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MasterCard Takes Debit To Canada

Retailers’ unrest over interchange fees continues to boil in Canada, but a seasoned debit card industry could prove too enticing to resist for MasterCard.

The company said this week that as it looks to expand operations beyond US boarders, Canada is likely its next stop for debit cards. The move, which would happen next year, would place MasterCard at a stronger position against main rival and industry leader Visa within Canada.

But whether MasterCard’s debit card plans will actually launch has yet to be seen. The company tried to enter Canada’s debit industry in 2010; this time, payments technology innovations – including digital and mobile payments – seem to have ripened the industry for a MasterCard entry, experts say. Canadians are not only jumping on the mobile payments bandwagon, but they rely heavily on debit cards: reports say 24 percent of transactions in the nation are made with debit cards.

The atmosphere is prime for new competition, MasterCard Canada president Betty DeVita says, adding, “debit is big business for Canada.”

It may be so, but merchants within Canada may not be too excited for a new competitor. Retailers are in the midst of fighting what they decry as too-high swipe fees for debit and credit cards. Amid the turmoil and regulatory intervention, MasterCard and rival Visa have both reached agreements with the Canadian government to lower their credit card processing fees; with MasterCard entering the debit industry, a similar mediation may be necessary.

Further, authorities are considering new regulations for mobile payments that would allow stores to reject some technologies as a form of payment.

Despite the risks, Canadian shoppers are just too enticing for MasterCard, it seems; reports say $260 billion in debit card transactions were made across the globe in the third quarter. And according to DeVita, the company is already in discussions with financial institutions in Canada to launch the debit project.​

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