Interac Takes Canada's Mobile Debit Prowess on Tour
Canada's national debit scheme has been a mobile trendsetter in recent years, enabling the organization to pursue agreements with other national programs that want to replicate that success.
Interac's first international deal is a license agreement with BankAxept, Norway's domestic debit network. The partnership is primarily a technology venture—the Norwegian and Canadian debit networks will remain distinct. What Norway will get access to is a "mature" ecosystem of technologies, partnerships and business strategies.
"We're able to understand the challenges that domestic networks face globally, it can be a daunting and competitive environment," said Kirkland Morris, vice president of enterprise strategy for Interac.
With Interac's help, BankAxept will develop a contactless point of sale product for Norway and provide software and other materials to enable BankAxept to offer other mobile payment products.
"BankAxept is very similar to Interac. Our goal is to give them the tools they need to be agile and competitive," Morris said, adding Interac is in discussions to forge similar agreements with national debit networks in other countries.
National debit networks face competitive pressure from technology startups to quickly add mobile proximity payments, a process that can be time consuming and expensive, according to Morris.
"For a lot of domestic networks, they find that as the industry moves to EMV and contactless and mobile, there's a value in an out of the box solution," Morris said.
Interac benefits from Canada's history as an early and fast adopter of new mobile technology. MasterCard, for example, has long viewed Canada as a locale to deploy new mobile commerce technology and to spot talent. Interac has immersed itself in the country's technology development culture, participating in development centers and taking part in early forays into contactless payments with partners such as RBC and McDonald's.
The McDonald's deployment dates to 2013, and Interac has helped power mobile debit payments for years at other nationwide Canadian retail chains such as Tim Hortons. More recently, Interac partnered with Everlink to enable payments for wristbands and moved into mobile commerce through a partnership with Bell ID and IBM. Interac also played a role in enabling nationwide coverage for Apple Pay
"What's interesting is you typically don't see non-profits leading a tech revolution," said Michael Moeser, director of payments for Javelin Strategy & Research, noting Interac attempted to become a for-profit venture in 2010, but was rejected by Canadian regulators. "In Canada, you have a lot of contactless usage, so you have a lot of consumers using Interac because of the lower cost."
Interac's international ambitions also benefit from an expansion of national debit networks, which are also looking to automate domestic transactions at scale, Moeser said.
"There are a lot of domestic networks that are looking to lower the cost of ATM usage and trying to get merchants to accept their cards," Moeser said, adding national debit networks are advancing in large markets such as China.Russia, India and Singapore.