- Business owners report feeling stressed during the COVID-19 pandemic and cash flow is a crucial concern for most [1)
- The use of Interac e-Transfer® by individuals has exploded during the pandemic and the company is working to expand its use by businesses of all sizes
- Moving money more quickly and efficiently is key for businesses, Interac enhances hugely popular Interac e-Transfer service to deliver
The effects of the COVID-19 pandemic on businesses have been well documented: retailers scaling back or closing altogether; offices trimming hours, cutting staff or sending employees home to work indefinitely; restaurants either equipping themselves with Plexiglas partitions or pivoting to takeout only.
“The pandemic has reinforced the need for digitization and reduced manual processes to boost overall operational efficiency.”
— Anurag Kar, AVP, Money Movement.
The effects on business owners are also profound. In November 2020, the Business Development Bank of Canada (BDC) released its Canadian Entrepreneur Mental Health and Well-Being Report, which showed that 39 per cent of surveyed business owners reported feeling depressed at least once a week while two-thirds reported feeling tired and “low,” with little energy.
“Generating revenue, paying expenses and having enough demand worry entrepreneurs the most through the COVID-19 crisis,” said the BDC report.
In this strained environment, every dollar counts more acutely than ever before and, for many business owners, cash flow is a big part of that: Will there be enough money coming in — and at the right time — to pay the bills and keep going?
One company whose business is the flow of money — Interac Corp., through which CAD$ 427 billion moved in 2019 — has been monitoring the enterprise landscape during the pandemic, learning from its customers and working on solutions for business owners.
A FASTER, DIGITAL BUSINESS SOLUTION
One solution, according to Anurag Kar, AVP, Money Movement at Interac, is for businesses to embrace the faster, digital payment options that their customers have been using for years.
Interac e-Transfer — used by parents to instantly send spending money to kids in university or college; by homeowners to pay painters and landscapers; by friends to share the cost of a joint birthday gift — can be more widely used by businesses, Kar said, pointing out that the average business payment cycle is upwards of a month and late payments are common in business-to-business interactions.
“The pandemic has reinforced the need for digitization and reduced manual processes to boost overall operational efficiency,” he said.
“The day-to-day financial management processes that businesses have in place are often ingrained into existing systems, which are not typically compatible with the technological advances being made available to the payments ecosystem.”
“In light of COVID-19, I believe we will start seeing businesses fast-track updates to systems and processes, enabling the faster movement of funds and straight through processing that Interac e-Transfer® for Business will allow for,” explains Kar.
MASSIVE INCREASE IN INTERAC E-TRANSFER TRANSACTIONS DURING PANDEMIC
So while Interac was recording a 55 per cent increase in Interac e-Transfer transactions during the pandemic — 325 million between April and August 2020 compared to 210 million in the same period in 2019 — it was also fast-tracking the road map to bring enhanced Interac e-Transfer features to the market, building on its origins as a peer-to-peer payment service to one that addresses challenges in the commercial payments space.
Among the requirements to benefit enterprise, Kar said, are consistent speed and certainty of transactions; compatibility with global standards for electronic messaging to centralize invoices and payment options; and increasing payment limits. All while working within a familiar and integrated business banking experience.
How would all of this help entrepreneurs? Here’s one example:
A vendor supplies a product it makes to a customer. At the same time, it is also a customer of a company that supplies it with raw materials. There are two sets of transactions for the vendor: receiving customer payments and paying their supplier. Often, a company will rely on short-term borrowing or lines of credit to account for periods where payables and receivables don’t line up.
With access to secure and reliable real-time payments, the business owner could immediately use funds coming in to pay their supplier without needing to account for payment processing times. This allows the business owner to lessen or even avoid the costs of borrowing in these cases.
MORE BUSINESSES ARE EMBRACING INTERAC E-TRANSFER
Already, entrepreneurs are getting on board; for example, according to Interac, 21 per cent more businesses were receiving Interac e-Transfer transactions in August 2020 than in February — just six months of pandemic life.
And that is on top of huge increases in contactless payments as more and more public-facing businesses stopped taking or discouraged the use of cash because of fears around the spread of COVID-19.
Other tools small-to medium-sized businesses are using include the Autodeposit feature, where money sent to them by customers via Interac e-Transfer is deposited directly into their account, eliminating the need for sign-ins and passwords.
“Faster, integrated, digital payments are essential for economic recovery in Canada, and that's why we're working with financial institutions to make these enhancements, supporting businesses on the journey to adoption,” says Kar. “We’ve seen appetite from Canadian businesses across industries, and we recognize that Interac and the payments ecosystem as a whole has a responsibility to innovate to meet these growing needs at a time when cashflow is crucial.”
Learn more about Interac by visiting newsroom.interac.ca.
Interac e-Transfer® is a registered trademark of Interac Corp. Used under license.
This story was provided by Market One Media Group and Interac Corp. for commercial purposes.
 BDC Study, November 2020, Canadian Entrepreneur Mental Health and Well-Being Report.
 This service is in development and currently not available.
 business owners banking with a participating financial institution can use the remittance service.