MONTVALE, N.J., Jan. 20, 2005 â A new program that allows Canadian shoppers in the United States to use their Canadian PIN-debit cards on a widespread basis proved lucrative for U.S. retailers during the holiday shopping season.
NYCE Corporation, a leading U.S. debit-card payments network, reported that Canadiansâ PIN-debit transactions have averaged $60 since the program began last October. Thatâs when NYCE formed an alliance with Acxsys Corporation and five major Canadian financial institutions to enable Canadian consumers to use their debit cards in the United States. By comparison, Americansâ PIN-debit transactions average $38.
"While the program is in its infancy, the initial results point to a very positive impact for American retailers," said Steve Rathgaber, NYCE president and chief operating officer. "When a Canadian consumer uses a debit card instead of cash or credit cards, U.S. retailers reap the benefits."
Rathgaber explains the two reasons for this. First, the average $60 Canadian debit transactions in the United States likely are higher than cash purchases, and, second, PIN-debit transactions process at a lower cost than credit cards, saving retailers money. Cash back, where offered, is another automatic benefit of PIN debit.
Canadian shoppers completed more than 100,000 transactions totaling nearly $6 million at participating U.S. retailers since the Canadian Thanksgiving holiday last Oct. 11. Retailers in Florida, New York and California got the biggest boost from Canadian spenders, taking in more than $1.5 million dollars in December alone. All 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam recorded Canadian debit transactions.
"The numbers, to date, are based on a limited timeframe and sample, but keep in mind how new this program really is and what is possible once financial institutions begin marketing this service," said Rathgaber. "We continue to see steady growth as more retailers find out about the program. Between tourism, the holiday season and the annual migration of Canadian-based âsnow-birds,â Canadian consumers are spending quite a bit of money in the states, and savvy retailers appreciate a piece of the pie."
In addition to Florida, New York and California, the states of Washington, Michigan, Arizona, Nevada, Hawaii, Maine and Texas rounded out the top 10 states for December 2004 Canadian-debit transactions. Half of these debit transactions occurred in supermarkets; department stores, gas stations and specialty stores also accounted for a significant percentage of transaction totals and total dollars spent.
For years, most Canadian consumers were unable to use their Canadian debit cards to pay for purchases in the United States. That changed on Oct. 8 when the first PIN-debit transaction by a Canadian consumer occurred at a Dean & DeLucaâs restaurant in Charlotte, N.C.
"Canadians have one of the highest rates of PIN-debit use in the world on a per-capita basis, so we expect the service to continue to build as more cardholders become familiar with the capabilities and as more Canadian financial institutions begin to market and offer the cross-border debit service," explained Rathgaber.