Getting To Ubiquity: ePayments In Canada

It’s not hard to understand why the medium, small and micro-business owners of Canada would appreciate Interac e-Transfer, which enables them to send or receive funds instantly, directly from or to their bank account, as well as request payments from customers — minus the awkward face-to-face element of asking someone for money.

But small business (SMB) owners aren’t the ones Interac needed to convince.

Typically, financial institutions (FIs) are a tougher sell than end users when it comes to new money-moving products. After all, FIs are the ones who have to integrate the solutions they choose, ensuring that they work — and work fast — and keep their customers’ financial data secure.

Often, different FIs have different opinions about which products and solutions will best serve their customers, leading to a fragmented ecosystem and keeping any one solution from reaching the payments holy grail of ubiquity.

Whether payments are moving between individuals (peer to peer, or P2P) or between consumers and businesses (C2B), they flow most easily from like to like — for instance, if the sender wants to use PayPal, the recipient must also have an account.

That’s why ubiquity is so desirable. But in an ecosystem like the one in the U.S., where there are thousands of FIs and heavy competition between payments product innovators, it can be nearly impossible to achieve.

Luckily for Interac, Canada isn’t the U.S. Interac e-Transfer is available at over 255 financial institutions in Canada, making the service nearly ubiquitous from coast to coast.

Interac’s AVP of Online Products and Platforms Peter Maoloni explains how the landscape left a perfect opening for the company’s latest offering.

The Who

Interac started out in the P2P space back in 2002. Maoloni said it was all about giving customers insight into payment information and powering easy completion. FIs that integrated the product built their own custom solution around it to deliver a unique experience to end customers, while also leveraging their strong Canadian household name.

In 2009, said Maoloni, the world started adopting mobile banking, and so did Interac. By then, the company’s customer segments were shifting, and the question became how to make life easier for SMBs and micro-businesses, such as dog walkers and yoga teachers.

The What

Enter Interac’s two new product components: Request Money and Autodeposit. These ensure that the money promised is actually available to be sent and that the payment is irrevocable, or can’t be taken back by the sender once it appears in the recipient’s account.

Request Money, said Maoloni, cuts out the awkwardness of asking someone in person to pay for a product or service rendered by a small or micro-business. And once the customer responds by sending the money, he added, there’s no taking it back — irrevocable payments are part of the value proposition.

Autodeposit enables customers to register once and then, henceforth, receive instant deposits directly to their bank account whenever someone pays them.

Designed for small business owners, these components can also be useful for landlords collecting rent payments, charity functions, church groups, organized sports and other use cases, said Maoloni.

The How

Canadian banks all have access to the same lightweight API that enables money to flow between accounts. Maoloni explained that the API facilitates instructions between FIs, so the payment is guaranteed to be good, irrevocable and available in real time.

Maoloni said that the platform’s APIs make it relatively easy for FIs to integrate the Interac e-Transfer product, and those guaranteed, real-time, irrevocable funds make it attractive for banks to adopt. The more banks adopt Interac e-Transfer, the more the value proposition grows as the product nears ubiquity.

Of course, it helped that Canada’s Big Five banks had already adopted Interac’s earlier products and solutions, making it one of the first bank-integrated P2P systems in the world, Maoloni said.

The earlier products, said Maoloni, essentially created a cash equivalent in a digital space. They were lower risk and invited less fraud. In a well-banked country like Canada, he said, FIs and their customers don’t want to have to move money somewhere in order to move it somewhere else. The original Interac solutions eliminated some of that hopping.

“They brought people to the party,” Maoloni said. “Once they’re there, introducing new features is just about making sure it’s interoperable for both parties.”

In the same way that banks built their own product around Interac’s branded P2P product, the new features are also a foundation on which FIs can design their own experiences and differentiation in the service offering.

The Why

Far be it from Maoloni, or anyone else, to say how every SMB owner should be running their enterprise. However, new tools are constantly hitting the market that can make life a little easier, a little tidier, a little more organized and a lot more secure. Judging by the adoption rates so far, many are finding that Interac e-Transfer does just that.

Maoloni said the system helps SMB owners eliminate paper invoices and keep better track of which invoices have been received and who has paid or been paid. Autodeposit eliminates the deposit collection for business owners — or, in another use case, saves charities from collecting and keeping track of cash at fundraisers.

In short, he said, “it empowers small businesses with the capabilities that large organizations already have.”

Canada was a comfortable place to start because of that finite landscape, said Maoloni, and makes for good experimental ground to see what could happen with FIs on a larger scale.

Now, it’s time to see if that larger scale bears out the lessons learned in the Canadian market. The next step, Maoloni said, is to build international and cross-border interoperability and make the product available to non-FI users.