Canada Could Be Cashless Before The U.S.

By: Daniel Rattanamahattana on August 28, 2012

Who would ever guess that pushing for more capitalism is centred on a national, almost socialistic form of payment? That seems to be the beauty of Interac, Canada’s thriving not-for-profit method of payment. What started off as a merger between Canada’s biggest banks to link ABMs has become the most popular form of payment for Canadians that according to some analysts, will eventually lead the country to a cashless society; and the real monkey wrench in it all is the traditionally conservative neighbours to the south will be years behind in making that happen.

Interac accounts for nearly 4 billion transactions yearly in Canada either by debit or credit and surpassed the use of cash back in 2000. According to the vice president of products and services for Interac Allen Wright, part of the popularity stems from the affordable cost. Because of its not-for-profit nature Interac only charges enough to cover its costs which add up to less than a penny per transaction. This coupled with the convenience of swiping over hitting a bank machine every time you have to make a purchase, has allowed Interac to grow to Canada’s favourite method of payment.

That socialist component of only charging what is necessary is one of the advantages of the nationwide program. Wright argues that Interac is similar to the health care system; both are built on Canada’s comfort level with creating and using systems that are established for the good of citizens rather than solely to make money. Unlike in the U.S. which has different debit and credit networks for most of its banks, Canada’s Interac is one network that spans the entire country which lowers costs for consumers and allows for easier adaptability to newer technology than what can be done stateside.

This is why Canada has succeeded in implementing the PIN and chip technology on debit and credit cards while the U.S. continues to struggle with making it a national requirement. On top of that Interac has begun using the ‘tap payment’ method where instead of inputting a PIN, Canadians simply scan their cards into the registers. This is also expected to go national.

Wright also says that as Interac continues to readapt with technological trends, cash may be phased out of payment altogether for Canada someday; he doesn’t expect it anytime soon but believes it is the right move forward for the Canadian economy. He says through Interac there will be greater transparency of purchases so the right decisions to improve efficiency can be made using purchasing patterns as a guideline.