How Canada’s Post Strike Could Boost Electronic B2B Payments

Canada’s mail and parcel operations under Canada Post have been hit by a worker’s strike amid ongoing contract tensions with the Canadian Union of Postal Workers (CUPW). While the post disruptions are certainly a headache for the public (consumers, businesses and government entities alike), there may be an unexpected effect of the strikes: a boost in electronic invoicing and payment adoption.

Ongoing contract disputes between the CUPW and Canada Post have led to widespread rotating strikes starting on Monday (Oct. 22), with strikes first beginning in Victoria, Edmonton and several other major cities. Since the strikes are rotating, mail service will continue even in cities in which strikes are occurring, but the union has advised that service will be slow, reports in CBC said.

Among the communities that may be most affected by the strikes is the small business (SMB) community, said the Canadian Federation of Independent Business (CFIB), which issued a notice on Monday calling for a speedy resolution of the contract disputes to end the strikes.

“While a rotating strike may be less harmful than a general strike, it creates additional uncertainty for businesses at a critical time for many small firms,” said CFIB President Dan Kelly in a statement. “The bad news for Canada Post workers is that every time they even threaten a strike, more small business customers move to use alternatives, many never returning to Canada Post.”

There are a multitude of ways that interruptions to the post service can negatively affect a business, according to Kelly, as small business invoices and payments particularly those exchanged with other business partners are often sent through the mail. According to the CFIB, the majority of small businesses in Canada pay other businesses by paper check, which must be mailed.

While small businesses may seek alternative service providers to continue mailing out their invoices and paper checks to make B2B payments, the CFIB is encouraging small business owners to turn to digital channels to transact. Specifically, the CFIB recommends that small businesses sign up for the My Business Account solution from the Canada Revenue Agency to make online tax payments, or use electronic payments system Interac to send and receive B2B payments. (Interac recently consolidated and added new features to its offering, including accelerated small business payment services.)

In an interview with PYMNTS’ Karen Webster in February, Interac CEO Mark O’Connell noted that the company’s new capabilities include a focus on SMBs, aiming to be “a true ‘check killer.'”

It’s unclear when the strikes will cease, or how much of an impact they might have on local small business adoption of electronic invoicing and payments. Disagreements between Canada Post and the union cover wage freezes and a lack of wage hikes to keep up with inflation across Canada Post’s urban unit. Union members at Canada Post’s rural unit have argued that contract negations have proceeded without Canada Post acknowledging that it won a pay-equity settlement through arbitration, reports added.

Canada Post is also under scrutiny for a planned price hike next year following 2014’s increases, as well as for a pension solvency deficit worth an estimated CAD$8 billion (about $760,000 USD).

This isn’t the first time Canada Post has endured a strike that threatened the nation’s small business payment operations. In 2016, a union strike similarly left the CFIB to call on workers to resolve disputes with Canada Post quickly so as to minimize disruption to invoicing and check payments sent and received by small businesses across Canada.

“The longer the uncertainty drags on, the more Canada Post customers, including small businesses, are going to find other ways to accept payments and ship goods,” Kelly said at the time.

A similar event occurred in the Bahamas last year, described at the time as a “disaster” when Bahamas post office workers held a strike, which shed light on local small businesses’ ongoing reliance of the post to send and receive invoices and B2B payments.