Canada has never had choices when it came to debit card companies – it was Interac or nothing. But now international credit card giants Visa and Mastercard are poised to offer debit cards in Canada, perhaps as soon as in the next year – and small business are worried about the impact this move might have on their debit card fees.

Why Canada? Interac and the Debit Card Monopoly

A federal decision made in 1996 made Interac a non-profit company, co-owned by 64 banks, credit unions, and other companies. This order prevented any member of the association behind Interac from restricting access to the debit card network – but it has also made it difficult, nigh impossible, for Interac to keep up or compete in the industry: All 64 members of Interac have to agree on any changes,new programs, or products that might affect fees.

Despite this limitation, Interac has done well for itself. Canada is one of the biggest debit card markets in the world, second only to Sweden. Nearly three and a half billion Interac "direct transactions" took place in 2007 – namely, in-store purchases – which is where the money is to be made in the debit card business.