E-transfers at record high amid pandemic
Canadian debit-payments firm Interac Corp. is experiencing a surge in digital and contactless transactions as consumers make purchases from home and try to keep their hands clean during the new coronavirus pandemic.
There were 51.9 million e-transfers sent through Interac in March, the first time the 50-million mark has been crossed in a month.
“We’re conducting ongoing analysis into the impact of COVID -19 on how Canadians are using the Interac e-transfer platform compared to regular state,” spokesperson Rebecca Deluca said in an email. “While some Interac e-transfer use cases will decrease during social distancing (splitting a dinner tab), we anticipate that others will rise or emerge, such as paying someone back for a grocery run.”
The number of Interac e-transfers has generally been rising, with about 485.7 million transactions made in 2019, or about 40.5 million per month. Just a little less than 50 million transfers were sent in January, which was previously the highest usage, Deluca said.
Increasing demand during the pandemic is also occurring for relatively new in-app and in-browser payments with Interac debit, something the company is working with merchants and financial institutions on expanding.
Such payments have grown by double digits over the past few months “due to demand for merchants that offer in-app food delivery services,” according to the company.
Interac said contactless spending hit a high in mid-march, when consumers rushed to stock up on supplies. With the need for physical distancing and constant handwashing during the pandemic, the company said it is in talks with its partners to help enable contactless, or “tap,” payments where they may not be currently accepted.
The company’s “Flash” contactless service limits transactions to $100, or $200 for consecutive transactions, above which consumers have to insert their chip and enter their PIN number.
Credit-card companies have moved to hike tap limits during the current crisis, but Interac is not doing so at this point, citing the number of players involved in processing transactions, making tweaks “a large undertaking.”
New “fraud threats” that have arisen during the current crisis is another concern.
“By not raising transaction limits, we are doing our part to protect Canadians and the ability to transact using their money during this unprecedented time,” Interac said.
It said it is also in talks with governments about how it could help them send support payments, such as Alberta’s recent use of e-transfers to send emergency one-time funding to residents who were self-isolating and couldn’t work.
Toronto-based Interac’s network moved $427 billion for Canadians via more than 6.7 billion transactions last year, the first full one since a February 2018 restructuring that combined Interac Association and Acxsys Corp. into the single Interac entity.
The combined company earns fees for helping move cash around, and is owned by Canadian banks, credit unions, payment processors and other shareholders.
However, the coronavirus outbreak is putting unique strains on the financial system, and payment networks are no exception.
Visa Inc.’s Canadian arm recently said that a technology delay prompted by the pandemic would prevent it from “systematically” implementing a planned 10-basis point cut in May to the average swipe fee for domestic consumer transactions.
Instead, it will rely on a patchwork system to pass on the discount until its “global technology release,” now scheduled for July, can be implemented.
Another challenge has been coping with the demands placed on the financial system by the federal government, which is rushing to get cash to people and companies sidelined by COVID-19.
Payments Canada, the provider of the national payments systems, said last month it was “actively monitoring and implementing precautionary steps” in response to the pandemic.