Expansion of Payments Canada membership eligibility announced in Fall Economic Statement

In addition to committing to implementing a “consumer-driven banking” framework in Canada in the 2023 Fall Economic Statement (FES), the Department of Finance also revealed it intends to expand membership to Payments Canada, as part of modernising the country’s payments system.

The Canadian Payments Act will be amended later this year to expand membership eligibility in Payments Canada to payment service providers supervised by the Bank of Canada, as well as to credit union locals that are members of a credit union central, and operators of designated clearing houses.

The FES stated: “This modernization will allow for lower transaction costs and faster, more secure payments for Canadians.”

In a statement issued yesterday (21 November) Payments Canada said it “applauds the inclusion of changes to the Canadian Payments Act” in the Fall Statement.

“Canada’s payment industry has been actively calling for changes to [the] CP Act to expand Payments Canada’s membership eligibility and access to our systems to include payment service providers, credit union locals and operators of financial market infrastructures that meet regulatory and legislative requirements,” the statement said.

“By supporting these critical legislative changes, the Government of Canada will foster greater choices and innovation, laying the foundation for important benefits and opportunities for people across the country.

“In consultation with our members, stakeholders and regulators, Payments Canada will advance by-law amendments required to operationalize changes to the CP Act. We look forward to working with the industry to bring the benefits of broader access to life.”

In December 2022, Payments Canada and a coalition of financial organisations signed a joint letter addressed to Finance Minister Chrystia Freeland calling for “broader access” to Canada’s payment systems.

The announcement has been roundly welcomed by the wider payments industry, as well as Canadian organisations.

Nick Catino, global head of policy, sustainability and social impact at Wise, wrote on LinkedIn: “Today the Canadian Government announced regulated payment companies will soon gain Direct Access to the payments system (no longer relying on a bank partner intermediary to send payments). Once enacted and implemented, this will boost competition and result in lower costs for consumers.

“This has been years in the making and a top policy priority for fintechs like Wise. It follows a similar announcement from the EU this summer, based on what the UK and Singapore already have in place.”

Alex Vronces, executive director of Fintechs Canada, said: “By beginning the implementation of consumer-driven banking in budget 2024 and expanding Payments Canada’s membership, this government has shown its commitment to making banks work harder for their customers.”