You just finished dinner with some friends and it's time to settle up. In the U.S, doing this would be simple, easy, and free. But in Canada, you either have to do it in cash or login to your bank account, send an e-transfer, pay a fee, wait who knows how long for it to show up... what a pain. This got us thinking: why can't you Venmo in Canada? Here's what we discovered...
What's Venmo? For those less familiar with our neighbours to the South, Venmo is a digital wallet that makes it easy to transfer money to friends.
- Going to a dinner with buddies in LA and the restaurant won't split the bill? You can just open the Venmo app and instantly transfer money to the person who paid.
And it's super popular. In 2013, the company was acquired by PayPal and last year the app processed over $12 billion of transactions. The app is fast, easy to use and offers low fees... so why can't we use it in Canada?
Bank Supremacy: Over 15 years ago, Canadian banks were smart enough to see the potential of peer-to-peer online transactions.
So they all got together and agreed upon a standard technology that would let Scotiabank, TD, RBC and CIBC customers transfer funds between each other. That's where Interac E-Transfers came from.
This was a huge win for the banks. By teaming up to control the Canadian peer-to-peer payment infrastructure, the banks could block competitors and charge customers a per transaction fee.
Blocking Venmo: With US banks so fragmented, Venmo became an intermediary that enabled money transfer between institutions. And the banks – eager to get on the peer-to-peer bandwagon – were happy to let Venmo do the work of connecting all the systems.
But Canadian banks are perfectly happy with Interac. Venmo needs to be able to hook-up to your bank to work and with Canadian banks raking in the e-transfer fees, don't expect to be Venmo-ing anyone anytime soon.