Interac
From Wikipedia, the free encyclopedia
| Interac | |
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| Operating area | Canada |
| Members | 83 |
| ATMs | 51,124 |
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| Founded | 1984 |
Interac Association is a Canadian organization linking enterprises that have proprietary networks so that they may communicate with each other for the purpose of exchanging electronic financial transactions. The Association was founded in 1984 as a cooperative venture between five financial institutions: Royal Bank of Canada, CIBC, Scotiabank, Toronto-Dominion Bank, and Desjardins.
By 2005, there were over 80 member organizations and there were over 51,000 Automated Banking Machines that can be accessed through the Interac network. In Canada, the word Interac is often used as a synonym for debit card.
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[edit] Services
Interac Association is the organization responsible for the development of a national network of two shared electronic financial services:
[edit] Interac Direct Payment (IDP)
- Interac Direct Payment (IDP): Canada's national debit service for purchasing of goods and services. Customers enter their personal identification number (PIN) and the amount paid is deducted from either their chequing or savings accounts.
- Since its national launch in 1994, Interac Direct Payment has become so widespread that, since 2001, more transactions in Canada were completed using debit cards than cash.[citation needed]
- Beginning in 2004, IDP purchases could also be made in the United States at merchants on the NYCE network.
- IDP is similar in nature to the EFTPOS systems in use in the United Kingdom, Australia and New Zealand.
[edit] How IDP works
IDP purchases can be made at all retailers participating in the program, regardless of the financial institution issuing the debit card being used, and normally no fees are charged for using the program. Banks may levy a charge for withdrawing funds from the account used to fund the purchase, but these fees are not associated with Interac Direct Payment itself. Some retailers charge a nominal fee (often $0.25) for Direct Payments (presumably to cover the expense of having the appropriate equipment and any transaction charges), but they are in the minority. There are just under 550,000 IDP terminals in use throughout Canada, and 124 billion Canadian dollars worth of transactions took place in 2004. On December 23, 2005, a new record for single day transactions was set with 15.5 million transactions processed. [1]
[edit] Four steps to completing a transaction
The “Interac Inter-Member Network” is a complex network known as a “distributed architecture” throughout the country. Chances of the entire network shutting down are very remote as the network does not have a specific “point of failure.” If a single member is experiencing short-term technical difficulties, it is not possible for the entire network to fail.
1. The procedure begins at the time a purchaser makes a purchase with his or her banking or debit card; this is processed with the Interac Direct Payment service. The employee will then record the sale and enter the actual price into the “point of sale terminal”.
2. Either the purchaser or the seller will swipe the card through the reader. At this point, the purchaser will enter his or her “Personal Identification Number (PIN)” into the reader. The account to be debited is selected by the consumer.
3. The sale is transferred throughout the Interac system where the purchaser’s financial services firm verifies the debit card, the PIN, and the funds available in the account. The purchase is complete after these three steps are verified by the purchaser’s institution.
4. A receipt of the transaction is returned to the purchaser along with the banking or debit card.
[edit] Benefits
[edit] Convenience
Businesses from coast to coast are given an opportunity to decide whether or not to adopt the system. According to the Interac Association, the system “is offered at over 370,000 merchant locations across the country”. Making a purchase directly at the “point-of-sale” is much more convenient and eliminates the need for cash on hand. In addition, it is now possible for consumers to receive “cashback” at the completion of the transaction. The convenience of “cashback” has enhanced the technology and contributed to the popularity of the service.
[edit] Overall Risk Reduction
A private number is selected by each user to access their individual accounts. This adds to the security and confidentiality aspect of the system; these features eliminate the worry of theft and make it next to impossible to access funds in an account without the corresponding Personal Identification Number.
[edit] Consumer protection in Canada
Consumers in Canada are also protected under a voluntary industry code which is overseen by the Canadian federal government. The Canadian Code of Practice for Consumer Debit Card Services[2] (sometimes called the "Debit Card Code") covers all providers of debit card services. Adherence to the Code is overseen by the Financial Consumer Agency of Canada (FCAC), which investigates consumer complaints.
According to the FCAC, revisions to the Code that came into effect in 2005[3] put the onus on the financial institution to prove that a consumer was responsible for a disputed transaction, and also place a limit on the number of days that an account can be frozen during the financial institution's investigation of a transaction.
[edit] Rapid & Private
Interac Direct Payment funds can be completed instantaneously and privately. Only a limited amount of information is revealed with a single transaction compared to other forms of direct cash payments. For example, when a cheque is made out to a merchant, the personal information of a customer is in the top left hand corner of a cheque. It is not uncommon for the cashier to request identification to match the information on the cheque.
[edit] Money Management
It has been said that “money can burn a hole in your pocket.” With the implementation of Interac, individuals are capable of constantly monitoring their cash. Bank statements are received monthly or as requested by mail. Additionally, online records are provided by various banking services, making your individual account balance accessible at any point in time. This system allows consumers to make direct payments which result in immediate account withdrawals and a more accurate account balance.
[edit] IDP flaws and features
Interac Direct Payment is a PIN-based system where the information entered on the PIN pad is encrypted and verified at a central server, rather than being stored on the card itself. Because of this, it is significantly more secure than traditional signature or card-based transactions. Despite these security features, there are ongoing fraud concerns, particularly when debit cards are duped or skimmed — a compromised automated teller machine or point-of-sale terminal will record the account information contained in the magnetic strip of the card, allowing for duplicate cards to be created at a later time. The owner of the card is then unknowingly video taped or observed entering their PIN, allowing a criminal to use duplicate cards to make fraudulent purchases.
[edit] Shared Cash Dispensing
- Shared Cash Dispensing (SCD): cash withdrawals from any ABM not belonging to a cardholder's financial institution.
- This Canada-specific service is similar to international systems like PLUS or Cirrus.
- Virtually every ABM in Canada is on the Interac system.
[edit] Interac Email Money Transfer
The Interac Email Money Transfer service is offered by CertaPay. It allows online banking customers to send money to anyone with an e-mail address and a bank account in Canada. This is an Interac branded service operated by Acxsys Corporation.
[edit] Interac Online
The Interac Online service allows customers to pay for goods and services over the Internet using funds directly from their bank accounts. Because it removes the need to provide any financial information to the online merchant, the Interac Online service is more secure than online credit card payments. This service, also an Interac branded service operated by Acxsys Corporation, began in 2005 and is expanding as more merchants choose to participate. As of November 2007, the service is available to customers of four major Canadian banks and offered by 116 merchants.
[edit] Services not offered on Interac networks
It is currently not possible to transfer money internationally using the Interac network; however, most Canadian ABM cards are also linked to PLUS or Cirrus, or other networks with more global reach.
[edit] See also
[edit] References
- Interac Association (2006). At the Merchant 2006. Retrieved 19 June 2006, from http://www.interac.ca/en_n2_11_howitworks.html
- Interac Association (2006). At the Merchant 2006. Retrieved 19 June 2006, from http://www.interac.ca/en_n2_12_benefits.html
- Interac Association (2006). At the Merchant 2006. Retrieved 19 June 2006, from http://www.interac.ca/en_n2_13_fees.html
[edit] External links
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