According to the final recommendations of the Task Force for the Payment Systems Review which was released by Canada’s Minister of Finance Jim Flaherty last Friday, a big step up from the government and from major Canadian financial institutions is needed to encourage a faster shift toward digital payment technology.
An 18-month long examination by the Task Force analyzed the opportunities and difficulties Canada faces in moving toward more digital payment systems and away from paper-based payment systems. Now, the Canadian economy could receive an annual $32 billion to give Canada the push it needs in the shift toward digital payment technology.
Canada has some of the most active online shoppers, online bankers and web users in the world, but the country has fallen behind in the international movement toward reducing traditional paper-based transactions and expanding a secure mobile ecosystem.
27 countries in the European Union as well as Brazil, Russia, India, China and Peru have done well to make the advancements toward digital payment technology, but Canada’s progress is nowhere near where it should be. The federal review pointed out that Canadians still heavily rely on making their payments traditional paper-based transaction methods like cash and cheques.
Ian Shelley, Partner and Advisory at KPMG as well as a Member of the Advisory Committee at the Canadian Payments Association commented on the review:
The report highlights one of Canada’s biggest challenges in implementing a new payments system—our dated infrastructure.
It comes down to who ‘foots the bill’ for the cost of changing the way Canadians pay—is it the banks, the credit card companies, the government or someone else?
KPMG gave its perspective and identified a number of other key obstacles in the report recommendations, including the need to remove old payments methods as new payment methods are introduced, the need for more infrastructure and collaboration to encourage payment system innovation, and the need to tackle the overall low adoption rate of digital payment systems today in Canada.
If implemented smoothly, the Retail Council of Canada said that the recommendations would completely reshape the way Canadians make payments.
The economic benefits triggered by a stronger adoption of digital payment technology in Canada should include a positive impact on Canada’s global competitiveness and the potential to save as much as 2% of GDP productivity each year, not to mention all the costs that would be saved from switching to e-invoicing and away from paper-based invoicing.
Plain and simply put, it’s time for Canada to go digital.
See Moving Canada into the Digital Age for more on the TFPSR’s final recommendations.