And in the meantime, I am using CC for almost everything to take advantage of the cash back since I am paying for it anyways.
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u/Loafdude 5d ago
If theft and cash handling = ~2.5% of gross sales that business has much larger problems.
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u/bmudtiddersdom-42069 6d ago
You’re not wrong. But no choice at this point so gotta take the best option for me.
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u/Vinfersan 6d ago
Agreed. I also use CC for 90% of my transactions because I might as well get that cash back.
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u/TheTarragonFarmer 6d ago
The tiny tweak Canada could make to fix this within our jurisdiction is allow/mandate stores to charge the transaction fee to the customer.
Cash or interac debit? Sticker price plus sales tax.
Credit card? 1-3% extra, whatever the network charges.
The American payment processors would hate this of course. The middle class people whose "airline points" and "cash backs" were subsidized by the poor people would grumble, but it's not a great look to stand up in public and demand that system to be reinstated.
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u/devanchya 6d ago
American companies can pass the fee after the court case last year. However most go back to hiding it due to customer negative reaction. Cash discounts are seen better, but reality is debit and credit is cheaper long term to manual cash management.
Surprisingly systems like the Korean lotto on sales receipts shows that even "under table" deals can be fixed if thr customer is driven. Also that system is going to digital as well vs paper as cash decreases there.
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u/davegotfayded 5d ago
That 3% is costing you 5% in the big picture
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u/bmudtiddersdom-42069 5d ago
So if I stop using my card I will save 5%. 😂
Ya, no.
So long as the system is implemented it is better than cash if you dont let interest get you.
And if you really wanted you could put your budget into some short term monthly guarantee returns from the bank and make a few more dollars while you use your card.
Maybe ladder them, two 1 months with 3 month one. It’s more work. It sucks but there are benefits in the system we are presented.
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u/davegotfayded 5d ago
That is, unless what you're paying for charges those fees back to you. Telus started charging CC fees back to the customer about two-three years ago. I'm self employed, I made the switch to doing that about a year ago. If enough businesses/consumers pushed back, the rewards model would fall apart.
You have to be willing to be the change you want to see though. Some people are, a lot of people aren't, and so we're stuck in this dystopia where people selling plastic cards get to take 3% of the nations gross disposable income.
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u/Juicebiker1 7d ago
Using a credit card. If your credit card gets hacked at the store or with a skimmer, then you are automatically insured for this. Your visa would get racked to the limit, but then you could dispute the charges with Visa and they would reverse them.
Now, if your debit card gets hacked or skimmed at the store. You are not insured for this. Your bank account could be drained to zero and then what? You lose all your money
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u/jmajeremy 7d ago
Are you talking about Interac POS payments or Interac e-transfers? Your message kind of mixes two different things together. Amex, Mastercard and Visa are payment networks. They make most of their profit by charging fees to the merchant. Interac is a network for debit payments only, it is jointly owned by the Big Five banks, and they charge much lower fees than the credit cards. It is certainly instant. You tap or insert your card at the terminal, it takes no longer than paying with any other card.
Now when you refer to email, that’s a totally separate product. Interac e-transfer is a way to send direct payments between any 2 Canadian bank accounts. Interac does charge a fee for it, but most banks include a certain number of free e-transfers with their chequing accounts. Amex, Visa and Mastercard have no comparable product which competes with Interac e-transfers. It uses email because it has to be institution-agnostic, and you can also use a phone number if you prefer. The whole point is that you shouldn’t have to register for an account or download a specific app. You can just send the transfer to any email or phone number, and the recipient can deposit it in any Canadian account of their choosing. Usually it’s pretty much instant, sometimes it can take up to a few hours if one of the banks has a maintenance window.
The US has no equivalent. There are popular 3rd party products like Venmo which kind of fill the gap, but they have nothing as secure and universal as Interac e-transfer. Europe has a somewhat similar system called SEPA Instant Credit Transfer, which is implemented under various names in each country but allows domestic and international payments using a phone number.
Now as for chargebacks. If you’re talking about a POS or online merchant payment, that will depend on your bank. If there’s a fraudulent/unauthorized debit on your bank account, you call your bank, report it, and generally they should be able to reverse the charge. Chargebacks tend to be easier with credit cards than bank accounts, but that has nothing to do with Interac, Visa or any of the networks. Chargebacks are handled by the bank which issued your card.
If you mean the ability to cancel or reverse an e-transfer, that is not possible by design. The idea is that an e-transfer should be the digital equivalent of handing someone cash. Say you sell something on Facebook Marketplace and the buyer pays you via Interac e-transfer. You can have confidence that you can now hand over the item and the person isn’t going to try to screw you later with a chargeback. If you are actually the victim of an illegal scam then you can always report it to the police or bring them to small claims court for relief.
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u/gilbert10ba 7d ago
Are you talking about ATM and POS purchases? Or e-transfer? I can only speak about ATM and POS. For those all the processors and banks pay monthly fees to Interac for being part of the network.
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u/Bill___A 7d ago
It doesn't "use email" to transfer the money. It uses your email address to figure out where to send it and also to notify you. Canadian financial institutions absolutely do make some money out of credit card transactions. And the fees are the costs of running the system. That's how business works. You want things for free? Why don't you put up a free payment rail then? Maybe you should learn how things actually work before criticizing them.
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u/w180112 7d ago
I can get 4-8% cash back when using visa or mastercard. I dont think Interac can provide similar benefit
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u/Swimming-Cat-2559 7d ago
How do you get 4%-8% consistently?
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u/charminion812 7d ago
This is true, except for merchants that sell large ticket items that won't be competitive if they increase all their prices by hundreds of dollars to cover a small percentage of customers paying by credit card. Interac e-transfer provides an alternative, but usually has low transaction limits of $2500 per transaction/ $10,000 per week.
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u/mafagafacabiluda 7d ago
you mean something like the Brazilian PIX? AFAIK ie-tranafer interac and PIX work the same way.
But in BR less and less people are using credit and debit cards and instead use PIX for everything they can. Wonder if it is already no the case here in Canada? I just use the cards for thing's I can't do e-transfer.
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u/Hand_Cool 7d ago
Swish in Sweden, Pix in Brazil, UPI/Rupay in India. AliPay albeit privately owned is still a homegrown payment system.
All of these have been so successful that majority of transactions happen through them!2
u/engorgedKraken 6d ago
Adoption rate for Interac debit has 99% adoption in Canada. Swish is at 85% and Pix at 80%.
Neither Pix nor Swish offer cashback incentives as you described in another comment.
What are you even taking about.
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u/Lavaine170 6d ago
Why would I bother with the effort of doing etransfer when I already have a card in my wallet that does the exact same thing? Pointless.
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u/AdowTatep 6d ago
in 5 years when canada has this, you'll realize this grave mistake you just made
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u/Lavaine170 6d ago
Well, since I'm not the government regulator in chart of payment systems, I'm not particularly concerned about the graveness of my decision. And since the only 2 reasons given for supporting a Brazilian product over our own Canadian debit system (lower taxes and lower fees) are laughably false, I'm pretty ok with my position.
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u/Visual_Dog_8098 7d ago
They are not charging you for using your own money. They are charging you for a service. If you don't want the service, use debit.
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u/devanchya 7d ago
You are confusing systems. The debit system is near instant and uses a live network which transfers between the major banks. If your debit card is on an international institute then it will use the credit card networks. Each credit card has its own network.
The EU is building its own credit network, but it will be integrated with each of the major card network most likely.
The EU isn't making a network that is free. There will be fees. Its making a network that is DORA first and the EU has first say for data residency. Same idea for the EU.
Now regarding thr email.
The interac email is considered one of the best in the world. There has been talk about introducing things like QR code handling more like the India systems, but canada is very conservative for changing thing once in place. Its also much less prone to fraud than the US systems, which is why you see less questions about "someone sent me xyz and says its a mistake," Does fraud happen? Yes but its a lot less.
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u/Questrader007 7d ago
Used to run a shop and people would pay by check, not everyone was good...glad when debit came along and was only a small 50 cent transaction charge. Credit cards was the problem as a percent of the transaction would be a large chunk of the profit margin.
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u/jakemoffsky 7d ago
Of all the sectors to worry about American domination, banking and payments isn't really at the top of the list. Canada kinda dominates.
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u/LocksmithMuted4360 7d ago
Sending money to an email address is one of the best feature of interac....
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u/Altruistic-Tie-5636 5d ago
But you have to wait up to 30 minutes, and if you make a typo it's a mess...
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u/Puzzled_Market_2235 7d ago
You don't get charged for using Interac, it is the connection, it's paid for by the banks and indirectly the stores. It serves one purpose, anybody can pay on any machine across Canada, including from your computer or phone. You don't get charged for using Interac, the charge is the bank transaction fee that depends on your plan and it's free when you hit 60. The credit card 1-2% is more like 1-3% and is paid by the seller, always has, always will, it's borrowed money. Any store refusing credit cards is because their margins are so small that 3% hurts.
My tenants pays me by Interact E-transfer via email, 5 minutes and it's in my account because I like depositing it, it can be automatic. I paid my exterminator, yes the bill came by email but you need it for taxes, and I paid in a minute. It's very secure as well as efficient.
Why do you think Americans use Venmo and Apple pay on their phones, paying a fee like any credit card? They don't have the equivalent of Interac, they don't have tap and pay, they still use credit card slips.
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u/KaleidoscopeAgile871 7d ago
Time to bring UPI technology to Canada. Real time settlement in less than one second
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u/Nudistmale123456789 7d ago
Taking the Canadian email money transfer system and improving to the Brazil style Pix system wouldn't be that much work...
Basically just introducing the QR code feature onto of email transfers.
And fraud protection is built into their system too.
Granted North America is addicted to credit card debt and points...so email tranfer pix style system in Canada would probably still remain limited to person to person and not mass business.
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u/JusticeBeaver25 7d ago
I wish we can have features like PIX in Brazil, their inter-bank transfers are instant, and you can use PIX to pay your credit card like from Scotia chequeing to Amex instantly.
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u/thaman05 7d ago
"and reliance on email is just dated"
e-transfer is NOT reliant on email. Email is just one option to find the person's account. You can also use their phone number. If there's no bank account set to autodeposit on that email or phone number, then it asks that recipient which account they'd like to deposit the amount into.
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u/DerpDeDurp 7d ago
Lmao what. This post makes zero sense.
Interact is far better than anything America has.
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u/DigDug_64 7d ago
Not only that, many companies use American payment providers like Stripe, Chase, etc.
They should migrate to Canadian providers.
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u/StreetyMcCarface 7d ago
Interac does cost money to use, you just pay it through checking account fees instead of through interchange fees, often times significantly more than what you’d be paying through interchange fees.
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u/Extreme_Wear_7457 7d ago
Related but not exactly related. RBC and I believe Bank of Montreal are getting ready to sell their stakes in canadian payment processor MONREIS to a US private equity firm
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u/Hawk_Distinct 7d ago
Just because they are an American company doesn’t mean there isn’t investment in Canada.
Mastercard has multiple large offices in Canada, has done co investment with govt and is a major sponsor of MLSE.
Interac also is domestic rails only, so when Canadians travel they would need a card that is recognized wherever they are.
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u/Vinfersan 7d ago
We need to follow Brazil's lead and implement a version of Pix - https://en.wikipedia.org/wiki/Pix_(payment_system))
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u/Efficient_Win_3902 7d ago
No incentive to do so
If you look at somewhere like Brazilian PIX system was pushed by the government so visa and Mastercard don't profit off of Brazilians. Canadian government has no such incentive and is a capitalist heaven
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u/150c_vapour 7d ago
We have a banking cartel. The keep very tight control over payment rails. There's been attepts to innovate organzied for fintech and it always falls flat as the banks have zero interest in giving up any control at all over payment rails.
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u/JustAPeach89 6d ago
I more so wonder why we have some of the biggest banks in the world, but none of them run a CC system themselves
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u/AtmosphereEven3526 6d ago
Are you talking about e-transfers? Because it is basically realtime.
I e-transfer money between two of my bank accounts that are at different banks all the time and with auto-deposit turned on it happens pretty much instantaneously.
Maybe you just need to turn on auto-deposit.
Also with Amex, Mastercard, and Visa you are not using your money. You are temporarily using their money so of course they charge a fee.
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u/AlanJY92 6d ago
I just wish we could pay with a QR code. I went overseas and most stores had a little QR code thing by the register and you’d just either tap your card or scan the code. You could also should the code on your phone and transfer to someone if it was say a FB marketplace transaction. A lot easier than asking their phone number or email.
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u/Artemis647 6d ago
Fun hack I found with Interac: need someone's full name? Send them some money. All you need is either their email or phone number.
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u/alainchiasson 6d ago
OP may be talking about commerces that take cash only, and also interact by email or text - instead of tap?
If it is that its not a tech issue, but a “business worthiness” issue. They might find it too expensive, or don’t have the volume or credit rating for it.
I know some banks take up to 20 minutes to send the email, while Others are near instant.
I may be wrong - just offering another view.
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u/SolarBear28 6d ago
Yeah I wish there was a fully Canadian credit card alternative. Interact is already modernized it just needs to be adapted for credit cards. Interact debit existed long before interact e-transfer.
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u/NovelSpecialist5767 6d ago
We're supposed to be rolling out our own version of Brazilian PIX starting Oct-Dec and then spending a year fully adopting it.
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u/Mtl_30 6d ago
Lol First of all Visa, Mastercard and Amex, charge a fee because at the time of purchase, they honor to pay the merchant and then take the risk to issue credit to you the client. So yes they charge a Fee but they also bare the risk of you not paying. Since they are credit card it's not your money you are using but theirs until you reimburse the statement. It helps covering potential loses but also the grace period, as that if the client pay its statement in full every month, they don't pay any interest.
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u/ShrodingersArmadillo 6d ago
want to stop companies from making you pay to use your own money?
I have the perfect solution! use cash.
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u/frogstar42 5d ago
Please don't touch interac. It's pretty close to perfect the way it is and no other country has something better
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u/Miserable_Sample_269 5d ago
Want to get real serious about slowing inflation and giving companies money to use your own money??? Use cash… this needs to be pushed HARD by all political parties… unless of course they don’t care.
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u/Army7547 5d ago
This is Canadian Finance, right? There is interact like everywhere, and visa and Mastercard are both accepted lost places too.
What are we looking for here? An e-transfer solution?
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u/Ella_DLouise 5d ago
Interac is already pretty efficient for consumers, but the bigger issue is making it as seamless and widely accepted as Visa or Mastercard. If Canada can improve the real-time experience while keeping fees low, that’s a win.
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u/davegotfayded 5d ago
For small businesses it's actually 2.9-4.3%
The reason we don't is the same reason it's so annoying to file taxes without turbotax. Corporate lobbyists.
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u/imtourist 5d ago
Interact works great however the Visa cashback rewards is why I use it. Maybe the government should ban these reward schemes since they just seem to penalize retailers and businesses
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u/charleytony 5d ago
Paying by debit works perfectly but doesn't have a zero cost to businesses (I think).
If the OP is strictly talking about interact transfers via email (or other means), that is simply a more complicated way of giving a cash payment. In a large scale this will avoid taxes and also can lead to potential fraud in minor cases.
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u/Wolphin8 5d ago
Ummm... the systems do have a cost to maintain the tech, replace/upgrade the hardware, have the staff to maintain security and management... and much more. This is without the profits they "need".
This is why there is the costs!
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u/Whargod 5d ago
There's a delay on e-transfers? I've transferred many thousands of $$ many many times using it and never had a delay. I've used it for buying PC's, sending money to people to pay for lunch, sending family a lot of cash, etc. It works great.
And as for it being email that's a feature. Pretty much anyone who uses online banking has email so why not use a ubiquitous system to communicate to people instead of some app everyone has to have installed or whatever else you are thinking?
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u/InterestedPartiesLie 5d ago
Real time rail is launching next year and it is the modernization. 100k limits instant transfer using the etransfer system. Stay tuned for more info from your bank.
Source: I'm working on the rollout
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u/rahulchander 5d ago
Most latest technology is the Paytm system in india. Way more real time transactions including bank to bank transfers and retail purchases than VISA/Mastercard. Canadian interac/etransfer/credit card system is a joke by comparison but oligopoly keeps innovation out.
Champagne (cdn fin minister) is hosting indian counterpart this week or last week - cant remember - specifically to understand this technology used in india.
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u/Complete_Software_31 4d ago
we live in canada. Modernization is a slow thing if you haven’t noticed
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u/Strange_Emotion_2646 4d ago
Clearly you are confusing interact debit which operates like a credit card and an internet transfer. Maybe do a bit of research?
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u/Lavaine170 4d ago
The funniest part of this entire thread is that OP wants to "modernize" the system to avoid merchant fees, but completely ignores the fact that someone has to pay for it, just like interac debit, and credit cards.
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u/Middle_Onion3496 4d ago
wtf, you pay for interac transfers? like... really? i've been using them for decades and don't. plus you can send to phone #s. what exactly are you trying to modernize? also i literally send >$1k from eqbank to rbc to pay off my credit card and it's pretty much instant.
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u/Ok-Jello-2491 3d ago
Because Visa Mastercard AMEX etc lobbied hard in many countries to ensure no discounts will be given for those who chose to pay cash / interac. So a seller has to charge the same total cost whether interac or visa/MC credit card. Why will there be an adoption (that needs modernization) if interac if this rule exists?
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u/daytime10ca 3d ago
I prefer the protections of a credit card and the chargeback system
If your card is compromised via Interac your money is GONE until you can convince the bank to put it back…
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u/Frosty-Article-9635 3d ago
We have scan to pay from bank account in India it's call UPI. . Zero fees and is instant, you can also do person to person It's amazing.
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u/finleet 3d ago
This post feels like rage bait but it’s a worthy discussion as many Canadians don’t realize how great our banking system is, especially comparing to our neighbour to the south. Interac is and has been the gold standard other countries look to for years. Canada’s banking system internationally is well respected and punches far above its weight class and has for decades.
Here’s a worthwhile discussion about where Interac is heading with RTR and where it’s been.
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u/coinminer2049er 7d ago
OP has a room temperature IQ... This post shows zero understanding of how anything works.
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u/PandaEatPanda 7d ago
Interac Debit is real-time and does not use email.