Article:
http://www.walletpop.ca/2010/11/13/visa-debit-finally-comes-to-canada-how-it-can-save-you-money/
Summary:
Visa has partnered up with CIBC to introduce the Visa Debit Card to Canada on October 18, 2010. The Visa Debit Card was first introduced in the United Kingdom 23 years ago and is used in about 160 countries already. With this card, consumers will no longer be subjected to monthly interest fees. You won't go into debt because you aren't borrowing money from the bank, like you would if you were using a credit card, and you can't spend more that what you have in your bank accounts. This is one of the main reasons so many consumers are switching to debit cards. Just like the other debit cards, it takes money right out of your bank account. But, unlike others, you can now use this card where ever you go, be it Germany or Korea. The transactions go through Visa's network to process the payment. However, this poses a problem for business. Now, they have to use 2 systems, Visa's network, and Interac's. Interac charges a flat fee while Visa charges a percentage of the transaction.
Connections:
The Visa debit card can save you money, not your business. With every transaction made with a credit or debit card, the company is charged. Interac, the company transfer transactions between companies, charges a flat fee for using their service. The new Visa debit card makes it more expensive for merchants as Visa charges a percentage of the transaction. It costs only about 50 cents to process a $150 transaction, but with the Visa debit card, it would cost $1.72. That's more than double. Businesses make more than 1 transaction so their expenses could rocket from, maybe, $50 to $100. This may cause businesses to raise prices. Is absorbing this expense even an option when it's so high?
Reflections:
This new card is widely accepted, in reality and online. We don't have to pay any credit bills. Unlike the usual CIBC debit cards, you can use this card internationally. It has benefits, but it has many down sides to it, too. If businesses choose not to absorb the expense and raise prices, we would have to pay more for everything. We already have the HST in place, we don't need more wallet emptying. At the same time, some businesses may choose not to accept this card at all. In that case, they may lose some customers. It wouldn't hurt the business too much because this card is still relatively new and not many Canadians have it, yet.
I really like reading your blog about visa debit cards. I think it's a smart idea how Visa also branches out to provide debit cards. That'll definitely help their company improve once it's recognized by everyone. Even though I think it's a good idea, I think certain people wouldn't want to use visa's debit card because of the company. They may assume that their debit cards might be similar to their credit cards. I don't think this debit card will affect new accounts in balance sheets, or income statements. I really liked your connections between the textbook and the article because they relate a lot.
ReplyDeleteThe Visa Debit Card seems to be a great idea for the consumers who travel, considering we cannot use our debit cards overseas--as you stated Korea and Germany. I know CIBC already has a debit card that could be used in the United States but not overseas. It might be a little more convenient for the people who travel overseas often but for the ones that do not, it might be worth a second thought. This card has everything a debit card has but costs more to use. I think this card is only useful if I travel often and do not want to bring cash. Great blog post, keep up the great work.
ReplyDelete-Anita D.