Local presence in a national system

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					Local presence in                                                                          payment for $30 through a very efficient
                                                                                           Interac system. (It should be noted that
                                                                                           Interac is not part of the CPA and is not
                                                                                           obligated to follow any rules applied by

a national system                                                                          the CPA .) So for personal transactions, we
                                                                                           have finality of payment. However, when
                                                                                           a business like Ceridian or ADP processes
                                                                                           a $100,000 debit for payroll to a business
At least two firms in Winnipeg play a prominent role                                        account, this electronic debit can be re-
in Canada’s payments system.                                                               turned NSF several days after all the em-
                                                                                           ployees have been paid. So we ask our-
By Brian Denysuik                                                                          selves, “Why is it that we can have finality
                                                                                           of payment on a $30 transaction, yet we
                                                                                           cannot have finality of payment when it
        C      
T   the best in the world. But it is important to understand how it
operates, how it has evolved, and how we can ensure that it meets
                                                                                           comes to a $100,000 transaction?”
                                                                                               With the new Bank Act, the Minister
                                                                                           of Finance now has the power to exam-
                                                                                           ine and possibly assist with these types
the requirements of its users.                                                             of situations. If a system can be defined
                                                                                           as “national in scope”, the Minister can
   During my 20 years in the payments            The objectives of the PSIA are:           designate it a payments system under
industry, I have participated in difficult    a) To promote our members’ ability to        the CPA . This can be a key element as in-
negotiations to try to get the Canadian          provide businesses and individuals        dependent payments systems develop
Payments Association (CPA ) to allow in-         with efficient, timely and secure fi-     outside of the current CPA infrastructure.
novation and creativity in payment pro-          nancial transaction processing;               The changes to the Bank Act have
cessing. It has been frustrating not only     b) To provide our members with strong        also opened up further opportunities for
for the users but also for the Financial         representation to the Government of       our Association, and we have become a
Institutions (FIs) involved in trying to         Canada, the Canadian banks, the           member of the CPA Stakeholder Adviso-
deliver services to their clients. In fact,      Canadian Payments Association,            ry Council. This gives us a voice within
one of the challenges is that the entire         and any other regulatory or official      the system. (Editor’s note: TMAC is also
payments system has been controlled              bodies that play a part in the pay-       represented on the CPA Stakeholder Ad-
by the FIs, with very little user involve-       ments process, and                        visory Council.) We are pleased with the
ment and influence.                            c) To ensure that legislation and prac-      progress and the openness that we are
   Within the payments system, there             tices of the payments system evolve       seeing within the system. Our next goal
are two parties to every transaction:            in parallel with the evolution of tech-   is representation on the CPA board.
the users of the system and those pro-           nology and market demands.                    We can now participate in many new
viding the service. Without the user,                                                      developments as they are reviewed and
there is no need for a payments system            Initially, we wanted to ensure that      considered by the CPA . The Draft Policy
at all. Yet until recently, businesses did    the Minister of Finance obtained more        Framework for Remotely Initiated One-
not have much of say in the way the           power over the Canadian Payments As-         Time Electronic Payments, for example,
system operates. This is now changing,        sociation as was being drafted into the      currently involves processing for person-
especially since users have begun to          new Bank Act. To this end, our group         al transactions. After considerable review
speak with a unified voice.                   presented its position to the House of       by our association, we have recommend-
   When the Bank Act was being revised        Commons Standing Committee on Fi-            ed some ideas to accommodate business
in 1999 and 2000, TelPay and Ceridian         nance in October 2000 and to the Sen-        payments, as well. We view these new op-
Canada discussed ways to improve the          ate Committee on Banking, Trade and          portunities as small steps forward to ob-
payments system to provide efficiencies       Commerce in May 2001.                        taining an on-line debiting system for all
to our customers. We drafted presenta-            We think the Minister of Finance         transactions, including business transac-
tion papers defining our needs and rec-        needs this increased power. The pay-         tions, in which we eliminate settlement
ommendations and sent them to the             ments system will progress much more         risk for all parties.
Department of Finance. We realized            quickly if users and providers of ser-           Your business is also a user of the pay-
that we needed a stronger voice, so we        vices like the FIs co-operate to meet the    ment system, no matter what industry
invited ADP Canada to join us. For our        overall objectives of both parties. How-     you are in. You, too, have a right to com-
three organizations, two of which are         ever, at times an independent authority      ment on its evolution, and I encourage
located in Winnipeg, the payments sys-        has to oversee the entire structure to en-   you to forward your creative ideas to en-
tem provides a critical component in          sure that everyone operates on a level       sure that Canada can remain proud of
the delivery of our services, and none of     playing field. This can be done through       the continued advancements within its
us had representation within the CPA .        the Department of Finance.                   payments system so that our businesses
   Our organization is now called the             For example, one of the CPA ’s objec-    can process payments in an environ-
Payment Service Industry Association          tives is to minimize settlement risk with-   ment that minimizes settlement risk.
of Canada Inc. (PSIA ) and includes the       in the payment system. Our association
three original members as well as Na-         has the same goal and, in a narrow           Brian Denysuik is President & CEO of
tional Money Mart. With combined              sense, we are all meeting this objective.    TelPay Incorporated in Winnipeg. He
transaction volumes of over 150 million       In a broader sense, however, we are not.     can be reached at 204-957-2840 (email:
payments annually, representing over              If you or I walk into Quarks to buy a This article is
$150 billion, we are significant players      $30 pair of shoes, we pull out our debit     based on his recent presentation to a
within the payments industry.                 card, and the retailer receives finality of   meeting of TMAC-Manitoba.

CANADIAN Treasurer                                                                                          AUGUST / SEPTEMBER 2003 29