I can hardly believe it. Here I am, the last person in the world to know anything about social media. I am guided step-by-step in this process of providing little tales about my experiences and, low and behold, I have already offended the internet gods! Facebook has found last week’s blog offensive enough to deserve its censure.  Well, at least their new regulations require me to prove that I am who I claim to be before I can use any paid advertising.  (See explanation note below.) 

As it happens, on the very day you may have read my last blog, I was reading a US newsletter, Pymnts.com, that described a decision by a South Dakota court that individual US states could assess taxes on the very online sales companies that Canada is planning to tax. So does Facebook feel my blog should not be promoted beyond its current modest readership?

So does Prime Minister Trudeau intend to honour his election promise and join the US so Canada can also tax these freeloaders? Politics can create strange bedfellows but Americans need to elect better presidents before we will throw in the towel on that matter.  Besides where would the US find a state among its 52 states, that is more docile than Canada?

Kidding aside, it is really an affront to our intelligence for those companies to think they should be allowed to operate tax free in any country they choose to do so.  Maybe we should revisit that Trans Border Data Flow issue again.

With Cyber Monday coming up and consumer online sales expected increase over 400% from any other Monday, its good to think about how this economy is taking advantage of our country’s slack tax laws.  This year it might even be a bit worse as the exchange rate favouring Canadian retailers so we should be the ones to attract more American business.  

If you are thinking about shopping online for Cyber Monday or online shopping at anytime please also see Online Safety Tips written by Telpay IT Systems Manager Jack Slawik:   https://blog.telpay.ca/online-safety-tips/

NOTE: 

According to Facebook:

“Ads about social issues, elections or politics that appear on Facebook or Instagram should include a disclaimer provided by advertisers that shows the name of the person or entity that paid for the ad. This is a list of top-level issues that will be considered in determining which ads targeting Canada require authorization and disclaimers:   civil and social rights, economy, environmental politics, health, immigration, political values and governance, security and foreign policy.” 

Disclaimer:  So to make it clear, I, W.H. (Bill) Loewen through my company Telpay, am paying for this Facebook account and any ads that appear here. 

“On Innovation” is a corporate blog by W. H. (Bill) Loewen, founder, Comcheq Payroll Services and Telpay Bill Payment Services, exploring the impact of current innovations in the financial services industry and reflections from his past 50 years of business experience.  In his spare time, Bill likes to spend time with family and friends, play bridge, dabble with woodworking and is a passionate classical music lover. 

Last Saturday, the Globe and Mail ran an article about large American firms lobbying the US government to discourage the new Canadian government from keeping its election promise to raise income from internet service providers who earn income from their users in Canada.  (U.S. business groups claim Ottawa’s digital tax plan could imperil USMCA, ask White House to intervene, Nov. 16)

It took me back to to the 1970s and 80s when a phenomena called Trans Border Data Flow (TBDF) was a bit of a hot potato. Data processing service bureaux were thriving at that time, at least in terms of investment. Datacrown, Canada Systems Group, Computel and others with backers such as Crown Life, Stelco, Eaton’s and so on. They were boasting how they were going to grow into the lucrative US market. They had an industry association called CADAPSO – Canadian Data Processing Services Organization. I had lead a group of small firms by forming CICS – Canadian Independent Computer Services, in an effort to stop banks from moving into the data processing field. The two groups became rivals. I recall a dinner put on by the Ontario government to which I was invited as were many heads of the large data processors. We each had to introduce ourselves. The head of CADAPSO boasted that his organization represented 90 per cent of the revenues generated by the Data processing industry. I desperately wanted to say that our organization represented 90 per cent of the profits of the industry. As an out of town guest I felt I should mind my manners and passed the opportunity. It wasn’t that long until they had all disappeared and, as it happened, so did all their parent companies.

At the same time the Canadian telephone companies were building cross border communication facilities to make it easier to move data across the border. As described by a friend of mine  “We have built the highways for our conquerors chariots”.

Some Canadians have long been concerned about the high degree of foreign investment in Canada. I had thought the data processing industry, being new and Canadian-owned at that time, should remain an exception to the many industries that were foreign-owned. Some of us tried but failed.  Even when selling Comcheq I turned down an offer from ADP and sold to CIBC on terms that I hoped would see Comcheq remain Canadian-owned. I thought the banks were in the payroll business forever.  How naïve I was!  At the very first opportunity, CIBC sold to a US firm.

The federal government had, some time earlier, passed the Foreign Investment Review Act. Under that act, all larger corporations had to provide their annual Canadian financial statements. With that information it was easy to see the degree of control and even profits of foreign-owned businesses. Even then it was apparent that American-owned companies had higher levels of employment per million dollars of revenue in the US than in Canada. With open borders for movement of data there were many more opportunities to provide head office functions on one side of the border, exactly as the opponents of TBDF had predicted.

Today, US firms dominate the internet.  Not only do they want all the resulting jobs, they want the revenue they generate in foreign countries to be free of any taxes imposed by  those countries. Local companies such as Telpay generate employment, pay taxes on their profits and collect taxes on their sales and, for my part, I am happy to do so. To paraphrase Mae West, “I have not had to pay taxes and I have had to pay taxes. Paying taxes is better.” These US companies want none of that. They want a free ride in Canada.  Any bets on whether they will get it? 

Today’s mantra is cloud processing.  Probably 90 per cent or more of Canadian cloud processing is done in the U.S.  Where we go from there is anyone’s guess. Those of us who believe that sovereignty matters, have lost a lot of battles.  Have we also lost the war?

“On Innovation” is a corporate blog by W. H. (Bill) Loewen, founder, Comcheq Payroll Services and Telpay Bill Payment Services, exploring the impact of current innovations in the financial services industry and reflections from his past 50 years of business experience.  In his spare time, Bill likes to spend time with family and friends, play bridge, dabble with woodworking and is a passionate classical music lover.

In the early days of the computer era, there were lots of predictions about where these new devices would lead us.  Many are memorable because they were wrong.  Someone wrote a book titled “The End of Work”.   For some of us that don’t seem to have worked.

Comcheq drew predictions from others in the computer services businesses.  There was no way Comcheq was supposed to be able to survive with the banks as its competitor.   We were viewed as the garbage collectors of the computer industry because we provided a service no one else wanted to.  But survive we did and eventually thrived because the banks who provided other types of services disappeared long before Comcheq was sold to CIBC.

A big part of the secret to success is to do what no one else wants to do.  It turned out that even the banks found out that they didn’t want to do payrolls and for a couple of reasons: it interfered with their processing of their banking information and it took too much of their programming resources to maintain their system

A second key factor is to know what you are doing.  Having first-hand experience in the whole cycle of the payroll operation, week by week, year by year, was instrumental.  I wasn’t guessing at what customers needed.  A third component necessary for success is the willingness to learn.  I also learned to listen to the customer when I lost one of our first customers for not doing so.  There were endless variations in customer’s needs that could be satisfied once you had the data needed to do it.

I spent a lot of time listening to customers and to employees that had listened to customers.  I developed a rule that if I heard a request once, I would make a note.  If I heard it twice, I looked for a solution.

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In 1968, I received a brochure proposing that I take on the franchise for a service that provided a group of accounting systems. What I found interesting about the offer was that it included all the usual accounting reports except payroll. That was the very application I was looking for but I never could find an offering that made me want to buy the service.

I could easily imagine reasons why others wouldn’t want to jump into providing that service. The computer programs were complicated. The processing was a bit cumbersome because of the need to produce separate cheque forms for each customer. There were fairly efficient manual systems that were widely used. But still, it seemed like an attractive application for computers because the entry of a small amount of data-enabled production of significant output, the ideal combination for computer applications.

I mulled this question over  for a few days when suddenly an idea struck. What if you produced a system that drew all the payments on the same bank account? A whole list of added benefits would follow. Computer operations would be simplified and significantly speeded up. Cost of forms would be reduced. Separate forms would not have to be stored.  Bank charges would be eliminated if you allied with a bank or trust company for handling the funds and clearing the cheques. Cheques did not have to be individually signed.  Individual bank reconciliations would be eliminated. The interest earned on the float required to be in place until cheques cleared provided unseen revenue to cover some of our added costs. When you added it all up, the combination certainly looked like a winner.

A Simple Idea Becomes Comcheq

That simple idea was what made Comcheq the success it became. Though I knew the ins-and-outs of payroll production, I had a lot to learn about computer programming. But once learned, it became a huge benefit. Not long after I started Comcheq, the banks became my competitors. That was scary but I knew more about payroll than they did. In fact, I knew very little about computers but a fair bit about payroll and payment systems.  It was easier for me to learn computer skills than for bankers to learn the intricacies of payroll.  In 1968, Comcheq processed its first live payroll that integrated the payroll and payment functions.

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