Why more choice means a better way to pay taxes and bills

Three benefits to Canadian consumers and businesses of having more payment methods available for paying their taxes and bills

As the deadline for filing personal tax returns for 2018 in Canada is April 30, 2019, many Canadian individuals and businesses are focused on the payments that they may need to make to the Canada Revenue Agency (CRA) at the end of this month.

Of course, this means calculating the value of any payment due, but it also means considering which payment method to use when making the transaction. Previously this has not been something that required much consideration; the number of payment methods on offer were few, and so needed little deliberation, regardless of whether the tax payer had a preferred method for making the payment.

However, a new payment partnership between Paysafe and PaySimply is enabling Canadians to make alternative payments to the CRA through PaySimply’s online portal, giving individuals and businesses more choices when it comes to paying their taxes.

Here are the benefits tax-paying consumers and businesses will be able to take advantage of through the portal.

“In a world where the utility of the chequebook is in sharp decline, any system that continues to rely on this payment method feels clunky and time consuming.”

 1. Moving online means greater simplicity

No one enjoys paying tax bills at the best of times. It can often be labour-intensive to complete a tax return form, with the potentially bitter conclusion of needing to make a substantial payment to the government at the end of it, so being able to remove any friction or inconvenience from the process is a huge positive for tax payers.

Antiquated payment methods such as cheques are one such inconvenience. In a world where the utility of the chequebook is in sharp decline, any system that continues to rely on this payment method feels clunky and time consuming. Payment preferences are increasingly moving online and tax must follow suit.

For individuals and businesses, making tax payments simple and faster through a single portal that provides easy access to multiple online payments methods is a game changer. It may not take all the discomfort out of making tax payments, but it certainly lessens the inconvenience.

“On average an online business in Canada accepts four payment methods, but the result of increased consumer expectations is that the average business will accept six payment methods in two years’ time.”

 2. More choice means greater flexibility and familiarity

The online payments landscape is continuing to fragment, both from the consumer and business perspective, meaning that preferences for a number of different payment methods are coming to the fore. For example, research from our Lost in Transaction: Payment Trends 2018 report indicates that more Canadians habitually use digital wallets (42%) to make payments online than debit cards (24%).

13% make payments through a prepaid card, 9% make in-app payments, and 9% make payments using a charge card.

Cash is also still a vital component of the payments landscape in Canada despite the shift in shopping habits to online. According to Lost in Transaction: Payment Trends 2018 data, 83% of Canadians habitually make payments in cash, and the average consumer still carries $43 of cash on them. Reflecting this appetite for cash online through an efficient cash replacement system provides citizens who prefer cash with flexibility to choose whether pay their taxes this way.

And businesses in Canada are reacting to this divergence in payment method preferences. According to our Lost in Transaction: The future of payments for SMBS research, 38% of small-to-medium-sized businesses in Canada operating online accept digital wallets as a payment method; 34% accept direct bank transfer, and 22% accept online cash vouchers. On average an online business in Canada accepts four payment methods, but the result of increased consumer expectations is that the average business will accept six payment methods in two years’ time.

The widening spread of regional payment preferences is also a factor to consider here, as Canadians that have moved abroad but still pay taxes or other bills in their country of origin may have adopted a local preferred payment method. Similarly, consumers that were born or have spent time overseas but now reside in Canada may have maintained a specific regional payment preference that they want to employ to make tax payments.

This more diverse payments landscape is being driven by changing consumer expectation, but it is also fuelling it. More and more Canadians will expect to have the choice to make payments online using every method familiar to them -- and making tax payments is no exception.

“Research indicates that as much as a third of Canadians are either underbanked (28%) or completely unbanked (6%); a significant issue when it comes to making or collecting online tax payments.”

 3. More payment methods mean greater financial inclusion

One further factor that is driving demand for alternative payments is that they are often the path for the unbanked and underbanked to access the same level of financial services that the rest of the population do through banking relationships.

Research indicates that as much as a third of Canadians are either underbanked (28%) or completely unbanked (6%); from both the consumer and CRA perspective this presents a significant issue when it comes to making or collecting online tax payments. All the time that the only available payment method is associated to owning a bank account (transfer, card, cheque) this avenue to settling any tax or bill is closed to a substantial percentage of the population.

Through the PaySimply portal, anyone can make payments to the CRA through methods that aren’t dependent on a traditional bank account, including by cash through an online PIN, or a digital wallet such as Skrill or NETELLER. This democratization of the tax payment process is beneficial for the CRA, as well as providing financial service parity for all tax payers.

Due to the rise of the gig economy, it has also become clear that less people are now subject to “deductions at source” taxation, meaning that they need to submit tax payments in due course instead.

Looking beyond tax

Whilst the primary focus of Canadians this month might be their personal tax returns, the scope of PaySimply extends well beyond that. Small businesses, which are required to submit tax payments regularly throughout the year, will be able to do so using the payment method that is preferable to them, and individuals will be able to do the same for other regular payments, such as utilities, education or municipal property taxes.

Bringing more choice to these bill payments will bring the same benefits as they do to tax payments, meaning this is a significant upgrade for consumers in these areas also. And one further added benefit of digitizing payments and offering more payment methods is that it reduces the likelihood of any service interruption. As online payments are more convenient, and the payment is settled much faster than a mailed cheque, consumers can ensure that they pay their service providers in a timely manner.

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