Interac
From Free net encyclopedia
Image:Interac.gif 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 by five financial institutions. As of December, 2004 there are over 90 member organizations. In Canada, the word Interac is often used as an eponym for debit card.
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Services
Interac Association is the organization responsible for the development of a national network of two shared electronic financial services:
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.
- 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.
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]
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.
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.
E-mail Money Transfer
You can use e-mail to transfer money between many banks offering Interac service. Some quasi-banks, particularly President's Choice Financial will not implement this feature so as to maintain their no-fees system.
Services not offered on the Interac network
It is currently not possible to transfer money internationally (except to the US) using the Interac network; however, most Canadian ABM cards are also linked to PLUS or Cirrus, or other networks with more global reach.