The CIBC Advantage card will work just like a traditional debit card, with a few interesting twists.

If you use the card at a traditional point-of-sale vendor, such as your local grocery store, the card will work just like any debit card.

However, you can also use this same card to make purchases online and over the phone, with traditional VISA "behaviours." You will enter the card number and an expiry date, while merchants can opt to use additional security layers such as the three-digit security code, address verification and Verified by VISA authentication.

A new way of thinking about VISA in Canada

While the VISA debit card is new to Canada, Mike Bradley, head of product development for VISA Canada, says that Canada's lack of debit functions is more the exception than the norm. VISA currently offers debit services in over 160 countries and is known more as a debit card company around the world than a credit card company, says Bradley.

Ultimately, if customers choose to use this form of payment, the desire to maintain or increase sales will motivate merchants to include debit VISA payment options. Bradley notes that the fees at point-of-sale debit machines will remain the same as they are now, and online interchange fees will be lower than a traditional credit card transaction.

Consumer adoption of the card will depend on how consumers balance security concerns with the convenience these new cards offer. Bradley notes that the zero liability policy is likely to put consumers at ease.

This means, however, that merchants will need to be more vigilant than ever in protecting their exposure when accepting this new form of online payment. Let's take a closer look at some of the technical and security considerations.

Technical considerations

First, to understand how the new VISA debit card will work, think of it as a card that allows you to make purchases by entering certain information (such as your name, card number, security code).

For merchants, if you already have an e-commerce-enabled website where you can accept VISA payments, there is nothing technical that you have to do immediately in order to accept payments from these new cards.

When a consumer visits your site they will simply enter their debit card information and the service you use to process the credit card transaction will take care of the rest. Bradley says that depending on which company you use for credit card processing, you may be asked to sign an updated merchant agreement related to the new cards.

Security Concerns

From a security standpoint, merchants will want to take a close look at how they accept online payments, as VISA's zero-liability policy means that merchants will be liable for any fraudulent transaction if they do not implement the recommended security layers.

This may see a great shift to implementation of Verified by Visa security screening, says Bradley, which will give merchants zero liability related to these transactions. Merchants will still be liable if the goods are not received by the end-buyer.

Claudiu Popa is a privacy and security expert and the author of The Canadian Privacy and Data Security Toolkit for Small and Medium Enterprises.

"Any entity involved in the processing, storage or transmission of payment card data must ensure that they comply with the Payment Card Industry Data Security Standard," says Popa.

"Our own Informatica Research sees approximately 75% of firms come up short on PCI compliance, including some of the ones that have already passed PCI-DSS audits conducted by authorized auditors."

Popa notes that on the consumer side, the security risks are not limited to the direct theft of funds.

"The important point that consumers should be hearing is that zero liability doesn't cover the identity theft-related efforts and losses of a non-financial nature," says Popa. "This is certainly an issue when making online or over-the-phone purchases, whether using Verified by Visa(tm) or not."

"As such, merchants should be aware of the added volume of transactions, a percentage of which is always fraudulent. This should be expected and they should take steps to use at least one layer of card validation, whether provided by transactional processors or not."

Dawn of a new form of payments

CIBC is the first bank to partner with VISA to offer a VISA debit card in Canada, but more banks are expected to follow.

Because of the number of players in a single online transaction, from the bank to the payment-processing company and the gateway firm, it is impossible to outline the fees merchants can expect to pay for these new cards.

Many decisions, such as whether the banks will introduce loyalty programs that have made traditional credit cards so popular, remain to be seen.

One thing, however, is certain. Canadian consumers and their appetite for more payment options are going to drive the adoption of this new form of payment in Canada.