Payments Canada Changes

by W.H. Loewen, President, Telpay

On Thursday, September 13, 2018, Telpay hosted a panel discussion at the Institute of Professional Bookkeepers of Canada (IPBC) National Conference in Calgary. The panel discussed the changes to the rules and procedures regarding processing payments in Canada. FinPay, a committee set up by the Department of Finance, has been working on it for some time. John Zajic, Vice President, Corporate Policy, Telpay, is a participant on the FinPay advisory panel.

Same Day Payments

We may see initial results of their work this month. We understand that an added daily exchange between banks will begin this September. This one change will be of great benefit to business generally and to Payment Service Providers especially. The proposed 9:00 PM EST exchange will mean, for example, that funds transferred to Telpay during the day can be paid out and credited to the intended recipient the same day. Deadlines for payroll payments, for example, will likely be shortened one full day. Anyone involved in payroll processing understands how beneficial this is. However, there are other benefits as well. Errors and adjustments may be reduced. We can’t say precisely how it will be implemented but you can be sure that Telpay will do so as soon as possible with payroll being our priority.

Other Changes Being Recommended
The following are recommendations that Telpay has put forward to the Department of Finance. We invite all payment service providers to join us in expressing their recommendations.

1. Faster processing of returned items. We would like to see the three to four day period for notification of returns reduced to as little as one day. We have to hold back payments that are funded by pre-authorized debits for up to four days. The faster turnaround would enable us to forward funds sooner.

2. Oversight of businesses such as Telpay that handle funds belonging to other people. This would not have to be onerous. Requiring them to have their funds audited is about all that is required. That is something any party handling other people’s money should do anyway.

3. More input to the payment system by users. Currently, the financial institutions have virtually all the say. That is not appropriate in the electronic age. Before electronic payments, businesses communicated the details of what is being paid using a turnaround document. Usually supplied by the biller, it arrived with the cheque, and explained clearly and accurately what the cheque covered. You can’t return such documents with electronic payments. The payment mechanism has to request that information and return it to the biller with the notice of payments. There are numerous other requirements that accounts payable and accounts receivable people understand. It is not so likely a banker will be aware of these requirements. Better and more effective payment system representation by the users will produce a better payment system.

4. Assurance that banking services are always available for competitors of the banks. Regulation of payment service providers should make this possible.