Industry Committee on Dec. 9th, 2024

[Jeremy Wilmot]

The pricing review of e-transfer has been in place for over a year. It was one of the first things I initiated when I took over as CEO. It's been a highly complex exercise. We want to make sure that it's fit for purpose for the next 10 years, as the current schedule has been for the last 10 years. We really needed to ensure we had the Bank of Canada fully on board with what we're doing as well.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Would it be fair to say that none of your 230 participants will see a reduction in fees?

[Jeremy Wilmot]

The flat-rate schedule is a different fee schedule for all 230 of them. They will receive those schedules.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

What does that mean? Does that mean there will be hidden fees or different associated access fees? You just said you went to a flat rate, but now there are going to be different structures for 230 different participants. How does that work?

[Jeremy Wilmot]

The current volume-based pricing that I was explaining earlier goes through tiers—top tier, middle tier, lower tier—which means that each of the 230 participants have a different economic model for using e-transfer. With flat-rate pricing, everybody will have the same economic model.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Will anyone see a reduction in pricing?

[Jeremy Wilmot]

We need to communicate it to the 230 participants. After that, we'll look at our communication strategy.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

The reason I ask is that our committee has been tasked with coming up with recommendations on a wide variety of areas, including the lack of competitiveness in this area. If you're signalling to this committee that there is no reduction in pricing, I would challenge your assertion that somehow this curiously timed move to a flat-rate system will somehow enhance access for other players in the system. Prove me wrong.

[Jeremy Wilmot]

The 2025 fee schedule for e-transfer has been worked on for over a year. It was one of the first things that I initiated at the end of 2023.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

How will it make things more competitive? What I'm taking away from this is that nobody is going to see a fee reduction. There are no significant changes in your governance. That leaves us to look at recommendations to have, perhaps, different types of interventions to spur competition in the area.

Has the government approached you and suggested that they may be looking at intervening by asking you to open your network for interoperability with other e-transfer programs? Has the government approached you with that recommendation yet?

[Jeremy Wilmot]

We're working with Payments Canada closely on real-time rail. The Retail Payment Activities Act is going to open up real-time rail to many payment service providers, and e-transfer is going to be settled on real-time rail.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

What is the timing on that? What has the government communicated to you in terms of timing for implementation?

[Jeremy Wilmot]

I believe the Bank of Canada has stated that the target is to have testing start toward the end of 2026 for real-time rail.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

In terms of other recommendations, has the government approached you suggesting that it would be open to enabling blockchain-based payment systems or other decentralized payment networks as competitive alternatives to Interac? Has it said, “Get ready for this, guys?”

[Jeremy Wilmot]

We have not had any conversations about a blockchain-enabled payment system with the government.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Just to be clear, with the opportunity you have in front of committee members here, who are looking at recommendations to the government or future governments on how to deal with the lack of competition in this particular sector, will any of your participants actually experience lower rates as a result of the move to your different fee structure?

[Jeremy Wilmot]

One of the statements I made earlier was that 6% of electronic transfers are by e-transfer, so 94% are by other methods: electronic funds; EFTs, electronic funds transfers; and pre-authorized debit or bill payments. There are other competitors in the market, such as PayPal and Apple. There are a number of different ways to move money or accept payments, whether it's person to person or a small or medium-sized business accepting payment—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

How is the independent committee of Interac compensated? What is its compensation structure?

[Jeremy Wilmot]

The independent directors are compensated. The compensation is set by the governance committee. The board does not set any of that compensation, and we don't disclose the compensation for executive officers like me or for directors.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Then we as parliamentarians would have no way of knowing how they would be motivated to make decisions on a pricing schedule. Would that be a correct assessment?

[Jeremy Wilmot]

We don't disclose compensation for executive officers or for directors of Interac.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

I'm not looking for amounts. I'm just looking at the decision-making structure.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, MP Rempel Garner.

I'll now turn it over to MP Gaheer.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Mr. Chair.

Thank you to Mr. Wilmot for appearing.

I was a little confused, like the NDP member, about the structure, but her questions clarified it.

Mr. Wilmot, you mentioned that you charge banks or participants a fee based on an arrangement that's going to change and that what participants charge to their customers is up to them. You said that 95% of customers do not pay for their e-transfers, that only 5% of customers do. It's because, as you said, they bundle e-transfer prices into the other services they offer. In effect, customers are paying for e-transfers, maybe not directly but because of the chequing account that they've signed up for or because e-transfer is part of a bundled service. Is that correct?

[Jeremy Wilmot]

Interac prices e-transfer on a wholesale basis. It's what I would call B2B2C—business-to-business-to-consumer. We're the business-to-business part of that.

In 2025, we will set a flat rate, and then the 230 participants will take that rate and make their own commercial decisions. Those commercial decisions will be highly complex, I'm sure, but they make those decisions. We don't have insight into that.