The Bureau of Competition Policy has turned town Interac's application to change its status from a not-for-profit to a for-profit business.

The debit payment processor Interac wanted to switch to a for-profit model in order to better compete with debit cards offered by Visa and MasterCard, which have revealed plans to enter Canada's USD 163-million-a-year debit market.

“Based on currently available information, including Interac's current dominant position in the market ... the Bureau does not agree that the removal of the restriction against for–profit activities by Interac would be pro-competitive, or is necessary to allow Interac to remain competitive,” the Bureau said in a statement.

The Bureau also said that certain changes regarding Interac`s governance structure would be acceptable ‘as they would maintain the necessary safeguards against anti-competitive activity", but the debit card processing network must remain a not-for-profit corporation.

In November 2009, Finance Minister Jim Flaherty released for public consultations a voluntary code of conduct for credit and debit card providers that focuses on promoting fair business practices between all players in the payments industry. Once adopted, the code would enable merchants to freely choose which payment options they will accept. Furthermore, they would gain increased pricing flexibility to encourage consumers to choose the lowest-cost payment option.

The Canadian Code of Conduct for the Canadian Credit and Debit Card Industry is being circulated for comment and the final version is expected to be released within the next weeks.