New video released by Task Force for the Payments System Review encourages conversation about the future of payments systems in Canada.
In July, Viewpoint Learning released a discussion document in association with the Task Force for the Payments System Review to stimulate debate about the future of the Canadian payments system. The result of a stakeholder-led collaborative effort, Scenarios For the Future Of the Canadian Payments System depicts four possible scenarios for the future of payments systems in Canada.
Oscar van der Meer, Chief Technology and Payments Officer at Central 1, believes that the level of mutual collaboration amongst the key stakeholders in the Canadian payments sector will determine which scenario eventuates. "In 2011 we are at the cusp of a complete transformation to a digital economy. The payments sector needs to support, and can even help accelerate that transformation", says van der Meer.
The four future scenarios outlined in the discussion document detail an upward scale of investment, ownership and collaboration amongst the payments sectors corporate and public actors. Here are some of the highlights from each scenario:
Ground Hog Day – Fragmented ecosystem and moderate consumer adoption
"Canada's payments system moves forward as it has in the past. Not much changes in the infrastructure of the payments system. The ecosystem is not strongly aligned: government, financial institutions (FIs), businesses and telcos are all charting their own courses and protecting their own interests, with few or no universal standards."
"Meanwhile much of the rest of the world moves ahead, adopting new technologies and creating a more robust regulatory framework."
Tech-Tonic Shift – Fragmented ecosystem and rapid consumer adoption
"Technology companies such as Google, Apple and social networking sites develop alternative payments platforms and become major players. Government is slow to regulate and competition is fierce."
"New entrants take advantage of cloud computing and collaborative networks to create low-cost scalable businesses. The proliferation of new financial services and applications to address specific needs is phenomenal."
Canada Geese – Aligned ecosystem and moderate consumer adoption
"All parties — federal and provincial governments, FIs, telcos, networks, merchants, and other players — operate on a level playing field. Over the course of the decade, this high level of collaboration reduces friction in the system."
"Limited push towards new technology, and the cost of meeting standards and regulatory requirements slows innovation. Instead, the payments system prioritizes gradual, thoughtful, evidence-based reform that embraces the best of technologies being road-tested in other systems."
Own the Podium – Aligned ecosystem and rapid consumer adoption
"There is growing awareness of the magnitude and speed of changes being fuelled by the convergence of computing and connectivity into the smart phone, disrupting existing business models and ways of working while creating huge new opportunities."
"Responding to this challenge, industry comes together to facilitate the rapid development of a set of standards in key areas of payment, especially privacy, security, digital ID and authentication, and mobile payments that will encourage competition and innovation and enable Canada to lead developments elsewhere in the world."
Announced in June 2011 by The Honourable Jim Flaherty, Minister of Finance, the role of the Task Force is to "review the safety, soundness and efficiency of the payments system; whether there is sufficient innovation in the payments system; the competitive landscape; whether businesses and consumers are being well served by payments system providers; and whether current payments system oversight mechanisms remain appropriate." The Task Force will spend the next year looking at the Canadian payments system with the goal of articulating key recommendations to help guide the future of this important system.
Developing industry–wide standards that align payments processes whilst serving the complex payments needs of businesses and consumers is not without its challenges, yet there are opportunities to make inroads and move closer to a completely digital payments economy.
The industry can work together to drive change in the Canadian payments industry. Have your say.
Excerpts published with permission from the Task Force for the Payments System Review.
Central 1 Technology and Payment Services