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Budget 2021 modernizes payments regulation, but stays silent on payment system access

History was made when Chrystia Freeland became Canada’s first female finance minister. And it was made again when she tabled her first budget, A Recovery Plan for Jobs, Growth, and Resilience yesterday. As Goldy Hyder said, she accomplished what no man before her was able to do, pledging $30 billion over five years to build a national childcare system, reminding observers of the importance of diverse representation in politics. 

All in all, the federal budget promises about $100 billion in new spending. With it comes more COVID-19 relief, policies and programs to kickstart our economic recovery, and measures to fight climate change, including support for the green economy.

While people debate the merits of the federal budget, payment technology companies are wondering why the budget promises more regulation, but not access to payment systems. 

When it comes to payments, the “innovation” in “responsible innovation” will follow from more open access, not just retail payment oversight. 

The only ones with access to payment systems today are federally regulated financial institutions. They resell their access to payment technology companies. This leaves payment technology companies at a disadvantage when it comes to cost and service levels, making it difficult for them to offer basic services, let alone experiment with more innovative offerings.

Fintechs Canada encouraged the federal government to table retail payments oversight legislation and make amendments to the Canadian Payments Act in the next Budget Implementation Act. 

Retail payments oversight legislation is supposed to regulate payment technology companies — not like banks, but enough to let them safely access the payment system. Amendments to the Canadian Payments Act are supposed to give them that access, empowering them to compete on a more level playing field with federally regulated financial institutions.

By a strict reading of the federal budget, payment technology companies are going to get more of the former and not the latter.

To promote responsible innovation in the financial sector, Fintechs Canada will continue to encourage the federal government to amend the Canadian Payments Act, broadening access to payment systems and making Payments Canada’s governance more inclusive. 

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