Payments Canada, along with other stakeholders in Canada’s payments industry have published an open letter to call on the Minister of Finance to expand the not-for-profits membership eligibility.
On Monday, 14 signatories signed a joint letter requesting to expand Payments Canada’s membership to include payment service providers registered under the Retail Payments Activities Act (RPAA), such as local credit unions and “operators of financial market infrastructures.”
“The only loud and outspoken opponents of this are a few of the biggest banks in the country, who actually position payment system frictions as selling points in video ads to customers.”
Payments Canada, which operates the payment clearing and settlement system in Canada, has a membership that includes the Bank of Canada, domestic banks, and other authorized financial institutions.
The letter requests changes to the Canadian Payments Act as part of Budget 2023 to broaden access to Payments Canada’s systems for qualifying entities. According to the signatories of the letter, this would allow for payment service providers and credit union locals to “better serve their clients” with enhanced electronic payments services. Subsequently, the letter argues it would help non-financial institutions to drive competition.
“Healthy competition in payments is the catalyst for innovation and will support Canada’s competitiveness globally, leading to improved payment products and services for Canadians and Canadian businesses,” the letter reads.
The signatories include ATB Financial, the Canadian Bankers Association, the Canadian Credit Union Association, the Canadian Federation of Independent Business, Central 1 Credit Union, CLS Bank International, the Consumers Council of Canada, Electronic Transactions Association, Fintech Cadence, Fintechs Canada, Koho, Payments Canada, Prosper Canada, and Telpay.
Once the Canadian Payment Act is amended, any entity who is registered with the Bank of Canada under the RPAA could be eligible for membership with Payments Canada. These entities could include FinTech startups, payment service providers, or paytech firms.
The only current FinTech startup that is a participating member of Payments Canada is Wealthsimple. In July, Payments Canada appointed Wealthsimple’s chief compliance office of payments, Hanna Zaidi, to its member advisory council.
Alex Vronces, executive director of Fintechs Canada, whose members would become eligible for Payments Canada membership if the Canadian Payments Act is amended, highlighted that the letter is “proof” that Canada’s payments ecosystem, including consumer and merchants groups, want such a change.
“That everyone wants this to happen should make it easy,” he said. “The only loud and outspoken opponents of this are a few of the biggest banks in the country, who actually position payment system frictions as selling points in video ads to customers.”
Amending the Canadian Payments Act is also a good way to manage emerging risks in Canada’s system, according to Vronces. Payments Canada provides tools for managing the risks of moving money in Canada, and is working on developing the forthcoming Real-Time Rail payment system.
“Keeping non-banks outside the formal system means keeping them outside the scope of these rules,” said Vronces.
Featured image courtesy Payments Canada.