Magazine article American Banker

Canadian Banks Outpacing U.S. Peers in E-Pay Adoption

Magazine article American Banker

Canadian Banks Outpacing U.S. Peers in E-Pay Adoption

Article excerpt

Canada has a higher percentage of people adopting online banking and bill payment than the United States, largely because there are so fewer major banks there, Canadian bankers say.

The figures are dramatic -- 52% of the Canadians regularly who use the Internet pay their bills at their bank's Web site, versus only 10% of online U.S. residents, according to a report last month from Forrester Research Inc.

Payment processing is faster and easier when there are fewer banks involved, the bankers there say. Moreover, Canadians have taken readily to paying bills through their banks' Web sites, and there is less competition from the billers themselves. Unlike in the United States, person-to-person payments are a standard offering from Canadian banks.

"Ten thousand banks is not the same as six -- it is easier to get consensus with six around the table," said Michael Lozeau, the senior vice president of e-commerce at National Bank of Canada.

In the early 1990s Canada's largest banks agreed to build an integrated platform that allows for the overnight processing of electronic payments, whether they are made using debit cards, the telephone, or the Internet. This laid the foundation for a faster settlement system that has helped spur the adoption of online bill payment.

"At the end of the day, bill payment is fundamentally different in Canada than the U.S.," said David Johnston, the senior vice president of the Internet channel at Canadian Imperial Bank of Commerce. In the United States, the actual flow of payments from one financial institution to another can take three to five days, but it occurs overnight in Canada, he said.

Bob Grant, the senior vice president of electronic banking at Bank of Nova Scotia, said that overnight settlement means that Canadians harbor fewer concerns about security or whether transactions will clear. …

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