CANADIANS are among the world's heaviest users of online shopping, banking and web-browsing services, but the country is trailing in the development of mobile payment systems, which could mean about $32 billion to the economy in terms of improved productivity.
But change won't come without government leadership -- and without pressure on key financial institutions such as Canada's major banks to be more innovative -- according to final submissions from the Task Force for the Payments System Review.
The task force spent 18 months examining opportunities and challenges involved in moving Canada away from paper-based payments.
The task force called for a state-of-the-art mobile-payments system for consumers, noting although Canadians are among the world's heaviest users of online shopping, banking and web browsing, mobile payments are "largely absent in Canada."
"We still rely largely on old-fashioned methods of payment such as paper-based processing and cash and cheques," the review said. "In addition, Canada is falling behind in the international push to generate a secure mobile ecosystem, the revolutionary agent that will deliver extraordinary new commercial and public services to consumers via their smart phones."
Meanwhile, 27 European Union countries, Brazil, Russia, India, and China, "and even Peru and Romania are significantly outpacing Canada's transition to digital payments, with obvious negative implications for Canada's global competitiveness and interoperability."
The review attributes Canada's failure to keep pace upon stagnation in payment systems by the major banks and other key institutions.
"Their interests are best served by keeping at bay new entrants to the system, the very entrants who would bring the innovations that Canadians need," the report said.
A "thoroughly modernized" payments system could save as much as two per cent of GDP productivity annually.
"As important as this massive benefit, a modern Canadian payments system will lead to far greater choice, efficiency and convenience for consumers, businesses, governments and organizations, as well as a safer, more secure system."
Potential savings include up to 80 per cent reduced invoicing costs and a one to two per cent of revenue cost reduction by switching from paper to e-invoices.
Recommendations for government action include implementing instantaneous electronic invoicing and payments for all government suppliers and benefit recipients and partnering with the private sector to create a mobile device-based "ecosystem."
The task force also called for the creation of payments-industry governing body as well as a public agency to scrutinize it.
-- Postmedia News