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Canada’s government has taken heed from fintech and payments players in the country, opting to expand Payments Canada’s membership and to bring forward a legislative framework for open banking.
Canada’s finance minister Chrystia Freeland the Fall Economic Statement for the country on November 21, and for now, appears to have allayed concerns that the country is falling behind.
Commitments outlined by the country’s government include amending the Canadian Payments Act and to legislate to enable open banking.
Canada’s government will introduce legislation through the Budget 2024 to establish a consumer-driven banking framework that would regulate access to financial data.
It will also expand membership eligibility in Payments Canada to payment service providers supervised by the Bank of Canada, in a move that Payments Canada says will benefit consumers.
“By supporting these critical legislative changes, the Government of Canada will foster greater choices and innovation, laying the foundation for important benefits and opportunities for people across the country,” said the organisation in a .
“In consultation with our members, stakeholders and regulators, Payments Canada will advance by-law amendments required to operationalise changes to the Canadian Payments Act,” the organisation said. “We look forward to working with the industry to bring the benefits of broader access to life.”
Secure open banking
In the statement, the Canadian government said that although data-driven services can at present play an important role in helping Canadians manage their finances, to access them, Canadians have to share their banking credentials with financial technology companies.
“This unsecure, unregulated practice leaves Canadians open to security, privacy, and liability risks in the event of data breaches or losses,” the finance ministry says.
The Liberal Party-led government says that the implementation of a consumer-driven banking framework — open banking — will enable consumers to securely access and share their financial data, ensure that Canadians are not subject to fees when accessing and sharing their data, protect Canadians and the financial system from “risky practices” such as screen-scraping, and ensure parties at fault are liable for any damages or data breaches.
The Canadian government says that it wants to allow Canadians to safely access innovative products and services that can help them improve their financial outcomes.
Fintechs celebrate
“We and our members have worked long and hard to make this happen, which makes this moment extra rewarding,” said Fintechs Canada in a LinkedIn post, endorsing the decisions taken by Freedland.
Alex Vronces, executive director of Fintechs Canada, said that the announcement “marks the beginning of a more affordable and inclusive financial sector”.
“By beginning the implementation of consumer-driven banking in Budget 2024 and expanding Payments Canada’s membership, this government has shown its commitment to making banks work harder for their customers,” said Vronces.
Brigit Carroll, senior policy and campaigns manager at Wise, told žž that she was pleased to see the government of Canada’s commitments made in the Fall Economic Statement.
“These initiatives will help to provide more choice and cost-savings for Canadians, while bolstering their financial safety and security,” she said.
“At Wise, our mission is to enable our customers to move and manage money worldwide in a convenient, accessible, and fast way,” she continued. “The planned actions from the Canadian government on payments modernisation will help us to deliver on that mission and make cross-border payments cheaper and faster for Canadians."
The Council of Canadian Innovators (CCI), which recently launched a campaign to enable open banking, also welcomed the proposals.
“We are pleased the minister heeded the calls from entrepreneurs, policy leaders, and experts, and has embraced a regulatory framework that will drive competition, innovation, and consumer choice with essentially no cost to taxpayers,” said Nick Schiavo, the CCI’s federal affairs director.
According to Schiavo, the devil will be in the details, and Canadian innovators stand ready to work hand-in-glove with the government on developing the specific protocols and regulations between now and the 2024 Budget, but based on what they have seen today, he said, the government deserves credit for making the right decision.
