For many companies, 2018 is a year of regulatory change: In Canada, for example, there are proposed changes to the Canadian Payments Act that could result in the creation of a non-bank associate member role for Payments Canada. The move is significant, as the only members at the moment are financial institutions (FIs). As a result, the proposed change could open new doors for companies that are not FIs.
“This is designed to promote competition and innovation by supporting new entrants into the marketplace,” NanopayCEO Laurence Cooke told PYMNTS.com in an interview. In addition, Cooke said that the change could encourage new products for the benefit of both consumers and the economy, while acting as a catalyst for change in the payments industry.
With the proposed move, Canada is upping its game and staying at the forefront of global payments development. While Canada has a high penetration of contactless card usage, for example, it’s a bit behind in some areas, such as real-time payments. But that could potentially change.
“This is going to help by bringing a lot of innovators into the space rather than keeping them outside of the space,” Cooke said, adding it would allow for better regulatory oversight. In addition, the move could be good for the country, as it could support its financial stability by introducing risk-based access to different platforms while increasing Canada’s attractiveness for global trade.
In other news, Department of Finance Canada has released a whitepaper that talks about an oversight framework for retail payments to allow non-financial institutions to participate in the country’s payment world – whether to initiate payments or be involved with clearing and settlement. Even so, the retail framework has been in draft and still needs to find a regulator – and people must be trained as well. But, in parallel with the changes under the Canadian Payments Act, it could open up what was previously a closed ecosystem. In essence, these potential policy changes could go hand-in-hand, creating new categories of payment service providers.
Already, there is significant amount of FinTech in Canada – in cities such as Vancouver, BC, as well as the province of Ontario. (In Ontario, FinTech is somewhat split between Ottawa and Toronto.) FinTech firms in Toronto, in particular, are close to the tech resources they need with great access to labor as well as FIs. By comparison, developers in the U.S. may need to travel from California to New York, or banks might need to travel from New York to California. “Here in Toronto, we’ve got everyone in the same place,” Cooke said.