Myth vs Facts
MYTH
Canada has open banking, and the Government of Canada protects Canadians’ financial information and data.
FACT
Open banking is not yet available in Canada despite it being available in other countries like Australia and the UK. Open Banking is a right, protected by law, that puts you in control of your financial information and protects your privacy.
Millions of Canadians already share their financial information with companies that offer them a range of services, including budgeting, investment management, bill payments and more.
Open banking is about putting consumers and businesses in control, empowering them to decide when to share their data, how much of their data to share and who to share it with.
The government of Canada has established an advisory committee on open banking, but they have yet to deliver on an official set of rules and regulations to allow this model to fully and securely exist in Canada.
MYTH
Canada has a modern payments system that can keep up with innovation, allowing Canadians to transfer money securely and quickly, safely circulating billions of dollars each day.
FACT
False. Canada’s payment technology and laws were created before the internet was a thing.
Our payments system today is not built to keep up with the innovation happening across the world, or with the expectations of consumers and businesses. Unlike many other countries, Canada's payment systems don't run 24/7, delaying important transactions such as payroll, invoicing and paying bills. Payments modernization is about upgrading our outdated payment technology and laws to make sure they’re responsive to the needs of Canadians. Canada’s slow uptake to modernize its payment system also runs the risk of stifling innovation, since companies may be pushed to leave Canada and take their business elsewhere.
Payments modernization can drive down fees for small businesses and lower the amounts that are passed on to consumers, while helping businesses participate in the digital economy and grow more quickly.
MYTH
Canada is a global leader on open banking and payments modernization.
FACT
This interactive map from the World Bank illustrates that Canada is far behind the rest of the world on fast payments.
Countries including US, Mexico, Brazil, Argentina, the UK, much of the European Union, and Australia are far ahead of Canada. In fact, Canada is one of the only advanced economies in the world to not have a real-time payment system.
MYTH
Canadian banks are at risk of becoming unstable if we introduce open banking and payments modernization.
FACT
False.
Upgrading Canada’s payments system makes our financial sector more robust.
Open banking puts Canadians in control of their financial data. Canadians have never been in control of their financial data. In 2000, when Canada's big banks launched web portals, they shared customers' financial information with third-party account aggregators to put all your banking information in one place. Banks were in control, making decisions about which data to share, how to share it and who to share it with. Now millions of Canadians are proactively choosing to share their data with others to manage their finances, but aren’t being given secure and convenient ways to do it, or, worse yet, are being prevented from sharing their financial data at all.
A modern payment system is more resilient to outages and by giving banks, credit unions and regulated payment service providers equal access will reduce financial market concentration, which lessens risk by increasing competition and innovation in Canada’s financial sector.
Embracing open banking and payments modernization can foster growth and enable the Canadian economy to grow between one and five per cent by 2030.
MYTH
Open banking and payments modernization will not help small businesses or Canadians.
FACT
Open banking and payments modernization are public policy initiatives designed to benefit small businesses and consumers.
Open banking empowers consumers with more information and provides more choice. So does payments modernization, which also helps pass on cost savings to businesses and consumers. Other benefits include:
Reducing the cost of living for Canadian consumers: Slow and inefficient backend systems can result in overdraft fees, late payment fees and a reliance on payday lenders that charge high interest fees. Payments modernization can reduce these costly delays through the implementation of instant payment systems.
Improving convenience for Canadian consumers: Payments modernization will allow Canadians make or receive payments in real time, reducing administrative burden. Being paid immediately after working one shift or removing the withdrawal and delivery of a bank draft during the homebuying process, are examples of changes Canadians could see with a modernized payment system.
Boosting the operating capacity of small and medium businesses: Payments modernization gives businesses and governments a way to reduce fraud by making it easier to trace where payments are going and to intervene before funds are sent to a fraudster. Whether it’s getting immediate transaction transparency when funds are delivered for a mortgage, more convenience when shopping, or seeing payments automatically reconciled in accounting systems for small businesses, Canadians would benefit from a modernized payment system.
MYTH
There is nothing you can do to have the Government of Canada follow through on its commitment to upgrade Canada’s financial system.
FACT
We are bringing Canadians together from across the country who value greater choice, greater autonomy, greater savings, and greater opportunity.
It’s time to demand that the government upgrade Canada’s financial system today! Join the campaign!
Benefits for Small Businesses
Currently, businesses experience $3 billion to $6.5 billion in operating costs for payment processing.
According to Payments Canada, efficiencies gained from deploying new infrastructure (such as open banking) could seriously cut into these annual costs faced by the business community. That’s certainly been the case in other countries.
The US recently launched its new instant payments system FedNow, which will eliminate processing time of payments and help small businesses more “efficiently manage cash flows without processing delays.”
Businesses interviewed in the UK have given open banking a big thumbs up. Of 900 small-and-medium-sized businesses interviewed, a vast majority agreed open banking is helping improve cash flow, with 73 per cent saying it increased business performance and 75 per cent saying it improved business decision making.
Benefits for Canadians
Open banking and payments modernization empower consumers by helping them:
Qualify for mortgages;
Make more informed financial decisions;
Be offered more competitive pricing with their financial institutions;
Improve their financial literacy;
Experience greater choice and see reduced fees;
See reduced fees and costs moving money to loved ones around the world; and,
Create greater financial inclusion.
“Open banking can connect families with a broader range of budgeting or savings tools and provide financially marginalized Canadians access to low cost, automated support to manage their finances. Open banking can enable Canadians with limited credit history, including newcomers, access to credit based on their financial transaction history.” – Finance Canada Advisory Committee report on Open Banking