Canada Lags U.S. In B2B Payments

Payments innovation usually begins in Canada and moves to the U.S. because Canada has achieved a more advanced stage of deployment with EMV-chip cards and other technology. But that’s not the case for business-to-business payments.
BMO Harris Bank, which is based in Chicago but belongs to a corporate entity owned by Bank of Montreal, is drawing on its experience in check automation in the U.S. to push new business payments technology in Canada.
“The U.S. is ahead of Canada in electronic checking,” said Derek Vernon, vice president and head of North American Treasury and Payment Solution for BMO. “Given our experience with BMO Harris Bank, we have been deploying technology like this in the U.S. for years.”
The bank’s software enables businesses to use scanners to process and deposit check payments, mostly for B2B transactions involving the nation’s small merchants.
Despite the country’s embrace of mobile technology, business owners still use paper checks much of the time in Canada.
For businesses, checks are particularly popular for supply chain, procurement and other payments, Vernon said.
Overall, Canadian businesses and consumers still pass about 4 million checks per day, he noted.
“The reason for that is the remittance data that goes into the check payment,” Vernon said. “When a business pays another business, they want to know what they are paying for.”
BMO’s DepositEdge has become part of an e-check processing package that’s designed to help small businesses avoid using lockboxes or purchasing check scanners.
The businesses can rent scanners for a monthly fee. Many choose that option because the equipment would cost $1,000 to purchase outright.
“The small businesses can’t afford the lockboxes, which aren’t cheap,” Vernon said.
The popularity of checks for B2B payments in Canada stands in stark contrast to other types of payments, where Canada generally adopts early and often, sources agreed.
One of the early Near Field Communication tests involved McDonalds and Interac Flash in Toronto.
Canada also regularly ranks high on MasterCard’s survey of national preparedness for mobile payments, the card brand said.
BMO is also applying its experience in Canada to its U.S. shift to EMV. It assumes the U.S. transition target date of October 2015 will likely not be universally met, and as a result it is issuing chip cards to customers only when their magstripe cards expire.
Business payment technology in the U.S. has also oten lagged behind consumer tech, though U.S. merchants are increasingly embracing automation.
RBS Citizens, for example, last year introduced a mix of accounts payable and mobile technology that enables businesses to deposit checks remotely through a system that is linked to the user’s other cash management relationships.
U.S.-based vendors such as Billtrust are digitizing invoice delivery. Fiserv also offers automated billing and payment technology for businesses, and software companies such as Bill.com integrate billing and payments with small-business banking.