Both debit cards and credit cards are very popular in Canada. Credit cards are currently the most popular transaction method in Canada, accounting for 31% of all transactions. Debit cards are close behind accounting for 28% of all transactions. Historically, cash transactions have been the most popular, however, cash has been falling drastically with people moving towards digital transactions. Cash now only accounts for 14% of all transactions.
Visa Debit is relatively new, launching in Canada in 2010. It is a major brand of debit card issued by Visa in many countries around the world. Many banks, credit unions, and financial institutions issue Visa Debit cards to their customers. There are approximately 2 billion Visa Debit cards in circulation globally. Here is also an overview of how Visa Debit works in Canada compared to the USA.
What is a Visa Debit Card?
A Visa Debit card acts like a normal debit card, meaning it pulls funds directly from the cardholder’s bank account, however they also have the capability to use the credit card networks allowing them to be used where a typical Visa is accepted. This means consumers can use their Visa Debit card online, which is a big difference compared to traditional debit cards. MasterCard also has MasterCard Debit, which acts the same way. Visa Debit cards are issued to consumers by their banks.
How a Visa Debit Transaction Works
Visa Debit uses a hybrid model for facilitating transactions in Canada. For swipe and chip & PIN transactions, Visa Debit cards use the Interac network, which is the network used by virtually all traditional debit cards in Canada. For all other transactions with Visa Debit, they operate on a distinct network from the Interac network. Visa Debit cards have a card number, an expiry date, and a security code, similar to a credit card. This allows Visa Debit cards to be used where standard Visa credit cards are accepted.
When a Visa Debit transaction is run, real-time verification occurs to ensure enough funds are in the consumer’s bank account. If there are not enough funds, the transaction will be declined. If there are enough funds, the funds are automatically transferred.
Visa offers several different types of Visa Debit cards in Canada. These include the Classic, Gold, Platinum, Signature, and Infinite. Depending on the bank that issues the cards, there can be different benefits and perks for the cards. Some Visa Debit cards have reward programs, similar to credit cards, applying points or rewards for transactions.
Visa Debit Fees to Merchants
Merchants need to pay fees for accepting credit cards, debit cards, and Visa Debit cards. The tricky thing is that rates to merchants change depending on how a Visa Debit card is accepted. This is because Visa Debit uses both Interac and credit card networks to run transactions.
When a Visa Debit is used by swipe or chip & PIN, Interac fees are charged. Therefore, it is only a fixed transaction charge, ranging typically from $0.05 to $0.025, depending on what you have negotiated with your payment processor. If you’re looking to get better rates, you can sign up with TCM with the form below.
When a Visa Debit card is used by phone, online, recurring billing, or any other method using the credit card network, your standard credit card fees will be charged. This means merchants will pay interchange fees and any other fees you’ve agreed to with your payment processor. Therefore, merchants will pay typically 2% to 4% of the sale amount, plus the transaction charge, and any other fees. In the end, Visa Debit cards are more expensive to merchants than traditional debit cards.
How to Accept Visa Debit Cards?
If TCM is your payment processor, you can automatically accept Visa Debit cards from anywhere in the world. This means if you have a credit card machine, online payments, virtual terminal, mobile payments, or other payment products through TCM, you can already accept Visa Debit.
TCM uses Interchange Plus pricing as the standard method for fees. This is the most transparent and fair pricing model for merchants. We work hard to minimize the fees merchants pay.
