Payments Canada says it’s making it easier for merchants to offer debit as an alternative to cash thanks to new regulations.

The latest rule called the Exchange of Point-of-Service Delayed Authorization Debit Payment Items for the Purpose of Clearing and Settlement – also known as Rule E5 – announced by Payments Canada titled enables wider use of digital debit payments across the country and offers flexibility through delayed authorization. 

The rule removes the requirement for immediate online connectivity.

Payments Canada first proposed Rule E5 on May 24, 2019, and followed up to public consultation by June 23, 2019. The company announced its implementation on Jan. 30, 2020.

Business models that require quick authorization, such as public transit operators, are a key reason why Rule E5 has been developed, the company says. Beyond transit, it is designed to enable other possible use cases, such as payment at parking meters, payment for vending machine purchases and payment for onboard purchases on airlines and trains.

“We know Canadians want easy, fast, digital payment options and fewer and fewer are carrying cash,” says Andrew McCormack, chief information officer of Payments Canada in the press release. “Modernizing the rules framework for payments in Canada will enable merchants and service providers to deliver on these evolving consumer needs.

While globally Canada leads in debit card use, consumers in Canada have still not been able to pay for certain everyday purchases using their debit cards. This rule is perhaps also developed in response to the evolving needs of Canadians in regards to making payments.

Data from the annual Canadian Payments Methods and Trends Report released by Payments Canada reveals that debit card use continued to outpace cash in 2018. Debit cards were used for approximately 35 per cent more transactions as compared to cash in Canada. People have started to use their debit cards more frequently for their everyday lower value purchases and this trend will only continue with changes to the underlying rule framework, the report noted. 

“Rule E5 benefits consumers as it enables the ability to offer debit card use to pay for transit and other services where rapid payment is needed,” said Don Mercer, president of the Consumers Council of Canada. “Canadians stand to benefit from new secure ways to pay. However, as with all payment choices, consumers should become informed on the terms and conditions before choosing any method of payment.”

This rule will enable merchants to more easily offer the debit option as an alternative to cash for small purchases, and also benefit consumers by offering the flexibility through delayed authorization which does not require them to have immediate online connectivity. Since it will enable broader point-of-sale debit card acceptance, Canadian consumers will automatically have more payment options.

Interac welcomes the adoption of this new rule which will support acceptance of debit in a broader range of settings including transit fare payments,” said Kirkland Morris, vice-president, enterprise initiatives and external affairs, Interac in the press release. “Millions of Canadians already use Interac Debit to securely and conveniently pay everyday; by expanding the ability to pay with debit, Interac is focused on ensuring Canadians can pay how they want, where they want and with their own money.”


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