Going “digital” means different things to different people and leaders in different industries. Some think of digital transformation like a facelift; e.g. like painting a room a new colour. Others think of it like renovating a room; e.g. tearing down a wall between your kitchen and your family room, creating a big open space for your family to engage.
Still others think of it as a complete foundational overhaul. Through this overhaul, you can do new and wonderful things in your house and truly transform your living experience. Think of new plumbing, heating, and sewage systems throughout your whole house, this would change the foundation of your home.
Well, payments modernization in Canada has started and the digital vision presented by Payments Canada is all of the above! Payments Canada envisions, “developing a modern payments system that will provide new opportunities to simplify and enhance Canadians’ daily payment interactions and help secure and strengthen Canada’s competitive position as a global leader in financial services.”
There are many components of Payments Canada’s Modernization program, including:
• Introducing a new real-time payments system called the Real-Time Rail;a new, 24/7/365 system that will facilitate the real-time delivery of payments in a matter of seconds.
• Introducing rich payment data (via ISO 20022) into all payments systems allowing for:
– Ability for sender to include a wide-rangeof messages along with payments enhancing payment clarity
– Enables straight-through processing of payment
– Supports greater efficiency by reducing need for manual inquiry about payment details – saving effort and costs
• Modernizing Canada’s AFT (Batch Rail) and Large Value Transfer (LVTS – Wires) Systems
A modern payments system that will provide new opportunities to simplify and enhance Canadians’ daily payment interactions.
So how does modernization affect me?
For Businesses
Get faster processing of funds, more data travelling with payments (much easier reconciliation) and increased funds availability. Ultimately with some internal investment, the proper ERP and Accounting solutions integrated with the new Payments Modernization capabilities you will get a much more enhanced and efficient experience
For Consumers
Get essentially the current email money transfer capability, but the 2.0 version with capabilities for faster money movement, ability to support different payments use cases and ultimately a more simple, flexible and convenient payment experiences
For Government
The new systems will facilitate fast, data-rich payments, allowing funds to travel faster between levels of government, with Canadians and businesses and to other countries
This is my simple payments modernization primer for those who are interested; My next blog on payments will give some insights into rich data and ISO20022.
