Justin Ferrabee
Chief Operating Officer, Payments Canada
ISO 20022 is a global messaging standard for payments that lets larger amounts of data to be transmitted in a payment.
“With the current electronic payment system, payments and information get separated at issuance and travel different paths and then get reconciled at the other end,” says Justin Ferrabee, Chief Operating Officer at Payments Canada, an organization that is responsible for Canada’s payment clearing and settlement infrastructure, processes, and rules essential to payment exchange.
Payments Canada is currently integrating ISO 20022 into Canada’s digital payment infrastructure upgrade, which will allow payments and payment information to travel together seamlessly — resulting in data-rich payments and automatic, straight-through payments processing and reconciliation.
Benefits to business, consumers and others
Data-rich payments will ensure better interoperability between and among payment systems both domestically and internationally. It will also result in cost savings and enhanced opportunities for Canadian businesses, and potentially more payment options for consumers.
For businesses, data-rich payments mean an end to costly and time-consuming manual back office payment reconciliation. “Canadian businesses currently spend $3 to $6.5 billion on payments processes each year,” says Ferrabee. “Automated straight-through processing that ISO 20022 allows will mean significant savings for business.” Businesses will also be able to use payment data to create new, competitive products and services. “Using ISO 20022 will is going to create opportunity beyond what any of us can conceive right now,” says Ferrabee.
Data-rich payments will ensure better interoperability between and among payment systems both domestically and internationally.
For Canadian consumers, data-rich payments will provide them with more information about their financial transactions, more options in terms of payments products, and faster access to services. Bank customers, for example, will no longer have to struggle to recall details of a recent purchase, as the electronic bank statement will display detailed transaction information. For getting credit or a loan, a simple scan of a customer’s spending data could suffice to determine credit risk, eliminating the need to obtain a credit score.
The standard offers future potential for such things as programmable smart money. This has broad implications, ranging from enabling people living paycheque to paycheque to better manage their expenses, to how frequently people get paid. “A recent survey of ours showed that about one third of millennials would like to get paid daily to reflect their lifestyle and spending habits — because the world is moving faster and they’re in the gig economy. They see no reason to have to operate around constraints of being paid monthly or bi-weekly anymore,” says Ferrabee.
Changing the role of payments in commerce
Ultimately, ISO 20022 and the new era of data-rich payments completely change the role of payments in commerce.
Key to unlocking the potential of this standard is wide market adoption. To take full advantage of the innovation opportunities and competitive advantage that that ISO 20022 presents, Canadian businesses and consumers are encouraged to learn more about the standard by visiting modernization.payments.ca.
