38
FMI
*
IGF JOURNAL
VOLUME 24, NO. 1
E-Payments in Canada:
A Fast-Forward Evolution
Carol Armatage
Getting people to abandon old, familiar
practices in favour of something new can
be a hard sell – and nowhere more so than
in money-handling matters. Which ex-
plains the special interest financial industry
experts take in the speed and enthusiasm
with which Canadians have embraced new
electronic payment options.
Statistics indicate the scale of the transi-
tion: 68% of Canadian businesses now use
the Internet for business transactions and
70% of consumers use debit cards to make
purchases.
The transformation is reflected in the
changing mix of electronic and paper
transactions flowing through the Canadian
Payment Association’s Automated Clear-
ing Settlement System (ACSS), a multi-
lateral net settlement system that handles
mostly retail transactions. Between 1990
and 2001, in terms of volume, the pro-
portion of e-payments rose from 13% to
68%. This reflects the fact that Canadian
consumers use debit cards more frequently
than their counterparts in other countries,
with 63.5 transactions per person each
year. In second place is France, at 54.5
transactions.
Even more interesting than the speed
and scale of the e-payment evolution in
Canada is the question of what’s driving it.
Experts point to several factors. An ob-
vious one is industry structure: Canada’s
financial institutions operate nationally
rather than within the limits of provincial
boundaries. Together with the industry’s
high level of automation, this makes it eas-
ier to offer and sustain services nationwide.
A less obvious but significant driving
force has been the readiness of the federal
government to take the lead, not only in
exploiting new e-payment processes for
its own transactions, but, more generally,
in instituting “e-government.” Ottawa’s
stated goal is to make all key programs
and services that are deliverable on-line
available that way by 2005. Its efforts are
showing results. In 2001 and 2002 Canada
ranked first in the Accenture organisation’s
annual survey of the state of e-government
in 23 industrialized countries.
Within that context, over the past dec-
ade, an array of new electronic payment
options has become available to Canadians
for transactions with the federal govern-
ment. The milestones include:
• Direct deposits of income security pay-
ments and tax refunds and credits, intro-
duced in 1989.
• The use of debit and credit cards to pur-
chase government products and services.
• Electronic filing and payment of income
tax. The Canadian Customs and Reve-
nue Agency (CCRA) now offers the fol-
lowing options to taxpayers:
o
E-FILE On-Line, for use by professional
tax consultants to transmit their clients’
income tax returns to CCRA. A high-
traffic variant, E-FILE On-Line Plus,
allows simultaneous transmission of up to
60 returns.
o
NETFILE, an increasingly popular
service that allows taxpayers to file in-
come tax returns from their own PCs
using CCRA-approved software and
unique identification numbers.
o
Online payment of income taxes using
PC banking.
o
Income tax payment by preauthorized
debits. Businesses and individuals who
pay taxes in quarterly installments can
now authorize CCRA to draw the money
out of their bank accounts electronically
every three months.
• The Receiver General Buy Button
(RGBB), introduced by Public Works
and Government Services Canada
(PWGSC) in 2001, is an important step
forward, not only in terms of immediate
usefulness but because of its potential
as a platform for new payment options.
PWGSC’s objective in developing the
RGBB was to give government depart-
ments a cost-efficient and simple way
to offer the option of online credit card
payment to clients.
Co-Editor’s Note:
The article authored
by Carol Armatage was first published
in the Winter 2003 issue of the fmi
*
igf
journal. In the last decade, the global
payment volume increased to around
330 billion transactions per year. The
highest growth in payment types be-
tween 1999 to 2010 was in electronic
payments, which grew globally to
85% of all non-cash payments. During
the same period, the cheque volumes
decreased by approximately 70%
globally. In his article, Nicholas Grillas
presents the latest trends in electronic
payments today and explains how the
Canadian Government intends to take
advantage of these new products and
emerging technologies.
Past
vs.
Present
#3: E-Payments in Canada
The
Past
Golden Coronation (1953-2003)
Courtesy: Canada Post 2003
