Thank you.
Good morning, everyone. Thank you for inviting me today.
I shall continue in English for comfort.
My name is Ali Abou Daya and I represent CanPay, a team that is aiming to improve the financial landscape in Canada. Our company is currently under development, and team CanPay hosts a group of hard-working Canadians, who have enabled over a $100 billion in transaction value globally over the past three years. I am a computer engineer with a business degree and over 16 years’ experience in technology commercialization in automation, AI and blockchain.
The work your committee is undertaking is of great importance to us Canadians, innovators and local businesses. Thank you.
I'm here today to discuss the need for a modern and less costly alternative to the dominant payments network, Interac. While dominant market positions typically come from competitive performance, the case cannot be made for Interac, simply because it's extremely difficult, if not impossible, for external players to bring forward any bank-to-bank transfer solution today without having to resort to Interac.
Banks have exclusive access to consumer accounts. When access is requested, they point to Interac as the incumbent and approved solution, effectively forcing the technology and the associated fees on the takers. Knowing that the banks are the majority shareholders of Interac, neither the banks nor Interac are compelled to modernize at the pace that is required to keep up with the rest of the world. As experience shows, lack of competition yields complacency.
Furthermore, the fee structures for shareholders of Interac are not public. One would expect more transparency from a service that is ubiquitous enough to resemble public services. As a personal example, I find it intriguing that the fees for similar value e-transfers conducted via different institutions range between zero to $1.05. If we compare this to the fees that we pay when exchanging cash, the discrepancy becomes more apparent. Similarly, businesses pay varying fees to use Interac in addition to the service fees they pay to the banks. These costs ultimately propagate onto the consumer.
Moreover, it appears that Interac offerings are not progressing at a comparable rate to other notable payment providers around the world. In comparing Interac with providers from the United Kingdom, Sweden, India and Brazil, for example, we found that in under three years, these countries rolled out cheaper, faster, more modern and feature-packed alternatives to their existing payment networks without significant disturbances.
Notably this past October, the Consumer Financial Protection Bureau in the U.S. finalized a rule that financial providers must make transaction information, account balance information, information for payments, bill information and basic account verification available without charging fees. This rule, along with the new incoming administration’s focus on reducing costs for its citizens, will no doubt move the U.S. to having a competitive open banking system in 2025. We must act, and we must act faster.
Over the past two years, our team has been building the foundation for a Canadian unified payments network, code-named CanPay, that prioritizes consumer needs, reduces overall consumer and operational fees and facilitates small to medium business financial operations with zero disruption to Canada’s current payment network, Interac. In simple terms, as our world is becoming more and more digital, we should expect to pay the same fee for sending an email as sending cash.
The potential economic impact of CanPay is substantial. Just on service fee reductions for online transfers alone, our solution would return at least $1 billion to Canadians in the first year of operation, another $1.5 billion indirectly because of time savings due to increased transaction limits, lower operational costs for financial institutions and increased financial inclusion. If we consider additional improvements to international money transfers, the overall impact doubles about $5 billion annually in five years' time.
We would like to recommend to this committee that, while not forgoing security and protections, we urge the committee to expedite the implementation of open-banking regulations, at least, to keep pace with our largest banking counterpart down south; to embrace and enhance competition in the financial sector to ensure the continuous improvement of consumer cost of living; and to fortify the resilience of Canada’s financial infrastructure by enabling parallel payment and settlement networks.
Thank you to all committee members for your leadership on this very important cost of living policy issue for Canadians.
Thank you for everything you do.
I would now welcome the opportunity to answer your questions.