The Coming Tectonic Shift in Payments

 Payments is a shifting landscape with increased consumer expectations on the retail side and central banks modernizing and moving to faster payments for wholesale - adding to this changes in regulations and several tectonic shifts in technology. The good news is that this represents an opportunity for Canadian and other financial institutions and corporates to re think their position in the payments landscape. As part of this, Payments Canada recently announced a roadmap with far-reaching plans to improve the federal payment infrastructure and the rules that govern financial transactions in Canada.

The president and CEO of Payments Canada, Gerry Gaetz, didn’t mince his words about why this is important for the country: 

“There are many things changing at a global level in payments – regulation, technology, new players, and opportunities for more payments data. We must make sure our payments infrastructure and standards are up to date. The consequence of this work will be a faster, safer and fairer payments system that fosters innovation and creates a better payment experience for all Canadians."

Work is already underway to deliver on the plan, and we’ll begin to notice its impact very soon. Perhaps most notably, the implementation of the global messaging standard ISO 20022 will greatly enrich payment data and streamline interbank payments.

 Digital payments will become more accommodating and convenient for businesses as Payments Canada supports a move away from paper-based invoicing and cheques towards more efficient and detailed data-driven methods. Canadian businesses need to be ready for this in order to get the most out of it – it’s definitely something to be aware of. 

 For large corporations handling settlements, direct clearing is changing. These changes will give tier two banks in Canada the opportunity to clear and settle more directly. With faster, more direct and data-rich payment standards, the question hanging in the air right now is when the dust settles on the changes in Canada who will be the key payments intermediaries or will intermediaries themselves be seen as the old payments model?

The real story here is that payments are becoming less about the movement of value and more about the exchange and analysis of data. There was a time when data was simply a necessary evil for payments -- with machine learning and AI this data is now gold and a major asset. The payments battle of the future will be all about the data. 

If you’re interested in the changes in payments, register for this live interactive webcast on February 23 on which I’ll talk about building a strategy that includes data-rich payment information and taking advantage of the ISO 20022 standard. I’ll also consider events-based architectures and moving to the API-led economy, as well as spending some time talking about emerging technologies in payments, such as blockchain.