Matt Spoke: Rogers outage highlights desperate need for Interac competition

As with many Canadians, I woke up on July 8th wondering why my cell phone wasn’t working. At first, I thought I must’ve missed a bill payment (or several), but eventually clued in that my wife’s phone wasn’t working either.

Luckily, my home internet connection is with Bell, so I was able to get on with my day and not worry too much about it. Then my wife reminded me that I was supposed to transfer her some money, so I logged into my bank and initiated an Interac e-transfer….Nope, never mind. That wasn’t working either. 

Ultimately, it wasn’t the end of the world—12 hours later, my service was back, I completed my e-transfer, and I frankly enjoyed a bit of forced digital detox. But the whole experience still shocked me. 

Looking beyond the slight inconvenience I experienced, it was clear that there were bigger impacts being felt by the Rogers outage. Small businesses could not accept Interac payments; 911 Emergency Services experienced crucial interruptions; employees could not log in to work.^{1Businesses lost more than internet during Rogers outage: ‘Our sales were diminished’ https://globalnews.ca/news/8979844/rogers-outage-small-businesses-impact/} I’m sure there were many more significant impacts that we’ll never hear about. 

How did we get to a place as a country where a simple error by one company can so negatively impact a huge percentage of our economy, our population, and some basic services that have become the critical infrastructure to the basic functioning of our society.

Luckily, today, I feel vindicated, hearing the news that Rogers would generously credit five days’ worth of service back to my account for “only” interrupting my coverage for less than one day. We should all flock back to Rogers with gratitude.

Jokes aside though, it’s too easy to simply turn the blame on Rogers. But we’ve built a system that allowed this to happen, and it could’ve just easily happened to Bell or Telus. 

There are some obvious questions being raised about the need for more competition in our Telecom industry, but I’ll leave that to others to comment on. The most surprising outcome of this line of thinking is NDP Leader Jagmeet Singh advocating for more competition in the industry. I would’ve thought the NDP would take this opportunity to advocate for a nationalized telecom provider, but I guess Jagmeet needs to ensure continued access to TikTok so he doesn’t want to get too crazy with his views on this file. 

And I think the first step taken by the federal government has merit: that the big Telecom companies be required to work together to mitigate the impacts of nationwide outages by providing each other backup network access so that, at minimum, no one in the country goes without emergency services.

One way or another, I have no doubt that our Telecom industry will become more resilient after this, and I hope that that includes increased pressure for more competition.

What is more astounding to me though, is how this outage impacted our national payment system, and how we continue to allow Interac to operate with monopolistic power after continuously showing us an unacceptable level of complacency and incompetence. 

Interac came with this statement after the outage:

“We are adding a supplier (besides Rogers) to strengthen our existing network redundancy so Canadians can continue to rely on Interac daily,” Interac told Reuters in a statement.^{2Canadian payments system Interac says adding backup network supplier after Rogers outage https://www.reuters.com/technology/canadian-payments-system-interac-says-adding-backup-network-supplier-after-2022-07-11/}

Is it too much to ask that the one payment service available to Canadians be designed with system redundancy before this type of event occurs?

Many readers will also remember the nationwide Interac outage back in 2017 that took the payment network offline for two days.^{3Interac system hit by technical problems https://www.bnnbloomberg.ca/interac-system-hit-by-technical-problems-1.793435} Unfortunately for the Federal Government at the time, there were no competitors (like Bell or Telus) they could force Interac into mitigation strategies with. Why not?

We’ve allowed a single company—owned and controlled by our biggest banks—to become a single point of failure in our economy. This is unacceptable, and we’ve now experienced the consequences twice in five years.

While most of the political energy will be spent scrutinizing the Telecom industry after last week’s events, let’s not let Interac get off the hook by focusing solely on Rogers.

We should have more payment options in Canada, and the banks should be forced to get out of the way and let this happen. Ironically, Payments Canada, the association representing this industry, has had a mandate to become more “independent from the big banks” and lead a payment system overhaul. The result? Last year, Payments Canada handed a contract to Interac to build a modern real-time payment system…You can’t make this stuff up.

A few short years ago, I was ecstatic to hear that Canadian fintech darling Wealthsimple was launching a new product called Wealthsimple Cash to directly compete with Interac on peer-to-peer payments and bring a “Venmo” experience to Canada.^{4Wealthsimple Launches Peer-to-peer Payment Cash App Nationwide https://betakit.com/wealthsimple-launches-peer-to-peer-payment-cash-app-nationwide/} Earlier this year they shelved this plan and announced that users could now Interac e-transfer money from within their Wealthsimple account.

I have no doubt that there were significant pressures stacking up against Wealthsimple behind the scenes that ultimately forced them to drop their competitive approach to Interac.

Where was the Competition Bureau? Where was Payments Canada?

It’s time to reopen this debate. We need more competition in Canadian payments. Now.