Canada's credit unions provide their members with access to a broad range of consumer card services, including both debit cards and credit cards.
While credit unions offer one of Canada's largest networks of proprietary ATMs, they are not significant providers of services to merchants for acquiring debit or credit transactions.
Visa products are offered by some credit unions and MasterCard by others, and approximately 600,000 credit union members have obtained a credit card through their association with a credit union.
Credit unions use a variety of different business models to provide credit card services to members, and each credit union makes its own decision regarding which card products and services they will offer, how they will deliver them, and which suppliers they will use, based on what best fits their business situation and the needs of their members.
For example, one credit union issues credit cards directly to their members and maintains control of the service relationship with the member, the terms and conditions of the card service, the design of the card, the marketing, pricing, fees, and interest rates, and the ownership of the card balances. Only the back office processing is outsourced to a third party.
Most credit unions, however, have completely outsourced their credit card services to a third-party financial institution. In this situation, it is the third party that issues the card, manages the customer relationship, sets the terms and conditions of the card service, and controls card design, marketing, pricing fees, interest rates, and owns the card balances.
In regard to debit card services, Canadian credit unions have issued approximately 3.5 million proprietary debit cards and are members of several ATM and debit payment networks. Credit unions affiliated with Canadian Central have access to Acculink, the national credit union system's proprietary network of over 1,700 surcharge-free ATMs across Canada.
Credit unions in British Columbia and the Atlantic provinces, and many in Ontario, are also members of The Exchange, a national network that includes credit unions and other financial institutions and provides surcharge-free access to more than 2,000 ATMs across Canada.
Credit unions have access to Interac membership and services through the group memberships provided by Canadian Central or Central 1, or through a direct membership with Interac. Credit unions also have access to international ATM and debit services networks through MasterCard Cirrus, Maestro, and Visa Plus.
It is important to note that each credit union individually determines which of these debit services they will provide to their members and at what pricing, and puts in place the service delivery models and appropriate supplier relationships that best fit the needs of the credit union and its members. This individuality is both a reflection and a reminder that credit unions are locally based organizations, delivering services that match the unique and diverse needs of the communities they serve.
To continue meeting these needs, Canada's credit unions need access to the broadest possible range of products, suppliers, and delivery models for debit and credit card services. This kind of flexibility is consistent with an open market environment that provides competitive choice for credit unions and their members. It also includes support for ensuring that a strong, domestically focused payments delivery channel, as provided by Interac, is preserved.
This should include allowing Interac to restructure its governance model to gain access to the capital and revenue generation tools needed to support development and implementation of new products and services, and a review of the regulatory and compliance environment to ensure that it provides a level playing field for all payments services.
As locally based organizations, credit unions respond to the unique needs of the communities they serve. Nationally, the tremendous success of Interac shows that it is similarly well positioned to respond to the unique needs of Canadians.
And as the card services market is transformed by the introduction of chip and other new technologies, the capability of Interac to develop and deliver new services focused on the needs of Canadians and the characteristics of the Canadian market will be of critical strategic value to Canada's credit unions in preserving their ability to remain competitive and continue meeting the needs of credit union members.
We wish to thank you once more for the opportunity to address you today. Ms. Goulard and I would be pleased to answer your questions.