By Amanda Ryder
Bidding farewell to cheques?
Changes to the way that Canadians make and accept payments for goods and
services may have implications for small- and medium-sized businesses. Top among the concerns to
entrepreneurs is the future of cheque writing.
Oct. 27, 2011 – Changes to the way that Canadians make and accept payments for goods
and services holds many positive and worrisome implications for the
country's small- and medium-sized businesses, according to the Canadian
Federation of Independent Business (CFIB). Top among the concerns to
entrepreneurs is the future of cheque writing in Canada as there is a
very real possibility that a federal review may recommend the phasing
out of paper cheques in the near future.
"Given the vast majority of firms in Canada are small businesses, it
is vital that any changes to the existing payments system does not
hinder their growth but rather creates additional opportunities and
benefits. Small-and medium-sized businesses (SMEs) need to be assured
that they are not being taken advantage of and that there are enough
reasons to justify a full switch to electronic payments," stated CFIB's
executive vice-president Brien Gray.
CFIB recently submitted new research to the Task Force for the
Payments System Review, which found that paper cheques are still the
most popular form of payment for Canadian small businesses –
particularly for business-to-business transactions. While credit card
and debit card transactions are the most commonly accepted forms for
payment at retail and hospitality firms, cheques represent the largest
portion of total sales for all other types of small firms.
"While cheques are still incredibly important to small firms," said
Gray, "if the transition to a new electronic payments infrastructure is
done right, there is an opportunity for small businesses to quickly warm
to the new options." The recent Canada Post strike caused much stress
and frustration for small firms relying on cheques in the mail as their
source of payments. "A fully integrated electronic payments
infrastructure for business-to-business transactions would be a welcome
step away from dependence on Canada Post for many entrepreneurs," Gray
To help inform policymakers to get the transition right for SMEs,
CFIB surveyed small business owners on the current state of the payments
system, opportunities for advancement, and obstacles in going
electronic. For SMEs, it is critical to ensure that any new payment
system introduced is low-cost, secure, accessible, and user-friendly,"
stated CFIB's vice-president of research Doug Bruce.
Findings indicate that SMEs prefer to use cheques as a type of
payment since they are commonly accepted in their sector, easy to use
and help with record keeping to meet compliance and business needs. The
cost of accepting (setting-up, processing and reconciling) electronic
payments is an issue for business owners, especially for smaller firms.
For SMEs, past experiences with electronic solutions providers and
credit card companies have eroded trust in the current payments system.
Business owners' views have been tainted by high credit card processing
fees and hidden charges. "Electronic solution providers will have to be
better at serving entrepreneurs through increased transparency,
reasonable costs and choices of payment type," stated Bruce.