Ron Morrow on Canada’s Payment Future at Payments Canada Summit

Toronto, Canada, May 30, 2024 – In a speech brimming with historical references and pop culture nods, Ron Morrow, Executive Director of Payments, Supervision and Oversight at the Bank of Canada, addressed the Payments Canada Summit on May 30th. Highlighting the evolving payments landscape, Morrow emphasized the importance of both maintaining a robust cash ecosystem and fostering innovation in digital payments. 

Cash Here to Stay, But Digital Payments on the Rise 

Ron acknowledged the enduring value of cash, referencing its universality, resilience, and immediate settlement. He noted that cash remains a popular choice, accounting for one in five point-of-sale transactions. The Bank of Canada, he assured, remains committed to supporting cash through secure banknote issuance and efficient distribution. 

However, the rise of digital payments was a clear theme. Morrow showcased this shift by referencing the Barenaked Ladies’ 1990s hit, “If I Had a Million Dollars.” He outlined how the song’s various purchases – from pre-wrapped sausages to online furniture – reflect the diverse payment methods Canadians use today, with debit and credit cards dominating and e-commerce transactions accounting for a significant portion of spending. 

Cryptocurrency and Stablecoins: Potential, But Concerns Remain 

Ron acknowledged the growing interest in cryptocurrency and stablecoins but pointed out their limited use as a mainstream payment method. He highlighted the Bank of Canada’s focus on studying central bank digital currencies (CBDCs) as a potential future innovation. He emphasized that the decision to implement a CBDC ultimately rests with the Canadian government and its citizens. 

Modernization Efforts Underway 

Ron outlined the Bank of Canada’s multi-pronged approach to modernizing the national payments infrastructure. This includes: 

  • LINX: Launched in 2021, this high-value payment system facilitates large electronic transactions and is considered the backbone of the Canadian payment system. 
  • Supervision of Payment Service Providers (PSPs): A new regime established in 2021 aims to enhance consumer protection and promote stability within the PSP landscape. Registration for PSPs will open in November 2024. 
  • Real-Time Rail (RTR): Canada’s upcoming real-time payment system, expected to be operational for industry testing in 2026, promises faster and data-rich transactions. Delays have been acknowledged, but a clear path forward with a “Team Canada” approach is in place. 
  • Modernization of the Automated Clearing and Settlement System (ACSS): The Bank of Canada is collaborating with Payments Canada to explore solutions for modernizing the aging ACSS system, which currently handles batch payments like pre-authorized debits. 

Collaboration for a Future-Proof Payments Ecosystem 

Ron concluded by emphasizing the national importance of payment system modernization. He underscored the Bank of Canada’s commitment to working with the Department of Finance, Payments Canada, and the industry to ensure a future-proof payments ecosystem that benefits Canadians. This includes fostering innovation in open banking, as recently announced in Budget 2024, and addressing fraud prevention measures for the RTR. 

The speech offered a glimpse into the Bank of Canada’s perspective on the evolving payments landscape. While cash remains a trusted option, the Bank is actively preparing for a future dominated by digital payments, while ensuring Canadians can continue to rely on a secure and efficient public money system.