As with any transit project, the addition of Interac debit cards as a fare option in Toronto was a long journey.
Until recently, it wasn’t possible to use Canada’s Interac debit cards for tap-and-go transit rides, even though credit cards were supported on several rail and bus networks. Interac, Canada’s sole point-of-sale domestic debit card network, had to work with all of Canada’s financial institutions to upgrade their authorization systems for transit purchases.
The Interac project follows a series of developments across the U.S., Canada and other countries to allow open-loop payment cards — the ones consumers use for everyday purchases at the point of sale — at the turnstile instead of only supporting single-purpose transit cards. This transition is often a challenge because transit systems require people to move through the turnstile much faster than the time it takes to authorize a credit or debit card transaction.
In October, Toronto became the first Canadian city to allow contactless Interac debit cards to be used at fare gates when Metrolinx, the region's transit operator, launched a pilot program on the UP Express. Later on, Metrolinx will roll out contactless credit and debit card payments to more transit agencies across the Toronto region that are part of its Presto closed-loop transit card network.
Accepting Interac debit cards for open transit payments is important, as Canadians are heavy debit users. In 2020, debit cards accounted for 28% of total Canadian payment volume, compared with 30% for credit cards, according to Canadian Payment Methods and Trends Report 2021, from Payments Canada, the domestic clearing and settlement infrastructure operator.
Metrolinx’s project is also appealing to tourists bringing Visa, Mastercard and American Express cards from the U.S. and other countries. These visitors wouldn't have the monthly passes that commuters use, and are more likely to use their bank-issued cards for individual fares. Since it launched a pilot of credit card payments on UP Express in March, Metrolinx has handled 8,666 fare payments using contactless credit cards from 57 different countries.
Interac had to change its rules to allow delayed authorization for situations such as
“As transit schemes want to get riders through their fare gates in milliseconds, Interac issuers had to make technical changes so that cardholders are allowed through the fare gate prior to authorization taking place. This involved some heavy lifting, which took a while," said Andrew Yablonovsky, Interac’s associate vice president, portfolio strategy and growth. Every Interac debit card issuer had to be on board with the change, Yablonovsky said.
Interac's pre-authorization process allows transit agencies to place a hold when an Interac card is first tapped at a fare gate. “We’re now at the stage where 99.5% of Canada’s 30 million Interac cardholders have the capability to pay for their everyday mobility and transit needs with debit,” Yablonovsky said.
Now that this aspect of the project is largely completed, Interac plans to go live with more transit agencies in the near future. “We can now focus on rolling out this option, and we’re in contact with every major Canadian transit agency that has expressed interest in upgrading their fare collection systems,” Yablonovsky said.
Metrolinx’s deployment of Interac on the UP Express is a turning point, said Simon Laker, principal consultant and global head of mobility payments at Consult Hyperion, a U.K.-based advisory firm.
“Until now, none of the other existing Canadian open transit payment deployments have accepted the national debit card Interac,” he said. “The growth of open payments has been a little slow in Canada, but we’re starting to see it really pick up.”
Both Vancouver’s TransLink and Société de Transport de Laval, the transit agency for the Montreal suburb of Laval, plan to accept Interac debit payments.
Other Canadian cities that have announced plans to upgrade their transit systems to open-loop card payments include Ottawa, Edmonton and Montreal, as well as BC Transit, the transit agency for the province of British Columbia.
“We’re seeing a trend for more and more Canadian cities to start adopting open-loop contactless transit payments in various formats such as in-app payments, e-tickets, or tapping phones or watches at turnstiles,” said Sohil Tiwari, Mastercard’s senior vice president for market development in Canada.
Credit cards are already taking off as a fare-payment option. In May 2018, Vancouver’s TransLink became the first Canadian transit agency to commercially launch an open payment system enabling
“Being able to tap Interac debit cards at fare gates will be great for low-income consumers without credit cards who want to pay straight from their bank account,” said Matt Newsome, senior vice president and general manager for the Americas at Cubic Transportation Systems. Cubic supplied TransLink’s contactless credit card payment system.
An Interac survey conducted in February 2020 found that 69% of Canadian transit riders surveyed would be likely to use open-loop card payments. This was in line with a June 2021 survey by Visa of 9,000 adults in nine countries including the U.S., U.K., Canada and Australia who use public transit networks, which concluded that contactless open-loop payments were the future of commuting.
“Contactless credit card payments on TransLink were hovering at around
Société de Transport de Laval launched a pilot of contactless Visa and Mastercard
“Despite the pandemic, we’re seeing quite high usage of contactless credit cards, with transactions averaging between 11,000 and 21,000 transactions per month,” Lacroix said. “Open payments are used by occasional riders or by regulars as a quick fix when they experience a problem with their monthly pass.”
