Tracey joined Payments Canada in November 2018 as the Executive Director of Modernization and is currently responsible for leading the modernization of the Canadian core clearing and settlement payment infrastructure.
Tracey has held executive roles at TD Canada Trust and RBC Royal Bank and has consulted extensively in the financial services industry as an independent consultant and with McKinsey & Company. Prior to joining Payments Canada, Tracey was the President of GFH Group Inc., a Toronto-based consulting firm focused on strategy, payments, innovation, and stakeholder management. The firm managed the Canadian Chip Trial Program Management Office and was responsible for coordinating the efforts of all payment stakeholders participating in the trial and launch of EMV in Canada.
Tracey has over 20 years of professional experience with extensive industry knowledge and deep expertise in payments strategy and innovation.
What can you tell us about the different services and programs that Payments Canada offers to small business owners?
The Canadian economy depends on the exchange of billions of dollars each day, and Payments Canada is responsible for the clearing and settlement infrastructure, processes and rules essential to those transactions. We are a public purpose, a non-profit organization, delegated by the Canadian government to meet the payment needs of consumers and businesses and our members.
Small businesses are an integral part of the Canadian economy. The modernization of Canada’s payments systems, through our Modernization initiative, is setting the stage for new and enhanced payment options and creating a platform for innovation that will allow member financial institutions and payment service providers to offer convenient payment options to their customers.
Modernization will see the enhancement of Canada’s payments infrastructure so that, among other benefits, Canada’s banks, credit unions, and payment service providers can offer their small business customers faster, safer and more data-rich payment options and experiences, and support the introduction of improved business processes. For example, with the adoption of ISO 20022, a global payment message standard, there is the potential to improve payment processing automation and overall efficiencies within small business operations. A real-time payment system will give small businesses, and their customers, more choice in how they make their payments.
What would you say has been the biggest change in the payment industry in the last 10 years?
There are many contributing factors that have influenced change in the payments industry.
• New technology: Adoption of new technologies and innovation — from apps, open data, disrupters, to cryptocurrencies and more — has set the expectation for payment to occur anytime, anywhere, without pause.
• Demand: Consumers and businesses are demanding faster, more convenient, flexible and frictionless payment experiences with the same or better level of security and privacy.
• Global economies: Countries are investing in payments infrastructure to drive economic growth and efficiency while pushing for the adoption of globally interoperable capabilities.
• Security: In Canada and elsewhere, central banks and regulators are taking a more active interest in payments, resulting in increasing oversight and new demands for risk management to ensure safe and secure payments.
“In the payment industry, advances in infrastructure technology will allow for more secure, efficient and scalable systems. As an operator of payment systems, this is important to Payments Canada. We also are monitoring the creation and use of paymentrelated data. The value of AI is only beginning to be understood and there will almost certainly be opportunities in payments to leverage AI and big data. The evolution of cryptocurrency is of significant interest to us. Payments Canada explored DLT and cryptocurrency in our Jasper projects to understand the capabilities and possibilities.”
Technology is constantly improving, and new innovative systems are being launched on a regular basis. What would you say has been the biggest impact that the new technology developments have had on the payment industry?
In the payment industry, advances in infrastructure technology will allow for more secure, efficient and scalable systems. As an operator of payment systems, this is important to Payments Canada. We also are monitoring the creation and use of payment-related data. The value of AI is only beginning to be understood and there will almost certainly be opportunities in payments to leverage AI and big data. The evolution of cryptocurrency is of significant interest to us. Payments Canada explored DLT and cryptocurrency in our Jasper projects to understand the capabilities and possibilities. Stablecoin based on fiat currency is now under investigation globally, and there will almost certainly be impacts on clearing and settlement systems and rules that we must be prepared for in Canada. These technologies may have impacts beyond payments and, as an industry, we must ensure we understand and are prepared for any impacts.
How has it [new technology] impacted the Canadian business industry?
Canadian businesses are already experiencing benefits from Modernization. In 2018, enhancements were made to Payments Canada’s retail batch payments system, the Automated Clearing Settlement System, adding a third exchange window to increase the number of payments that can be processed the same day, and to support accelerated funds availability. The third exchange window has been especially valuable for businesses in Western Canada because of the extended cut-off times for payment origination and the ability to provide same-day payroll processing.
You have over two decades of expertise, knowledge, and experience in the payment industry. In your opinion, what would you say are the biggest payment challenges that small business entrepreneurs face and how are Payments Canada helping them overcome these challenges?
According to our recent Payments Pulse Survey: Small Business Edition, small business needs include payment processing efficiencies, data-rich payments, and the ability to support new digital payment options. Despite the dominance of digital payments (80 percent of small businesses conduct less than 25 percent of their transactions in cash), many small businesses feel obliged to continue to accept cash. As customer payment options and preferences continue to evolve, small businesses will need to support these new options.
Many small businesses rely on cheques, often to support payment tracking and reconciliation. Modernization will introduce the ISO 20022 messaging standard on all payment systems, which will allow for payment information to travel with the payment. Support for data-rich payments will support operational efficiencies for businesses of all sizes and ultimately help to lower operational costs.
Where do you see the payment industry heading in the near future? What are some of the initiatives that Payments Canada has planned within the next few years?
Data-rich and real-time payments are where payments are heading. The global implementation of ISO 20022 messaging will allow for payment-related information to travel with the payment for both domestic, and international payments. All of Payments Canada’s modernized payment systems will support ISO 20022, beginning with the launch of Lynx, our new high-value payments system, in 2021.
According to a recent report, fifty-four countries around the world have introduced real-time payment systems, up from 40 in 2018. This focus on real-time, credit push payments will continue, both for domestic and cross-border payments. Payments Canada will introduce a real-time payments system in 2022, following the launch of our new high-value payments system, Lynx.
The continued collaboration between Payments Canada and the industry will support the implementation of our modernized payment systems that will deliver benefits for Canada.