A new report from Ernst and Young LLP (EY) and Payments Canada finds Canadian businesses are spending as much as $5.2 billion on payments processing.
The companies released their report on Tuesday (Feb. 6), highlighting both the cost of payments processing and the inefficiencies involved in the process due to a lack of transparency and data in payment messaging, especially for small businesses (SMBs). Invoice matching, a lack of supply chain visibility, an inability to predict cash flow, the struggle to track cross-border payments and ongoing reliance on legacy infrastructure are all bogging down SMBs’ payment processes, the report warned.
These points of friction lead companies to miss out on more than $5 billion in savings, researchers said.
The analysis was released as Payments Canada moves forward with its Modernization initiative to promote faster payments in the country while ensuring security. Payments Canada highlighted the potential in adopting the ISO 20022 payments messaging standard as a way to enrich transaction data.
“The modernization of Canada’s payment systems — specifically the introduction of faster, safer and more data-rich payments — will bring highly efficient options to Canadian businesses that will lower operational costs and boost bottom line returns over time,” said Payments Canada President and CEO Gerry Gaetz in a statement. “Business leaders can prepare to take full advantage of the changes now by paying more attention to the way they make and receive payments, examining the inefficiencies in their existing processes and becoming more informed about the coming changes to national payment systems.”
The companies noted that analysis from 2011 by the nation’s Task Force for Payments Systems Review estimated the national economy could save more than $6 billion every year by upgrading the nation’s payments systems.
“The case for a modern payments infrastructure in Canada is strong,” said EY Canada Partner and FinTech Leader Ron Stokes in another statement. “There are many opportunities to deliver significant efficiency gains for the Canadian business community without compromising safety and security. By modernizing a scalable, future-oriented payments infrastructure, Canada will continue to promote innovation and strengthen its competitive position in the global economy.”