Canadians able to use debit cards in U.S. by fall

An arrangement announced Thursday between Acxsys Corp. and an American electronic payment firm will allow Canadians to make debit purchases in the U.S. by the end of the summer.

Toronto-based Acxsys, whose shareholders include the five major banks operating in Canada, will use the Nyce Network,

which operates throughout the U.S., to facilitate the transactions. Canadian banks will need to opt into the service in order for their customers to take advantage of it. Acxsys spokesperson Sara Feldman said the company has approached its eight shareholders and will also offer the service to the more than 100 card-issuing institutions in Canada that make up the Interac network.

“”Once your bank enables the service, we send files to the various merchant processors telling them that those cards are now enabled,”” said Jim Judd, executive vice-president at Nyce Corp., based in Montvale, N.J. The transactions will be invisible to American merchants and no different from those they typically perform with customers holding U.S. bank accounts.

Once the vendor has swiped a customer’s card, the transaction will be routed to Nyce’s data centre in Secaucus, N.J. It will then be transferred to Acxsys, then to the appropriate card issuing institution in Canada. Once the transaction is approved, the process is reversed and the purchase is completed by the American retailer.

In order to make this process work, Acxsys is building a gateway, which is being developed by CGI Group Inc. based in Montreal. There will be a customer surcharge for the service which will be determined by the Canadian card-issuing institution.

The completed transaction will appear on the card-holders bank account statement much the same as a credit card purchase would appear — the location of purchase, the amount in U.S. dollars and the converted amount in Canadian dollars.

“”Over next couple of months we’re going to develop and build the requirements of the infrastructure to make the transactions happen,”” said Feldman. “”The goal is to have a September launch.””

At press time, the Royal Bank of Canada declined comment on the service and a spokesperson from the Canadian Bankers Association said it was too early to gauge what kind of customer interest it might attract.

Feldman said that Nyce has been pursuing Acxsys “”quite vigourously”” for several years in order to set up the arrangement. Nyce is one of several electronic payment processing companies operating in the U.S. and processes about 100 million transactions a month.

“”Really, it was their determination to create a situation to open the door for Canadians to use debit in the United States,”” said Feldman.

Judd couldn’t identify the size of the opportunity the deal represented, but said Canada was the natural choice when Nyce decided to expand its customer base beyond its borders. “”Certainly the greatest opportunity would be the agreement that we’ve reached with Acxsys, simply because of the geographic proximity and the heavy utilization of debit in Canada,”” he said.

According to Interac, the largest number of direct payments recorded in Canada on a single day was 11.9 million transactions on Dec. 23, 2002.

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