I had the honour and pleasure of recently attending and participating in the Canadian Payment Association’s Payments Panorama 2014, held this year in beautiful Charlottetown, Prince Edward Island. Prince Edward Island is Canada’s smallest province, with a mere 0.5% of the Canadian population and a total area only twice that of the Australian Capital Territory. Yet on this postage stamp gem in the Gulf of St Lawrence, some big ideas concerning the future of Canadian payments were being discussed.
By way of background, Canada and Australia share many features and our payment landscapes have some similarities. Both have a long-standing national payments body and a competitive national domestic debit card scheme. Australians and Canadians are enthusiastically embracing new ways of paying, including mobile and contactless. The Government and regulators in both countries have intervened on the fractious issue of interchange fees, though Canada has adopted a more disclosure-based approach than the harder caps found in Australia.
And both countries had major payment system reviews recently – the 2011 Canadian Task Force and the Reserve Bank of Australia’s (RBA) 2012 Innovation Review. The Canadian Task Force proposed a broad and radical redrawing of payments regulation yet it failed to gain traction once the contentious issue of interchange had been addressed. The Canadian example sits in contrast to the RBA’s Innovation Review, which has spawned same day settlement in direct entry, the Australian Payments Council and the New Payments Platform. Canadian stakeholders are, not surprisingly, keen to understand why progress has been made in Australia.
To this end, the Bank of Canada Deputy Governor Lawrence Schembri gave a speech at Payments Panorama outlining the central bank’s views on payment system renewal. He outlined the benefits of expanded central bank oversight of prominent payment systems, the need for a shared vision for systemic innovation and a coordinated means of achieving the shared vision. In terms of the benefits, the Bank of Canada is seeking a system that is high speed, low cost, open, and ubiquitous; has cross-border functionality; and is reliable and secure. CPA CEO Gerry Gaetz echoed many of the Deputy Governor’s sentiments, suggesting an emerging consensus on the need for systemic reform.
In rebooting the systemic reform debate in Canada, there was significant interest in the Australian experience at Payments Panorama. Why has Australia made progress since 2012? In the panel session following the Deputy Governor’s speech, the panellists, including myself, picked up on the theme of how best to structure the industry and regulator relationship. In outlining the Australian experience with NPP, I noted how each needs to play their respective role – the regulator in setting the high-level objectives but then leaving it to industry to decide how those objectives would be met.
Canada is at the start of its own journey. However as we have learnt in Australia, while it is important to appreciate overseas experiences, any solutions need to be crafted to meet the particular needs of the local environment, including local industry participants and local payment users.
