Interac Debit: Rules Canadian Merchants Should Understand

Interchange is zero, so what you pay is margin

This is the single most useful fact about Canadian debit and the one most often missed. On a Canadian credit card transaction a large part of the cost is interchange, which your provider genuinely pays to the issuer and cannot discount. On Interac Debit, Interac says interchange is currently set at zero. What acquirers and issuing financial institutions do pay is what Interac calls a Switch Fee — a wholesale, flat-rate fee for eligible Interac Chip & PIN and card contactless transactions — and that is paid by the participants, not billed to you as interchange. Interac adds that it has a role in setting the interchange fee rate but receives no revenue from the fee. The practical consequence: when a provider quotes you a debit rate, there is no interchange floor underneath it. Ask what the number is for, and ask for it as a flat amount per transaction.

Never accept a percentage on debit without doing the arithmetic

Because interchange is zero, a percentage-based debit price grows with the size of the sale for no underlying cost reason. On a $20 sale, 1% is $0.20. On a $400 sale the same 1% is $4.00, for a transaction that costs the network the same flat switch fee either way. A fixed per-transaction price does not behave that way. If you sell larger tickets and your debit is priced as a percentage, that is usually the single largest avoidable line on a Canadian statement. Ask for per-transaction pricing on Interac and compare the two structures on a real month.

What Interac publishes on contactless

Interac publishes a Contactless Payment Interchange Structure with per-transaction amounts by merchant profile and transaction size. Low-ticket merchant categories such as fast food restaurants, convenience stores, taxicabs, transit services and hospitals sit in the lowest tier; a high-volume tier applies to merchant enterprises exceeding 20 million Interac Debit contactless transactions based on the previous calendar year's volume; all other merchants sit in the general tier. Above $100.00 a single amount applies to all merchants.

Surcharges on Interac Debit

Interac states that merchants may not directly apply a surcharge to any cardholder for use of the Interac Debit service. Where a surcharge is imposed, Interac says it must be applied by the merchant's acquirer, must be capped at $0.25, and must not exceed another payment network's surcharge offered at the same point of sale. It must be printed on the transaction record and properly disclosed, and the customer must be given the option of cancelling the transaction without cost if they do not wish to pay it. Separately, Visa Canada prohibits surcharges on Visa debit and prepaid cards, and the Financial Consumer Agency of Canada notes that some networks do not allow debit surcharges at all. In Quebec, the Office de la protection du consommateur says merchants cannot charge fees for paying by debit or credit card.

Your rights under the Code of Conduct

The Code of Conduct for the Payment Card Industry in Canada, effective October 30, 2024, applies to your debit acceptance as well as your credit acceptance, and several provisions are worth knowing before you renegotiate. Merchants may accept either domestically issued credit or domestically issued debit card payments from a payment card network operator without being obliged to accept both, and debit and credit functions must not reside on the same card. Acquirers must notify merchants between 30 and 60 calendar days before a new or increased fee takes effect, and a merchant may then cancel card processing agreements without any form of penalty within 70 calendar days after that effective date. Fixed-term agreements cannot automatically renew for the full initial term, though they may convert to automatically renewable extensions of six months or less, and a merchant may give notice of non-renewal up to 45 calendar days before renewal. If you complain, the Code sets a maximum of five business days for acknowledgement and 20 business days for a response.

What to ask your provider

Ask five questions and get the answers in writing. Is my Interac Debit priced per transaction or as a percentage, and what is the per-transaction amount? What separate fees apply to debit — authorisation, network, monthly? Is Interac enabled on every terminal, and is contactless enabled? What contactless limits are configured on my terminals, and who sets them? And, given interchange on Interac Debit is zero, what specifically does the debit price cover? A provider who cannot answer the last one is not somebody to renew with.