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How Canadian banks could revolutionize electronic transactions?

Updated: Jun 20, 2020

In 2008, Canadian banks introduced chip inserts and contactless payments to securely move towards digital payments. Since then, electronic transactions have increased in usage every year with the banking system in Canada recording 73% of transactions electronically in 2019.

As cryptocurrencies grow in popularity, technological innovation pushes the industry as a whole to become digital first. We notice a significant rise in the number of Interact e-transfers and see overall improvements in the security and user-interface of banking apps. Social distancing also applies to the exchange of money as companies move away from physical cash for sanitary reasons. The world is trending towards digital transactions whether we like it or not.

While banks work hard to roll out new tech, there is one area that needs significant improvement. The term metadata is popular in the tech community and means “a set of data that describes and gives information about other data”.

The metadata that is left out of each transaction in 2020 is simply staggering. When a digital transaction happens online or at a physical store, the information that the banks record is extremely limited. The solution we propose is to make a bank transaction record equivalent to an invoice that is acceptable by Canada Revenue Agency and Revenu Quebec.

What does this mean? Essentially, each transaction’s metadata should include at the minimum all of the following information;

  1. The before tax amount,

  2. The taxes including the tax rates,

  3. The after tax amount,

  4. The date of transaction,

  5. The location of transaction,

  6. A list of the products or services sold,

  7. The seller’s contact information,

  8. The seller’s tax account numbers,

  9. The buyer’s contact information,

By recording the above metadata for each transaction, physical paper receipts can be eliminated, which in itself can be a legitimate ecological opportunity. The fact that the government still requires companies to keep separate invoices also makes bookkeeping highly redundant.

The banks have the ability to form an association with POS providers and the Canadian government to implement a new Digital Transaction Reporting Standard (DTRS). All of the required information is already in the banking system, it is just a matter of linking them into the metadata of each transaction.

The opportunities for data analysis would be endless.

  1. Banks will get better insight into their client’s spending and selling habits by evaluating transaction patterns. The analysis can help banks better calculate the risk of loans and lines of credits.

  2. The accounting industry would finally see a major shift towards automation by connecting to accurate bank transactions. Automating bookkeeping and simplifying invoice storage will allow accountants to spend more time providing their clients with business insights and analysis.

  3. The government could audit companies with more efficiency by accessing accurate tax information directly from the banks or the accountants. Tracking sales tax is a major pain point for governments right now and implementing DTRS is a necessary step to address this issue.

The time to act is now. Digital currencies are the way forward and it’s time to take full advantage. We are calling on the top 5 big banks to seriously consider DTRS and implement digital currencies effectively.


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