Executive Director of Payments, Supervision and Oversight Ron Morrow recently addressed the evolution of payment systems in Canada at the Payments Canada SUMMIT in Toronto. Morrow emphasized the need to modernize Canada's payment infrastructure amidst increasing digitalization.
"Canadians use debit and credit cards, and they pay by e-transfer or through online payment providers. Some are even getting into cryptocurrencies and stablecoins," said Morrow, highlighting the diversity of current payment options.
Despite the rise in digital payments, cash remains significant. "Cash is a universally accessible form of public money. For this reason, the Bank of Canada will continue to support bank notes as long as Canadians want them," he stated. He added that while there is ongoing research into digital currencies, there are no immediate plans to replace cash with a digital Canadian dollar.
The Bank has been working on several initiatives to enhance Canada's payments infrastructure through four main pillars:
1. **Lynx**: Launched in 2021, Lynx is Canada's high-value payment system used by banks and financial institutions to settle $400 billion daily.
2. **Real-Time Rail**: Set to be Canada's first real-time payment system, allowing 24/7 transactions for businesses and consumers with potential cross-border linkage.
3. **Batch Payment Systems**: The existing system has been clearing cheques for 40 years but requires modernization to handle electronic items like pre-authorized debits more efficiently.
4. **Retail Payments Supervision**: Initiated in 2021, this mandate requires over 3,000 service providers to register with the Bank this autumn under new consumer protection rules.
Morrow stressed that these efforts aim to keep pace with economic digitalization and leverage future innovations. "Payment service providers have been largely unregulated in Canada up until now," he noted. With new oversight from the Bank, these providers can become members of Payments Canada, enhancing their competitiveness.
"We expect innovation in payments to continue and probably accelerate," said Morrow. He concluded by affirming the Bank's commitment to ensuring reliable public money for Canadians in various forms.