Canada needs to adopt electronic cheque resentment quickly, Lloyd Darlington, Bank of Montreal’s technology and e-business chief, said in a speech to the Canadian Payments Association today in Victoria.

Darlington who is President and CEO, Emfisys, and Head, E-Business, Bank of Montreal, noted that Canada has developed a first class payments system.

However, he added it can take years for some changes to be approved and implemented. “At the speed at which technological change is taking place, we can’t afford to spend a decade getting our house in order. We simply have to become more nimble.”

Darlington argued that current legislation regarding cheque presentment inhibits the introduction of new technology that can reduce costs and increase efficiency.

He said that at present, any proposal to enhance the efficiency and cost-effectiveness of the clearing process and reduce the movement of paper must accommodate the more than century-old presentment provision of the Bills of Exchange Act. While applauding the government’s financial services reform initiatives, he said there is still a lot more to be done.

Darlington said that last year, just under 1.5 billion cheques were physically exchanged and settled between CPA members, sometimes taking up to six or more business days if a decision not to pay had been made.

“Obviously, this is an area where moving from paper to electronic channels can produce great benefits, savings and efficiencies,” Darlington observed. “Instead of physically presenting those 1.5 billion pieces of paper for payment verification, authorization and settlement, electronic cheque presentment would involve digitally transmitting (electronic codes).”

Under financial services reform legislation, the CPA will have a mandate to facilitate relationships between other clearing and settlement systems involved in the exchange, clearing or settlement of payments. It will also have a mandate to facilitate the development of new payment methods and technologies.

In addition to the need for electronic cheque presentment, Darlington urged the CPA to work harder and faster, especially on two other core requirements: the creation of a Public Key Infrastructure and the introduction of a payment mechanism like e-cheques. PKI technology assures consumers and businesses that their electronic transactions are legitimate, confidential and secure. “We need (these payment methods) now if Canada is to participate fully in the e-commerce market that is estimated to grow to $4 trillion by 2004.”