Evidence of meeting #151 for Industry, Science and Technology in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bank.
A recording is available from Parliament.
President and Chief Executive Officer, Interac Corp.
The shareholding of Interac as a privately held company is not disclosed. We have many shareholders over and above the large banks of Canada.
Conservative
Adam Chambers Conservative Simcoe North, ON
You can understand why the public or some policy-makers might have some questions about a lack of transparency and some bona fide questions around conflicts of interest when we don't know the ownership structure. When the volume-based pricing mechanism was brought into place, the board was chaired by two of the largest banks in the country.
It's nice to see that you announced today that you're moving sometime in 2025, but the lack of transparency leaves open a lot of questions for people. They question whose interests are being well served: Is it Interac's or is it the secret ownership structure that we don't know about?
President and Chief Executive Officer, Interac Corp.
Interac e-transfer pricing, the current volume-based pricing, was reviewed and approved by the independent committee, not by the board. The independent committee is made up of independent directors only, plus me. The recent move to a flat-rate price, which has been in the works for about a year now, was reviewed and approved by the independent committee.
As a prominent payment system, or PPS, we review that with the Bank of Canada. We've recently retained approval from the Bank of Canada for that new pricing schedule. We're in the process of communicating that to participants and reviewing our communication strategy on it.
Conservative
President and Chief Executive Officer, Interac Corp.
We're in the process of informing participants. We have 230 participants. With the recent approval from the Bank of Canada, we need to go through an orderly process of informing those participants.
We'd be happy to share the details of the new pricing schedule after that time.
Conservative
Adam Chambers Conservative Simcoe North, ON
Will it will be a price reduction for a number of players?
President and Chief Executive Officer, Interac Corp.
It will be a flat-rate price structure for 230 participants.
Conservative
Adam Chambers Conservative Simcoe North, ON
Right, but for a number of new entrants, it will be a price reduction. Is that correct?
President and Chief Executive Officer, Interac Corp.
It will be a flat-rate price structure.
Conservative
Adam Chambers Conservative Simcoe North, ON
Okay.
If the volume-based pricing system was in effect for a long time, why change it?
President and Chief Executive Officer, Interac Corp.
In 2012, as I said in my opening remarks, we had low adoption of e-transfer. We had 30 million transactions at that time. One of the common commercial practices is to adopt a volume-based tier of pricing in order to get the biggest players to gain mass adoption. I think that has been very successful over the last 10 years. I think “e-transfer” is almost a verb in Canada today: “I'm going to e-transfer my kid some money at university.”
Now is the right time. We spent a year reviewing the global market. We looked at other real-time payment systems around the world. The flat-rate structure is the appropriate structure, so that's what we're implementing in 2025.
December 9th, 2024 / 6:20 p.m.
Conservative
President and Chief Executive Officer, Interac Corp.
A flat-rate structure means open access and a level playing field for all participants.
Conservative
Adam Chambers Conservative Simcoe North, ON
That's great, but you were looking at it for a year, and we're a bit delayed. Again, when there's a secret ownership structure and a governance model that may or may not be relied upon, the public will look at it and say that of course there are delays, because the ownership structure might force there to be delays.
In any event, you brought up prominent payment systems. Is Interac in full compliance with the current standards set out by the Bank of Canada?
President and Chief Executive Officer, Interac Corp.
We're regulated by the Bank of Canada, as you've said, regarding the prominent payment system. We are observing or broadly observing all of the Bank of Canada's oversight expectations. We can't talk about any of the specifics of that due to the Payment Clearing and Settlement Act—
Conservative
Adam Chambers Conservative Simcoe North, ON
I apologize for cutting you off, but I'm running short on time and I like to be fair to my fellow members.
One of the standards is that the criteria to become a member of Interac is public, but I can't find that anywhere on Interac's website, so you're not in compliance with the Bank of Canada standards, at least with respect to that standard. Would that be correct?
President and Chief Executive Officer, Interac Corp.
Interac e-transfer is observing or broadly observing all oversight expectations. The one report the Bank of Canada produces on an annual basis states that, essentially, Interac is in good standing as it relates to the oversight of e-transfer.
Conservative
Adam Chambers Conservative Simcoe North, ON
I noted the addition of “broadly observing”, but I'll follow up on that in a future round.
Thank you, Mr. Chair.
Liberal
Liberal
Ryan Turnbull Liberal Whitby, ON
Thank you.
I echo my colleague's comment about your being here in person, Mr. Wilmot. It's great to have you here.
I note that the Competition Bureau recently announced at our committee that they are looking into potential anti-competitive behaviour in the e-transfer industry, namely at Interac. Were you aware of that?
President and Chief Executive Officer, Interac Corp.
Absolutely. We're working with the Competition Bureau. We actually have a meeting with them later on this week.
Liberal
Ryan Turnbull Liberal Whitby, ON
Do you fully intend to co-operate with that investigation or review?
President and Chief Executive Officer, Interac Corp.
We welcome the opportunity to talk through all of the e-transfer aspects with the Competition Bureau.
Liberal
Ryan Turnbull Liberal Whitby, ON
We previously heard testimony at this committee about the challenges associated with accessing e-transfer services and some of the operational restrictions Interac imposes. At least some fintech companies called your practices highly “burdensome” and “anti-competitive”. That's what they said. Those are not my words.
Should the Competition Bureau approach you to discuss these practices, how will you respond to those concerns?
President and Chief Executive Officer, Interac Corp.
Interac is committed to broadening access to e-transfer.
Today, we have 230 direct participants in the e-transfer system. We've worked with both FINTRAC and the Canadian investment regulatory oversight authority to enable investment dealers and money service bureaus to directly connect. It's great that one of Canada's fantastic success stories in the fintech space, Wealthsimple, took that up. They have directly connected to enable their business and provide differentiation. We welcome broadening access.
