FINANCIAL SERVICES REPORTER
The association that runs Canada's main payments network for automated banking machine transactions has signed a deal that will make it much easier for Chinese travellers to access cash here, a potential boon for businesses catering to them.
"Up until now, almost all Chinese bank cards could not be used to take cash from Canadian ABMs," said Mark O'Connell, chief executive officer of the Interac Association.
Interac has signed a deal with China Unionpay, the dominant Chinese bank card network whose members have issued nearly 2 billion cards, that will make it easier for the holders of those cards to take money out of bank machines here.
Chinese travellers made 54,000 trips to Canada between January and May, up 8 per cent from a year ago, according to the Canadian Tourism Commission.
That could balloon if China grants Canada "approved destination" status, something that many officials in the tourism industry are hoping will happen soon now that Ottawa is making more of an effort to smooth relations between the two countries.
Finance Minister Jim Flaherty travelled to China in August, bringing along a delegation of executives and officials from Canada's largest banks and insurers, which are courting Chinese business both there and in Canada.
In recent weeks Bank of Montreal announced that it has received preliminary approval to incorporate in China, Manulife Financial announced that it has received approval to operate in Tianjin, and Fairfax Financial Holdings Ltd. announced its first foray into China.
Interac's deal means that the companies that run bank machines in Canada will now be able to process China Unionpay cards, although they must make some changes to their systems first. Canadian Imperial Bank of Commerce and Open Solutions are expected to announce today that they will immediately begin accepting the cards.
They collectively represent about 12,000 bank machines.
On Friday CIBC launched a product it calls the Newcomer to Canada Plan, as it competes for lucrative immigrant business.
Mr. O'Connell, who travelled to Shanghai to seal the deal with China Unionpay, said he expects more machines will soon be accepting the cards. And Interac is hoping to negotiate another deal with China Unionpay that will allow Canadian Interac cardholders to take cash out of Chinese ABMs, and allow China Unionpay cardholders to pay with their cards at Canadian retailers, he said.
This deal comes as Interac prepares to go head-to-head with Visa Inc. and MasterCard Inc., which are both looking to become significant players in the country's debit card business. In most other countries where they operate, Visa and MasterCard have debit cards in addition to credit cards.