How Visa Debit Cards Work in the US vs. Canada

Visa Debit cards are the most popular form of payment worldwide. It’s accepted in most countries and is the safest, fastest, and most reliable way to conduct transactions, both online and at retail stores. To avoid accumulating interest and unnecessary fees on late payments, people prefer debit cards. These cards work differently in different nations, although they look similar. In this post, we’ll walk you through a detailed guide on how Visa debit cards differ in the US and Canada. Let’s learn how these cards work in the US and Canada.

What are Visa Debit Cards?

Launched in 2010 in America, the Visa Debit card is used for withdrawing cash or making purchases online and in brick-and-mortar stores. These cards are linked to your bank accounts. Every time you make a purchase through a Visa debit card, the amount is deducted from your bank account immediately. This means that these cards can be used for payments and cash withdrawals only if you have sufficient funds in your bank.

It’s easier to obtain a debit card than their credit counterparts. These cards carry a lower risk of fraud, as there’s no risk of the cardholder not paying the balance. However, you don’t get the perks of credit cards, such as cashback offers, rewards, and discounts, with debit cards. Whether you want to book flight tickets, buy your Netflix subscription, or pay for your gym membership, a Visa debit card comes in handy.

And since it doesn’t require a good credit score or any purchasing limit, you get the flexibility to use them however you like. The biggest difference between a credit and debit card is that you don’t borrow money from the bank up to your credit limit. You can spend as much as you like, as long as you have a sufficient balance in your account.

How Do Visa Debit Cards Work?

Visa cards are acceptable in more retail stores across 200 countries, giving you the flexibility to buy goods in any part of the world using your Visa debit cards. As mentioned earlier, Visa debit works by pulling money from your savings and checking account. Unlike credit cards, you don’t borrow money from your issuing bank and pay them later. The amount is deducted right away from your account as you complete the transaction.

The issuer of these cards, i.e. your banks, will set terms and conditions you must meet to be eligible for getting your Visa Debit card. Physically, the card looks like a credit card with a 16-digit unique number printed on the front of the card, a CVV code, and an expiry date, all of which are needed to verify the cardholder’s identity and complete the payment. These cards are equipped with an EMV chip that ensures secure transactions at retail stores.

How Are They Different From Visa Credit Cards?

Credit and debit cards help customers buy stuff without cash. They just need to swipe these cards across the POS system or give card details to the retailer to process a transaction. However, for a merchant, it’s important to know how these cards work. Credit card involves authorization and settlement, which may take a few days for the money to be transferred to the merchant’s account.

Since the cardholder is using the borrowed money, it goes through the two-step validation before it’s credited to the merchant’s account. The first step is authorization, in which the merchant sends the card details to the acquiring bank. The bank sends this information to the Visa network, which passes it to the issuing bank to verify the cardholder and ensure they have sufficient balance in their accounts. The issuing bank checks whether the cardholder has any history of fraud or any security-related concern before approving the transaction. Once they have verified the transaction request, they will either approve or reject it.

The settlement can take a few business days. Once the transaction is completed on the customer’s end, the merchant sends a batch of the credit card transactions to the Visa network for settlement. This batch is submitted to the card network through the merchant’s acquiring bank. The Visa network verifies the batch and transfers the requested amount minus the interchange fee to the merchant’s acquiring bank. The acquiring bank or the payment processor transfers these funds to the merchant. The cardholder gets the credit card bill, which is cleared at specific intervals.

The process is much faster and simpler in debit card transactions. As you are withdrawing funds from your account, the authorization and settlement are instant. The transaction still goes through each step to ensure you have enough bank balance to pay for the goods, but it takes a few seconds for the entire process to be completed. The merchant gets the money immediately into their accounts.

Now that you know the difference between Visa Debit and Credit cards, let’s move on to how Visa debit cards work in the US and Canada.

How do Visa Debit Cards work in the US?

Visa Debit in the US works quite differently than in other countries. The same physical card that you can use to make debit purchases can also be used for credit transactions. That means one Visa card works as both a debit and credit card and you can use it interchangeably for all purchases.

At the time of the purchase, you are supposed to mention how you’d like to use the Visa card, i.e. whether you want the payment to be deducted straight away from your bank account or you are borrowing money from your bank and using it as a credit card. There you go! The merchant will handle the rest based on your choice of payment. The payment settlement takes place like usual, i.e. authorization and settlement.

This unique feature of the Visa debit card in the US makes it an acceptable and commonly used form of payment in different parts of the states. It’s also one of the most preferred choices for travelers shopping online and at retail stores. The card network in the US offers around 25 different cards. They have partnered with different banks, including Navy Federal, TD Banks, and so on. You also get to earn rewards for each purchase, plus you get purchase protection for all transactions. The best part is that some of these Visa cards have no monthly fee nor charge a surcharge on ATM withdrawals. Certain cards are compatible with contactless payments, as well.

Put it in simple terms, flexibility is the best perk of Visa debit cards in the US. Having one card that can be used for credit and debit purchases makes it easier to manage your Visa card and process multiple payments through your preferred payment method.

Visa Debit Cards in Canada

The credit and debit card industry in Canada doesn’t allow the same card for credit and debit purchases, so each individual who wants to use both payment methods for different purchases should get a Visa debit card that goes through different card networks for credit and debit transactions. The process of obtaining a credit and debit card varies significantly and, as mentioned before, the settlement period can also vary.

In Canada, debit transactions are processed by two payment networks, Visa and Interac. The latter works in Canada and only at banks that have partnered with Interac. Note that it’s not a part of Visa. It’s a separate payment-facilitating company that processes debit transactions in Canada.

If a customer swipes the card across the POS system and uses chip and PIN technology to enter their card details into the payment system, the transaction will be processed by Interac. The card will function as a Visa debit card if you use the 16-digit number on the front of the card, CVV, expiry date, and other details to make a purchase online or through the phone. Simply put, the card serves as a hybrid card. The payments can be processed by either card network, depending on how you are using it. No matter which card network processes your payment, the processing criterion is the same. The amount is deducted from the cardholder’s bank account for each transaction immediately.

If you don’t have sufficient funds in your bank, your request is denied and the transaction will be failed. You cannot borrow money from your issuing bank. Visa debit cards in Canada are available in five types and each comes with a unique reward mechanism, fees, and restrictions. You can choose from Visa Classic, Platinum, Gold, Infinite, and Signature. Depending on the debit card you choose, you can get extra benefits on the card, such as auto rental insurance and a warranty.

Key Differences Between Visa Debit Cards in the US and Canada

Let’s check out the key differences between Visa debit cards in the US and Canada.

Acceptance: Visa debit cards are accepted at nearly every store, online and brick-and-mortar, in the US. It’s widely used and accepted in the states. However, not every Canadian bank issues Visa debit cards. Likewise, these are acceptable only at specific stores.

Credit and Debit Purchases: Your payment goes through different networks for debit and credit transactions in Canada, while one network, i.e. Visa, serves both purchases in the US. As mentioned above, you can use a Visa card for debit and credit transactions. You only need to mention how you’d like to use it.

PIN and Signature: For card verification, the retailer will ask you to enter the PIN into the POS system or use your signature. Although signatures are a less common way to verify the cardholder’s authenticity, they are still accepted in many stores in the US. That’s however not the case in Canada. You are supposed to use the PIN to be able to verify your card and complete the payment.

Interac Vs. Visa: In Canada, there are two card networks that facilitate Visa debit card payments. Although the payment authorization and processing procedures are similar (regardless of the payment facilitator), the card networks that process the payments can vary. In Canada, the banks can issue debit cards that are linked to the Interac Network. It’s the domestic network of the country and works all across Canada. The network doesn’t work internationally though. In the US, all Visa cards are linked to Visa and work nationally and internationally.

Fees, Rewards, and Restrictions: Fees and rewards on Visa debit cards vary depending on your issuing bank and the card type. It also varies greatly in the US and Canada. The fees tend to be a bit higher for debit cards in Canada than those in the US. Then again, the rewards and fees are determined based on the issuing bank and their card policies. So, they are never the same.

Accepting Visa Debit Cards: What is the Processing Fee?

For those processing a transaction online or through phone, Visa debit cards serve as credit cards, and a processing fee is applied depending on the card type and the size of the transaction. On the other hand, if you are using this card for an in-person transaction, it will work as a debit purchase and the transaction will be processed through Interac Network.

Why Should Your Business Incorporate Visa Debit Card?

• Offers Customers a Choice of Payment: Since Visa Debit card serves as a credit and debit card, it gives customers a great opportunity to buy their preferred item using their choice of payment method. For instance, they can pay instantly for groceries using their Visa debit card as a debit transaction and reserve their credit use for luxury shopping. Customers get the flexibility to pay through a method that seems most convenient.
• Easy for Travelers: Visa is a popular card network and is acceptable in more than 200 countries making it one of the most popular choices for travelers worldwide. Accepting Visa cards allows tourists to buy from your store without having to pay through cash. It’s pretty convenient for travelers who do not carry cash around. They can swipe their Visa debit card across your POS system and transfer the funds instantly into your account.
• Not Everyone Has Credit Cards: Those under 18 or people who do not qualify for Visa debit cards will face difficulty buying their desired goods and services, as cash is their only option to pay. Retailers who accept Visa debit cards provide their customers with a choice to pay through a mode that they can access and prefer.

Bottom Line

That was all about the differences between Visa debit cards in Canada and the US. Note that all kinds of debit cards work in the same way. The authorization, cardholders’ verification, and settlement are a must for all cards, including debit cards, but the fees and rewards associated with these cards can vary in different countries. As mentioned in the article, the most notable difference between the two is that the same Visa debit card can be used for credit and debit purchases in America.

A customer needs to specify whether they’d like to pay using their bank balance or borrow money from the issuing bank and pay later. Based on their requirements, the card can be used for debit and credit transactions. In Canada, you need separate cards for credit and debit purchases. Moreover, there are two card networks, domestic and international, for Visa debit cards. Depending on the type of transaction, the payment can be processed either by Interac or Visa.

FAQs

Can you use a US Visa debit card in Canada?

Yes, US Visa debit cards are internationally used and they work in Canada.

Do Canadian debit and credit cards work in the US?

Canada has two payment networks for processing credit and debit purchases. While the Visa network is used for credit transactions and works globally, its debit cards are processed through Interac, which is a domestic card network. It doesn’t work in the US or any country for that matter.

How do I use a Visa debit card in Canada?

There’s no way you can use Visa debit cards issued by a Canadian bank and linked to the Interac network internationally. You can, however, use the card for online shopping and pay through your phone by sharing the 16-digit code and other card details internationally. Paying through the phone or website turns your Visa Debit into a credit card, which is then processed by the Visa network. It works globally.

Do all Visa debit cards work internationally?

No, Visa debit cards that run through the Interac network do not work internationally. You can use them for domestic shopping, but that’s it.

Should I bring cash to Canada? Can a US debit card be used in Canada?

Yes, you can bring cash to Canada, but if you want a convenient payment option, you can use your US debit card to make credit or debit purchases in Canada. These cards are acceptable all over the world, including Canada.