This IDC Perspective identifies the initiatives that are underway today to enhance core payment processes in Canada.
The Canadian government has initiated a Payment System modernization initiative that after eight years of study is finally moving into the implementation phase. The intent is to enhance financial services competition, substantially reduce the cost of handling payments by Canadian businesses, and keep Canada in sync with enhancements of payment systems globally. Taxation authorities were also interested in the inclusion of data-rich payments that would help compliance with tax laws.
Key components include the acceleration of payment transactions, the access to payment systems by nonfinancial entities, and the use of ISO 20022 payment data standards to reduce payment handling overhead.
It is interesting that while the financial industry is embarking on a costly payments modernization journey, there appears to be no groundswell of consumer interest in features like faster payments and faster fund transfers. Delays in moving funds from account to account that involve days seem to be accepted as the norm. The payments modernization process has therefore been driven by the interest of governments in maintaining the competitiveness of the country and financial institutions in reducing their costs.
"The implementation of enhanced payment systems in Canada is a challenging initiative involving substantial costs, challenging implementation plans and many participants. The key to success will be the early agreement on the scope of the deliverables, highly skilled solution providers, and exceptional project management skills to keep control of the many participants that are involved," says Robert Smythe, research associate, IDC Financial Insights.