When it comes to building a modern payments system, equal access matters

Payments Canada recently sat down with Grace Jung, Head of Industry Relations, Payments and Operations at the global technology company Square, to hear her perspective on how Canada’s new Real-Time Rail (RTR) will benefit small businesses and why expanded access to Canada’s payment system is critical to ignite competition and innovation.

Square is perhaps best known for the iconic little white card reader it started with. How has Square evolved in Canada over the last nine years?
Today we have a broad set of hardware and business tools, engineered in significant part by our fast-growing team in Toronto and across Canada. We are serving hundreds of thousands of Canadian businesses of all types, from contractors to cafes, lawyers to landscapers, retail stores to restaurants. We’re helping electricians in Barrie, Ontario take card payments in person or over the phone and marina owners in Sidney, British Columbia let boaters schedule dockings online and receive digital invoices. Each business is unique but we’ve found most Canadian business owners want to operate more efficiently and reach more buyers in-person and online. Business owners want to sell in more ways, gain visibility into their business and know their options in order to expand with their goals and growth.

You spoke about all the ways you’re helping business owners run and grow their business. How do you view the role payments play for business owners?
Payments play an important role for business owners as the origin point of commerce. The majority of the Canadian sellers we serve today accepted card payments for the first time with Square. And a closer look at the sellers we serve shows us we’re expanding access among demographic groups. I’ll share two specific examples. Fifty-six per cent of Square sellers in Canada are women. That’s well above the national average of the thirty-eight per cent of self-employed Canadians who are women. We’re encouraged to hear the vast majority of women business owners using Square say Square tools give them control over their destiny as a business owner. We also see that seventy-two per cent of Square sellers live in mid-size cities, suburbs, towns and rural communities, outside the ten most populated Canadian cities. And we hear from almost all rural sellers that Square tools give them the ability to meet their customers’ needs.

Speaking of needs, with the fourth wave of COVID-19 levelling off, what stands out to you as the greatest needs of Canadian business owners today?
Without a doubt cash flow is one of the top concerns we’re hearing from Canadian business owners. Cash flow is the lifeblood of a business. It’s a source of emotional angst and confusion and often the cause of business failures. There are several ways to address cash flow gaps but as a payment industry, the one that we need to make possible for all business owners is real-time settlement. When settlement happens in “real time” as it is processed, business owners are not subjected to a waiting period and they get instant access to their hard-earned funds.

Are you optimistic about the RTR l being able to help business owners across the country?
The significant cash flow needs among Canadian businesses does reinforce for us why real-time settlement and data-rich payments that will be built into the RTR will be crucial. Especially as we know cash flow management is important for the growth and creation of businesses across the country. We also know how important operational efficiencies are for small business owners.

But, the devil is in the details. Right now access is most clear for large financial institutions when the RTR  launches. For payment service providers to have direct access to the RTR, it will require creating a membership class in tandem with the establishment of the Retail Payment Activities Act (RPAA). At the earliest we’re at least a couple of years from that point. To put that potential length of time into perspective, that’s longer in duration than the pandemic has already lasted in Canada. That’s a long time to wait for something that affects the lifeblood of a business.

What do you believe needs to happen?
If we look across the pond to the United Kingdom (U.K.), they astutely realized that access matters. It was not until the U.K.'s Faster Payments made services available on an equal basis to payment service providers by introducing a New Access Model that greater competition and innovation was realized.

We support the Canadian government’s introduction of the RPAA which is an important first step to broadening access. As a next step, we believe amendments to the Canadian Payments Act should be prioritised for the Canadian government’s 2022 Budget, which should see broadened member eligibility for entities such as payment service providers registered under the RPAA.

Any final thoughts to leave us with?
We know firsthand it is not easy to create equal access for all, but it’s incumbent on all of us to do the right thing. Making payments safer, faster and easier is important, but what’s more important is ensuring those experiences are available on an equitable basis. Together we can better serve Canadians.