Given its genesis as a cooperative venture between Canada’s big five banks, you could forgive Canadians for thinking of Interac Corp. as a homegrown secret rarely known outside its borders – but as a newly minted deal illustrates, that’s far from the case.
In fact, Interac head of international business development James Good tells ITBusiness.ca that a deal inked in April with Toronto-based payment firm the Mint Corp. to bring Interac’s financial services platform to the United Arab Emirates (U.A.E.) was not the first such agreement of its kind.
“The question isn’t so much ‘What is it that we’re doing outside of our domestic borders?’ as ‘What is it that we’re not doing?'” he says, and though Good acknowledges that Interac’s pursuit of such relationships, and its ability to deliver on them, doesn’t stretch all the way back to its 1984 creation, it’s hard to argue with his assessment of the company’s present.
“Interac is among the most successful domestic networks in the world in terms of acceptance and, ultimately, usage,” he says. “And the state of our advanced technologies is strong: we own, for example, a successful card and terminal specification for contact-based and contactless transactions, and a number of mobile solutions including Host Card Emulation [HCE – that is, mobile payments]. And we have strong mobile wallet partners within our market: Apple Pay, Samsung Pay, Google Pay.
“If you charted our product innovation over the 35 years or so that we’ve been a domestic operator serving Canadian customers, you would see what Canadians like to refer to as the ‘hockey stick curve,’ with an enormous amount of our innovation occurring in the last decade or less,” adds Good, who has been with Interac since 2009.
“So as we looked around the world we realized there’s an opportunity to support the success of other domestic debit networks by licensing some of the solutions we’ve developed for the Canadian market for use in their markets.”
That digital payments expertise was a key reason Mint decided to partner with Interac, CEO Vishy Karamadam tells ITBusiness.ca.
While Mint, which has offices in both Toronto and the U.A.E.’s financial capital, Dubai, was already offering what Karamadam calls a “fully integrated” payment platform in the region, with a customer base of corporate employees numbering in the thousands, it needed a partner to reach what Karamadam calls the U.A.E.’s “underbanked” customer base, such as migrant workers.
“Interac is a unique debit network technology which has kept up with the payment industry’s rapid change in technology,” Karamadam says, with the company’s magnetic stripe, chip, and mobile payment technologies developing with the times while remaining world class.
To reach the U.A.E.’s under- and unbanked residents – and eventually, other migrant workers across the Middle East, which according to the Gulf Cooperation Council number more than 17 million – Karamadam aimed to create a mobile payment infrastructure, and chose Interac as its platform.
“The U.A.E. does not have a domestic debit network, which we believe is a strategic initiative every country should have,” Karamadam explains. “So we’re using Interac’s knowledge and experience to create one, so that no matter where you go there is a lower-cost payment alternative for every merchant… and customer.”
Once Mint’s Interac-powered U.A.E. domestic payment platform is in place, he says, the company will set about expanding it through deals and acquisitions with other brands and payment networks in the region.
A history of domestic payment transformation
As mentioned, this isn’t the first time Interac has served as the backbone of an initiative like Mint’s, with Interac’s Good illustrating Mint’s plans with a 2016 agreement Interac made with BankAxept, the domestic payments provider of a country with a reputation for generally being ahead of the technological curve: Norway.
“Eight out of 10 card transactions that occur at the point-of-sale in Norway occur over the BankAxept network,” Good explains. “Understand – it’s all BankAxept branded. We have no operations there. They just made a licensing deal to use our technology.”
It’s a deal which has proved fruitful for both businesses, however, with BankAxept expanding its Norwegian infrastructure by licensing Interac’s mobile payment software development kit, and using the platform for mobile transactions.
Asked why he believes Interac is so well regarded worldwide, Good says he thinks it’s because the company’s licensing deals allow partners to use the company’s internal specifications for both contact-based and contactless payments across their own networks, as Mint is doing.
And while that arrangement may sound intuitive, it isn’t.
“Generally the international schemes will not let you use their card and terminal specifications, especially when it comes to advanced technologies, to conduct transactions over a network that’s not theirs,” Good explains. “I don’t want to speak on behalf of those organizations, but effectively we have no routing requirements when we give you a territorial license to use our platform. You can use it over any network you want. So that’s our angle, which is that it’s unencumbered by any kind of transaction flow requirements other technologies might have.”
The company also provides post-implementation support, he notes, showing partners how to use the Interac platform for card-based and mobile payments and convert them into products with the partner’s branding, before segueing into the role of strategic consultant as needed.
It is, he acknowledges, a different process than simply bringing the Interac brand to other countries – one reason Canadians might not be aware of Interac’s international reputation is it doesn’t operate as Interac outside of Canada.
“What we’re not doing is building the Interac network out,” Good says. “We’re simply providing technologies to other domestic networks that enable them to be successful in their market. [The Mint agreement] isn’t about you travelling from Toronto to Dubai to use your Interac card. It’s about what we think is a good operator based in the U.A.E. building out their version of Interac for the good of their domestic economy.”