The 2023 federal budget delivered big progress in some ways, but we’re disappointed it didn’t deliver in others.
The themes of the budget were the right ones, given the moment we’re in. Fintechs Canada is pleased to see the government work to build a stronger middle class, a more affordable economy, and a healthy future. But some opportunities were missed.
We were looking forward to commitments from the government to expand access to payment systems by amending the Canadian Payments Act, and are eager to see a commitment from the government to begin the second phase of Canada’s journey toward open banking.
Giving merchants more relief from payments-related fees
By amending the Canadian Payments Act and letting regulated payment service providers access Canada’s payment systems, the government could have put downward pressure on all transaction costs and related administrative fees, not just credit card interchange fees.
According to research from EY, the total amount of transaction costs and related administrative fees businesses pay when processing payments is $14 to $32 billion every five years.
With its commitment to reducing interchange fees alone, the government estimates it will give businesses approximately $1 billion relief over five years. However, more can be done to provide merchants with greater relief from all fees and related administrative expenses, not just credit card interchange fees.
Looking ahead
With the government’s consultation on the Retail Payment Activities Act regulations now over, and the first phase of open banking almost complete, we look forward to working with the government to give Canadians access to better financial services in the lead up to the Fall Economic Statement later this year.
As we head into 2024, we also think there will be an opportunity for the government to announce it’s starting the second phase of open banking, which will help expand the market for non-predatory credit, as well as give merchants even more relief from transaction costs.
If open banking is implemented in a way that levels the playing field between all lenders, borrowers benefit from a bigger and more affordable market for credit. Likewise, if open banking is implemented in a way that gives merchants more control over how they’re paid, we can expect more responsible competition in payments.
Fintechs Canada looks forward to continuing to collaborate with the government to give Canadians better access to financial services that are affordable, safe and secure.
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For further comments, please reach out to Alex Vronces, Executive Director of Fintechs Canada (alex@fintechscanada.ca).
