The Canadian payment technology industry is experiencing a period of rapid and radical change as merchants, consumers and regulators push for more possibilities and options for how, when and where Canadians pay.
The traditional payment ecosystem consists of a large, complex network of issuers, merchant acquirers, processors, networks, card schemes, independent sales organizations (ISOs), service providers and merchants.
A number of large, internationally established players still control the payment landscape in Canada and they set the terms of access to their payment system, through contractual arrangements with card networks or payment schemes. However, we are also seeing many international disruptors — some new entrants and others existing players — looking to enter or expand in Canada.
Tapping Into Existing Payment Networks: EFTs
EFT payments, or electronic funds transfer, are a convenient way to make payments favored by many businesses and individuals. EFT payments are used to transfer money directly from one bank account to another using a variety of payment methods. EFT payments make up a huge chunk of the payments economy, with around $5 trillion in payment being processed in 2020 in Canada alone.
It is important to recognize that EFT does not just refer to a single payment type. EFT is the general term given to a payment that is made electronically, and using an EFT processor can be done in many different ways. Some of the most common EFTs include:
Credit or Debit Card Payments
Most people will be familiar with debit and credit card payments, as this is an extremely common way of paying for goods and services. You can also receive money through this medium, however this is comparatively less common.
Electronic Checks
Electronic checks or e-check as they are more commonly known have become more popular in recent years, due to their increased speed of payout when compared to regular paper checks. They are also much more secure and less open to fraud and exploitation, since they have digital accountability.
ACH (Automated Clearing House) Payments
ACH payments are the standardized electronic payment form in the USA. Many people will use the ACH network in some way, perhaps without even being aware of it, since it is commonly used for paying bills and receiving deposits from an employer. ACH payments in Canada are still common for businesses who want to transact in the USA.
Old Meets New With Intelligent EFT Payments
Bank to bank EFT payments have been around for a while, and they have largely remained unchanged. This means the limiting factors of EFTs have stayed the same, meaning slow processing times for bank to bank payments, and complete lack of visibility into the process as it happens.
This is set to change however, as some forward thinking payment technology companies have created intelligent EFT payments that extinguish these drawbacks. Instead of taking up to 3 days as they usually would, same day EFT payments can now provide huge benefits to businesses and consumers.
With this new technology, businesses can streamline their payment processing and save time and money where it matters most. This will then have a trickle down effect as companies can offer faster, more efficient payment methods and the consumer can enjoy lower fees, more transparency and faster turnaround times.
