News

Commissioner of Competition Melanie Aitken has struck down the Interac Association's request to become a for-profit corporation.

The ruling means that the possibility of an initial public offering of Interac is now off the table, and it means that it will likely be easier for credit card giants Visa and MasterCard to increase their Canadian debit businesses.

It is also another sign that Ms. Aitken, who took over the helm at the Competition Bureau last year, is looking to spur competition in a number of markets. Earlier this week, the Bureau challenged the dominance that the Canadian Real Estate Association and its agents have through their access to the Multiple Listing Service.

On Friday, the Bureau said it cannot support allowing Interac to become a for-profit entity because the association currently has a dominant position in the country's debit market, and that the restrictions that are currently in place are there to protect consumers from any potentially anti-competitive activity.

Interac runs the system on which the majority of Canadian debit and automatic banking transactions take place. It was first created in the mid-1980s, when a number of big banks and Desjardins Group joined up to ensure that their customers would be able to withdraw cash at one another's bank machines.

In 1994 began offering a system that enabled retailers to accept debit cards. But the Competition Bureau accused Interac and nine of its members of abusing their power in the payments sector. To placate that concern, Interac signed a deal in 1996 that says it can only charge fees that cover its costs.

More than a year ago it made a request to the Competition Bureau to change that agreement, because Visa and MasterCard are rolling out plans to splash into Canada's debit market for the first time. Interac wants permission to earn a profit so that it has money to compete with the card giants; it also wants funds for research and development to come out with new products as competition heats up.

But in its decision, the Competition Bureau said that it does not agree that the removal of the restriction against for-profit activities would be pro-competitive, or is necessary to allow Interac to compete.