Association formed to educate participants
Montreal – December, 2003.
The Electronic Transactions
Association of Canada (ETAC)
was founded on in December of
2003. Incorporated as a non-profit
federal Canadian corporation,
the ETAC was established under
the leadership of Adam N. Atlas,
a Montreal attorney.
On the founding of the ETAC,
Atlas stated that the mission
of the ETAC will be to educate
and bring together participants
in the burgeoning electronic
transactions industry in Canada.
Separate and independent from
the U.S. Electronic Transactions
Association, the ETAC will be
devoted exclusively to Canadian
issues in the rapidly evolving
Canadian electronic transactions
market. With some Canadian
banks lagging woefully behind,
Atlas predicts, that the electronic
transactions business in Canada is
on the verge of a revolution as the
number of Canadian processors
increases and as the processors
bring online ISO’s. The ETAC
is inviting Canadian banks,
processing and ISOs to join a
board of trustees that will govern
the affairs of the organization.
The web site of the
ETAC will be launched, at
www.electran.ca in the new year.
Enquiries can be made by calling
Tel: 514-842-0886
FT Staff writer
SARS: One Major Concert And A World Of
Difference In Payment Processing
SARS (Severe Acute Respiratory Syndrome)
affected all facets of business and commerce in Canada,
and electronic payment processing was no exception.
Moneris Solutions, Canada’s largest processor of debit
and credit card transactions, took the intiative to conduct
an extensive study on their payment processing activity
in the Greater Toronto Area (GTA) during the months
of April and July 27 to August 2 (the latter being the
SARS benefit concert featuring the Rolling Stones and the
start of Caribana celebrations).
The study was a successful attempt to quantify the
economic impact of SARS on their merchants.
An overall assessment of the findings suggest that across all
industries, spending in the GTA increased by $75.2 million in
the late summer in comaprison to the pitfalls suffered earlier
in the year. The travel and entertainment industry alone was
up $25 million while spending at restaurants increased by
$20.9 million. Hotel transactions were up by $1.9 million.
As for the retail industry it gained the highest growth with an
increase of $39.6 million.
A fitting conclusion to these findings would suggest that
the best way to predict the future is to invent it; so why
not throw a concert!
Say Goodbye
to Telecheques
CPA Reigns In Paperless Cheques
The Canadian Payment Association (CPA), which
exists by an act of parliament, and whose membership
consists largely of banks, has adopted a policy to the
effect that telecheques will be prohibited in the clearing
process, effective as of January 1, 2004.
A telecheque is a form of a cheque, which is neither
created nor signed by the payor. It is a cheque
created by a third party on behalf of the payor who
subsequently providesall the necessary information and
an authorizationof withdrawal to a third party.
This type of interaction often takes place over the telephone
or on the internet.
The prohibition of telecheques reflects a concern over fraud.
When a payor provides ready and live account information
to a faceless third party, the verbal authorization is
valid but difficult to prove.
Such payors are create an invitation for fraud. In analyzing
the issue, the CPA concluded that the inability to verify
a valid authorization has created an unacceptable level of
risk for both the account holders and financial institutions.
Surprisingly, there has been no report of fraudulent
conduct associated with telecheques in Canada, but
then again, this type of transaction is rarely used. The
purpose behind the prohibition is therefore proactive
and intended to solve the problem before it occurs.
It should be noted that until January 1, 2004, telecheques
are still valid, and they will continue to be processed through
the 180 - day return timeframe for unauthorized items
See also the feature article, Page 6 on the Paperless Cleaning System.
Advance with
CHIP technology
Make Way For Chips That Dip!
No, we’re not talking about salt and vinegar or
barbeque, but rather the newest edition to the sea of
credit cards which are the “smart cards”. The smart card
features a chip with a microcomputer designed to make
payment processing safer by acting as a replacement for
the standard magnetic strip.
The microchip transaction processing is seeping into
the Canadian market with some of Canada’s largest
processing companies like Moneris and Paymentech
welcoming and implementing the advancement with
open arms. The industry advancement was influenced
by Ingenico, a France-based company which happens to
be one of the world’s POS terminal manufacturers and
is a primary reason for Europe’s growing demand for chip
technology and smart cards. Ingenico is one of the leading
POS supplies in Canada.
The adavanteges of smart cards include that they are
practically imossible to encrypt, the possibilites of fraud
and chargebacks are reduced, and customer loyalty and
conveinience with use of PIN numbers instead of signitures.
Smart cards are also facilitate intergration of credit, debit
and loyalty plan systems.
Disadvantages of chip technology are hard to miss as well,
namely, the high cost of new equipment and the time
required for market penetration.
Market research predicts that the Cananadian application
of smart cards is expected to take approxiamtly seven years.
Paving the Way towards
a Paperless Clearing System
Will There Be Cheque Scanners At Canadian Corner Stores?
Although writing a cheque may be a seemingly easy
payment method for individuals and companies on a dayto-
day basis, much effort is in fact required and delivered
by clearing houses who act as the “behind the scene”
entities and process the entire check clearing system.
Cheques are exchanged among clearing houses during
the evenings and then stacked onto planes and trucks
the following morning, designated to reach the financial
institutions from which they were drawn. This journey could
either be a one way ticket across town or around the world,
which creates vulnerabilities to unexpected interruptions.
Evidently, over the past 20 years clearing processes in
Canada have remained stagnate with little emphasis on
wireless technology. However, by 2006 old habits will
die out and the cheque processing industry will finally be
aboard the technological super highway. In the spirit of
recent proposed U.S. legislation.
The idea of clearing exchanges in a cheque imaging
environment has been the center of serious discussions
for the past 18 months.
What exactly is cheque imaging?
In the simplest of terms, it is a technique whereby once
a cheque has reached a clearing agent’s data centre,
the amount of the cheque and its MICR line data (the
numbers that run along the bottom of the cheque), as
well as an image of the front and back parts of it, will
be captured electronically. Once this is done, instead of
transporting via trains, plains and automobiles the actual
tangible item, the data center will transmit the information
detained from the cheque and the image file to the issuing
institution. The issuing institution (sagnificant drawee)
will then make a decision to honour the withdrawal
based on the electronic imaging information. Although
cheque imaging will represent a turning point for the old
way of doing business, very little will change at the “store
front”. Counter top cheque scanners are still a thing of the
future in Canada. Canadians will continue to write and
deposit cheques as they normally do, and the financial
institutions will continue to follow their usual practices
of delivering the cheques to their clearing agent’s data
centre. Cheque imaging is commonplace in the U.S. today.
What happens to the original paper item?
After its image has been captured and cleared by the
paying institution, the original paper item no longer serves
any real purpose, thus, it can simply be destroyed after
an allotted retention period.
The benefits of cheque imaging are notable. Abandoning
ground transport in favour of electronic frontiers makes the
delivery of cheque imaging data faster and more efficient.
Financial institutions accepting cheques on deposit will
also benefit by receiving notification of returned items
more rapidly than they do today. In addition, these
financial institutions will use software products that are
geared towards digital imaging and will therefore be
more likely to detect fraud. Essentially, cheque imaging
and data transmission will reduce the current cheque
clearing process to a matter of minutes while enhancing
the safety of the system by reducing risks associated with
transporting and verifying the physical cheques. Finally,
customer and business satisfaction will increase and thanks
to faster processing will bring drastic service improvements.
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