Key takeaways

• Modernized government payments deliver faster, more secure, user-friendly services for citizens and businesses.
• Digital, consolidated, and data-rich payment solutions drive significant cost savings, reduce fraud, and improve efficiency.
• With targeted modernization efforts, governments can build trust, streamline operations, and provide better value for constituents.
  

Payments are the lifeblood of our country and economy. As some of the largest payment originators and receivers, governments play a crucial role in developing and offering modern payments systems. The ease and security with which money moves through governments fuel services for citizens and businesses.

Payments are one of the most common reasons for citizens and businesses to interact with government, from benefits and tax refunds, to essential services that drive safety and economic prosperity. However, outdated policies, legacy and siloed systems, and unintuitive payment channels simply can’t keep up with how today’s citizens and businesses expect to send and receive payments to and from government.

In contrast, modernized payments are digital, timely, secure, and data-rich, which allows for lower costs and seamless experiences.

Payments modernization across all levels of Canadian government will improve the way they:  

Over the past several years, Canada has been laying the foundational groundwork for payments modernization to enable faster, data-rich payments with higher limits and increased optionality. One of these initiatives, the Real-Time Rail (RTR), is anticipated to launch over the next couple years and will enable near-instant payments.

We’ll cover the case for government entities to continue the momentum of modernizing payments, the feasible steps to start taking now, and the tangible benefits.

The case to modernize government payments in Canada

Canada was once a global payments leader with various achievements throughout the 2000s and 2010s, including the launch of Interac e-Transfer along with early planning and investments in the country’s national payments infrastructure. But amidst several delays across large transformational initiatives, Canada has begun to lag other countries.

For example, Australian citizens can receive emergency funds in real-time. In contrast, Canada relies on electronic fund transfers (EFTs) and cheques for emergency disbursements, which can delay the receipt of funds at a time when citizens need it most.

Overarching challenges in Canadian government payments

• Significant government cost savings are being left on the table: Antiquated systems and inefficient processes for existing payments contribute to higher costs for governments. For reference, cheques cost $15–$25 per transaction, compared to a few cents for electronic payment methods.¹ Cheques also have limited data to support automation, reporting, and insights, which drives up operational costs. There are also working capital costs to consider—the CRA alone had roughly 8.9 million cheques left uncashed in 2022, amounting to $1.4B in outstanding CRA tax refund cheques that have yet to be deposited and settled.² This is also a liability for the CRA as it is required to hold cash to cover the total of the uncashed cheques.
• Lack of digital payment options: Government payment methods often lack digital optionality, relying instead on slower methods like cheques for certain programs and use cases (e.g., Ontario 2025 taxpayer rebates).³ However, Canadians increasingly expect to receive and make payments through other digital methods and are accustomed to receipt and disbursement of money to occur quickly. From 2019 to 2023, EFT usage rose by 136%, signalling a strong shift in preference toward digital payments.⁴
• Current experience does not meet citizen expectations: One recent survey revealed that nearly 70% of Canadians experienced issues accessing digital government services, including sign-in failures and difficulty finding support.⁵ UX issues like inconsistent layouts and complex navigation make it difficult for Canadians to complete simple transactions, like paying property taxes or applying for a rebate. These poor online experiences can erode citizen trust in government to function effectively or carry out complex tasks.
• Tackling fraud in government requires modern payments solutions: Over the years, fraud in government has continued to gain traction given the increased sophistication of fraudsters and technology. Notably, cheques are also highly susceptible to fraud. While digital payments may present different threat vectors, they’re accompanied by robust solutions and capabilities to combat fraud, like encryption, payee verification, and real-time monitoring.
• Poor controls result in payments errors: From 2020 to 2022, the federal government saw over $4.6 billion in overpayments after the rollout of the COVID-19 Emergency Response Benefit (CERB).⁶ Governments often lack the ability to quickly implement standardized pre-payment checks like real-time eligibility validation, and consistent identity verification, which can introduce significant operational and financial risks. Streamlined and automated verification processes reduce errors while providing more timely and expedited payments to citizens and businesses.

The path forward: Five compelling ways for Canadian governments to modernize payments  

Join the payments revolution

In a government climate focused on efficiency, affordability, and seamless user experiences, governments can achieve tangible results by modernizing payments. There are many opportunities to attain short-order benefits while building a longer-term foundation.

Your payments modernization journey could start with more manageable activities like the following examples:

• Promote education and awareness to shift payments behaviours: WorkSafeBC encouraged workers, healthcare providers, and vendors to register for direct deposit during Canada Post service disruptions.¹⁰
• Advocate for policies to enable broad change: The EU’s Single Euro Payments Area (SEPA) Regulation mandated all euro-area non-cash payments including government payments (e.g., tax refunds, supplier disbursements) to use ISO 20022-based formats by 2016, improving speed, efficiency, and consistency across 41 participating countries.¹¹
• Select a smaller-scale, high-impact use case to pilot modernization: The City of Guelph recently launched an online property tax portal, addressing a common gap still seen in many municipalities for common routine payments.

Deloitte’s professionals bring a breadth of specialized talent to your government’s payments landscape and a tailored approach to deliver value to your citizens, businesses, and workforces.

Ready to join the government payments revolution? Let’s chat about your next move!