Interac Online and How It Works

In our last segment, we mentioned Interac Online as a means of paying for goods and services on your website.  And while this service was launched in 2005, it is still largely unknown to Canadians.  What is Interac Online and how will it help you grow your service?

Interac Online is a means that allows customers to pay for their purchased goods and services from your website with their Interac debit card.  How the transaction flows is as follows:  When a customer is ready to complete their transaction, from the payment option page, they would choose the Interac Online option.  They are then redirected to a secure Interac Online gateway where they can choose the financial institution they bank with.  Once the choice is made, the customer is sent to their own online banking login page.  They login as they would with online banking and they see their transaction there.  They confirm the amount of the transaction and they choose the bank account from which they would like the transaction debited from.  Once they click on proceed, the transaction is processed and debited from their bank account and deposited to your merchant bank account.  They are then redirected back to your website with the completed transaction details.

The benefits of Interac Online are abundant.  First of all, there are no chargebacks.  This means, a customer cannot dispute a transaction with a merchant once the transaction has been approved.  All properly authenticated transactions are considered as “good funds” and if the customer has a dispute, they deal with their own financial institution directly.  Interac Online also does not require PCI certification.  This means no additional PCI certification costs for a merchant if you choose to implement Interac Online.  Keep in mind, this does not mean that the rest of your site does not require PCI certification, only the Interac Online piece.  And lastly, it enables you to reach a demographic that historically could not shop online because they lacked a credit card.  These are individuals like students and young adults, who by the way, make up the majority of online shoppers.  Or individuals who were not comfortable with making online purchases on their credit card due to the fraud or the risk associated.  Interac Online is a safe means to purchase online, almost identical to making a card present Interac debit transaction.

So are there any negatives to implementing Interac Online?

Well, nothing is perfect.  The one major downfall to this product is the lack of ubiquitous acceptance by all the financial institutions.  CIBC does not participate and either does Desjardins or most of the smaller credit unions.  However, we’ve been told that if your customer goes to Interac gateway and finds that their financial institution is not there, they are simply transferred back to your payment page where they are prompted to choose another payment option.  And if this was not a hindrance to major merchants like Indigo Books or the Canadian Federal Government, perhaps it’s not that big of a deal?

At the end of the day, the more payment options you offer boils down to the large customer base you will reach.  That’s a proven fact.  And when setting up a merchant business, can you really afford to limit who can buy your products and services?

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Matthew Hunt has been helping small businesses get set-up with Canadian Merchant Account Services since 2007 and helped 1000's do so. Join Matthew on Google+.


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