Modernizing Canada's Payment System requires a holistic approach
Canadian Payments Association and Bank of Canada release research outlining areas of focus for the payment industry in developing a shared vision for the future
Ottawa, ON -- (September 17, 2015) – As part of its initiative to modernize Canada's core national clearing and settlement framework and infrastructure, the CPA is creating a shared vision for the future of payments in Canada based on research, a global perspective, and industry views. Research from the Canadian Payments Association (CPA) and the Bank of Canada released today supports this initiative by outlining the most critical issues the industry must investigate to improve the payment system to best meet the needs of Canadians.
"There are many options for the future of payment systems and many opinions on what should take top priority," said Carol Ann Northcott, Vice-President, Risk, Security and Research and Chief Risk Officer at CPA. "This research gives us a way of assessing the issues, and the tradeoffs, in a comprehensive and systematic way."
The research provides a tool to consider the ability of a payment system to balance the Canadian public policy objectives of safety and soundness, efficiency and end-user interests given the attributes of the system. These attributes, which can be used to characterize any payment system, are access, functionality, interoperability, timeliness of payments and risk management. The research points to three areas of focus as the industry considers modernizing Canada's national clearing and settlement system:
- A core payment system should provide rich functionality, allowing for value-added services that can evolve with changing technologies.
- In order for new market entrants to maximize the efficiencies they offer Canadians, their access to the payment system must be considered. With access comes new risks and we must strike the right balance between efficiency and safety as we evolve to meet consumer needs.
- It’s intuitive to think that everyone wants everything faster but preferences and needs around timeliness vary. The true demand for timeliness in payments and how best to provide it must be better understood in the Canadian context.
"The global payments ecosystem is changing, enabled by new technology and driven by changing user demands," said Gerry Gaetz, President and CEO of the CPA. "In Canada, we are taking a holistic approach to modernizing our systems, which includes significant research, a global perspective and industry consultation. This particular piece of research is a first step and will help frame industry discussions as we move forward."
Please visit the CPA website to find the full paper, titled Public Policy Objectives and the Next Generation of CPA Systems: An Analytical Framework, the Executive Summary, and for more information on CPA's modernization project.
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About the Canadian Payments Association:
The CPA underpins the Canadian financial system and economy by providing safe, efficient and effective clearing and settlement of payments, which totaled $44.9 trillion in 2014, or $178 billion every business day. These encompass a wide range of payments made by Canadians and businesses involving inter-bank transactions, including those made via debit cards, pre-authorized debits, direct deposits, bill payments, wire payments or cheques. The CPA's Large Value Transfer System (LVTS) is designated by the Bank of Canada as a systemically important payment system.
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