Why is Payments Canada modernizing its payments system?

The payments ecosystem in Canada (and around the world) is rapidly changing: Consumers and businesses want faster payments and access to funds, enhanced security and privacy. Businesses want richer payment data and operating environments that promote efficiencies like end-to-end straight-through processing. Also, the Department of Finance and the Bank of Canada – who both have oversight responsibilities for Payments Canada – have expressed strong support for payment system modernization for both risk reduction and promotion of the public policy objectives. Payments Canada’s payments infrastructure, rules and standards need to be updated to better enable payments providers to innovate and products and services to better meet end user needs. For more information on why Payments Canada is modernizing the Payments system, view the Companion Reader to the Vision or the Canadian Payment Ecosystem.

Has Payments Canada consulted with key stakeholders on Modernization?

In 2015, with the support of McKinsey and Company, Payments Canada developed a Vision for the Canadian payments ecosystem which included soliciting input from more than 100 organizations (i.e. system participants, service providers, fintechs, consumers, businesses and governments). Payments Canada held numerous workshops, interviews and collaborative sessions with key stakeholders across the country, gathering valuable qualitative insights to shape the Vision.

Payments Canada will continue its ongoing engagement on Modernization with stakeholders through all phases of the initiative. You can also email us your comments at info@payments.ca.

Additionally, Payments Canada consults on Modernization with the Stakeholder Advisory Council (SAC) and Member Advisory Council (MAC) on an ongoing basis. MAC serves as a consultative and engagement forum for Payments Canada membership and is representative of the diversity of our membership, while SAC represents the views of our broad base of stakeholders, including consumer associations, businesses, retailers, governments and service providers. Each 20-person council, codified in the Canadian Payments Act, provides important counsel and advice to Payments Canada's Board of Directors on a continuous basis.

Is Payments Canada working with other organizations to deliver solutions?

Payments Canada works closely with other infrastructure providers (i.e. the Bank of Canada, card networks, and scheme operators) and payment service providers and we will continue to have an ongoing dialogue with them to support progress in Canadian payments.

Is Payments Canada looking into new technologies (e.g. blockchain) as part of its Modernization effort?

Payments Canada is exploring and keeping informed on the progress being made with new technologies, including blockchain and distributed ledger systems, which have become hot topics in the industry. While no decisions have been made about the use of specific technologies to support our Modernization initiative, we remain very interested and engaged in discussions about this technology, but we understand there are many questions left to be answered about its applicability.

Which other countries are modernizing their payments systems and where does Canada fit into that?

By the end of 2015, 17 countries representing 45 per cent of global payment flows had gone live with modernized retail payment infrastructure. Many other countries – including Canada - are in the “second wave” of modernization and are actively pursuing modernization. This list is continually growing.

Almost all of the countries who have modernized their payment systems have focused on faster payments. Faster is becoming synonymous with near real time and also means “always available” with most countries supporting end-user funds availability 24/7/365. It is important to note that near-real time payment clearing does not require near real-time settlement. Most jurisdictions have continued to use enhanced deferred net settlement. For more information on this topic, check out the PDF icon Companion Reader to the Vision for the Canadian Payments Ecosystem. 

How much will Modernization cost and who will pay for it?

We have yet to identify a solution which means the cost of Modernization is still unknown. The overall costs, when they will be incurred, and how they will be funded will become clearer as we progress in our initiative. We do know that the needs and expectations of all participants will be a key consideration as we begin to consider funding options. We are committed to communicating with all stakeholders on this front as new information becomes available.

What type of new services will my financial institution be offering me as a customer and will these services cost more to me?

Payments Canada is looking at what enhancements we should make to our core infrastructure such as systems, rules and standards, and how those changes could enable downstream competition and innovation. Payments Canada does not dictate to financial institutions what products or services to provide to their clients or what those services will cost their clients. Speak to a representative of your financial institution for more information on the services they provide.

What is the timeline for implementing Modernization?

Our Modernization program is a multi-year, multi-phase initiative. In 2016, we will be working with member financial institutions and stakeholders to analyze our options and plan. That includes defining business requirements, examining the role of Payments Canada and what enhancements we should make to our core infrastructure (systems, rules and standards) and what enhancements or changes the industry could make to enable downstream competition and innovation. A key deliverable for this phase of work will be to define a prioritized roadmap of the changes that will be implemented by Payments Canada over the next three to five years. For more information on our plans, check out the Companion Reader to the Vision for the Canadian Payments Ecosystem. 

How do I give feedback on Modernization?

Payments Canada continues our ongoing engagement on Modernization with stakeholders through all phases of the initiative. You can email us your comments or questions at info@payments.ca

How can I keep up to date with Modernization developments?

You can receive email notifications when we release relevant research or make an announcement regarding the Modernization initiative by signing up to our mailing list.