Thank you, and good afternoon.
I'd like to thank the committee and the members for the invitation to give the CPA the opportunity to come here and contribute to your study.
By way of background, the Canadian Payments Association was created by an act of Parliament in 1980. Our membership stands at 136 members and includes the Bank of Canada, all chartered banks, trust and loan companies, credit unions and caisses populaires centrales, and cooperative credit associations, among others.
Parliament gave us a specific mandate to establish and operate the national clearing and settlement system and to facilitate the interaction of our system with others and facilitate the development of new payment methodologies and technologies. Parliament further set out clear public policy objectives to promote the efficiency, safety, and soundness of our systems, taking into account the interests of users. As such, the CPA plays a leadership role in providing safe and efficient clearing and settlement of payments for Canadians, processing on average more than 24 million payments daily at a value of $170 billion, which translates into six billion transactions annually and $42.8 trillion of value.
The change drivers in the payments system are common the world over. We see significant advancements in technology that result in new payment products and services, but that also make the payments we do today faster, better, and hopefully less expensive. Also, new players and service providers are making it more convenient for Canadians to shop, trade, and transact over the digital highway.
In terms of volume of payments processed through the systems of the CPA, the move towards electronic is significant, but some barriers remain to processing all commerce and all payments electronically. It wasn't too long ago, even back in 1990, that approximately 80% of all payments through the CPA were paper-based. Today this has fallen to less than 18%. While this sounds like a great success story, the reality is that there are still almost 3.6 million cheques processed each and every day through our systems, and that doesn't include cheques issued in cases when the buyer and seller are at the same financial institution. Taking those into consideration, Canada has approximately 1.6 billion cheques still in annual circulation.
One of the largest users of these instruments is small to medium-sized business. The reasons for this are several. Key is the fact that reasonable payment alternatives to provide the small business with complete remittance data or invoice data that can be automated into their accounting processes are not readily available. In other words, straight-through processing is not an option for them today.
Similarly, for parents who need to send money to schools or organizers of their children's events, choices are few, so they send in the cheque.
Finally, for online shoppers, the need for shoppers to make payments in an online manner gave rise to payment service providers such as the PayPals and the Googles, and certainly gave a boost to the credit card companies. Online debit options that are linked directly to personal deposit accounts need to be pursued and advanced as viable options to the credit card.
In 2009 the CPA embarked on a comprehensive strategic plan exercise, which was coast to coast and involved business, consumers, and government, to understand their needs and their challenges. In the end, we developed our Vision 2020, which presented a detailed road map of the future, closing many of the market gaps. The CPA, working with the broad industry, is now developing and implementing solutions that facilitate straight-through processing between corporate users and the payments system and enhancing its standards to ensure that remittance data required by corporate users is in fact provided.
The CPA is now undertaking a review and potential adoption of international payment standards that will continue to drive efficiencies both domestically and internationally.
Finally, the CPA is active in developing clearing rules that will allow the marketplace to develop mobile payment applications. By reducing barriers to clearing, and improving the transparency and efficiency of our rules, the market will be free to innovate, and the CPA will be prepared to clear and settle all payments.
I would be remiss if I did not also acknowledge the work of the task force for the payments system review. This seven-person task force, appointed by the Minister of Finance, has been examining Canada's payment industry for the past year and a half. Their final report is due in December and will address many issues related to competition, innovation, efficiency, and industry governance.
The task force, together with a broad community of interest, has been studying the issues and impediments to Canada's becoming leader in the digital economy. The CPA has been working closely with the task force and their several subcommittees dealing with issues of digital ID, authentication, payment standards, and bill presentment and payments. The transformation to a new payments ecosystem and a truly digital economy is a large and expensive proposition, and many groups have been engaged in ongoing policy discussions.
Before the CPA introduces any new policy or rule change, we undertake a rigorous public consultation process. In the development of these rules and policies, we rely heavily on the advice provided by specialized committees comprising members and stakeholders alike. After a new rule is presented to their stakeholder advisory council and our consumer group, we then submit it for general public consultation. We are very proud of the relationships we have forged and the collaborative nature in which our policies are developed.
We are all well aware that the payments landscape continues to change, and the future shows no sign of slowing. To that end, the CPA will continue to play a leadership role in providing a safe and efficient clearing and settlement system to meet the current and future needs of Canadians.
Thank you very much.