Canadian Banking Concepts

Canadian banking seems to lag New Zealand a bit in some seemingly obvious ways but is ahead in others. The concept of bank transfers doesn't really exist (except within the same bank, and even then it's not so common). Most people pay for things with cash, or cheques. Really big things can be paid with a bank draft, which are close relatives of the cashier's cheque. You have to go into a bank branch, fill out and sign several forms, and finally, you get a very official looking piece of paper printed and handed to you. As the money has already been taken from your account by your bank, you have to protect the bank draft (not so much from theft, as it can only be cashed by the named recipient, but against loss). If you lose the bank draft, then as far as we could tell you lose your money.

We had a bank draft issued for the first car we were planning to purchase, but in the end, didn't follow through on the sale. This meant heading back to a bank branch with the draft and receipt, and then signing more papers and watching the teller follow many complicated internal processes to reverse the draft and release the funds back into your account. What a hassle!

Another main form of payment is the Interac e-Transfer. Interac is an inter-bank transfer service run by a third party, and powers things like their EFTPOS terminals and other banking infrastructure. e-Transfers are a way of sending money via email or txt message to any bank account holder in Canada. The money isn't actually sent via email, but the instructions to retrieve it are. The process works a bit like this:

• Sender adds the contact info (name, email, cell) of the recipient on the e-Transfer section of their online banking website
• Sender initiates transfer and chooses a password or other question/answer style passphrase that the recipient will use to authenticate themselves
• Sender communicates this passphrase to the recipient, preferably not via the same method that the e-transfer was sent
• Recipient opens the email, enters their details and the passphrase, and receives the money into their bank account

We've used the e-Transfer method to pay our rent, and it seems to work pretty well. Unfortunately many banks charge ($1.50 or so, sometimes one free per month) per e-Transfer, so you can't use it to pay for everything.

Then finally the fall-back is standard cheques or cash. Cheque related technology has advanced quite a bit to accommodate their ongoing usage, so you can normally deposit a cheque with your mobile banking app just by taking a photo of the front and back.

I can't wait until the rest of the world has a banking system like the New Payments Platform that Australia has just released. One day.