Payments innovation normally migrates to the U.S. from Canada, which is at a more advanced stage of deployment with EMV-chip cards and other technology. But that's not the case for business-to-business payments.
BMO is drawing on its experience in check automation in the U.S. to push new business payments technology in Canada.
"The U.S. is ahead of Canada in electronic checking," said Derek Vernon, vice president and head of North American Treasury and Payment Solution for BMO. "Given our experience with BMO Harris Bank, we have been deploying technology like this in the U.S. for years."
The bank's software allows businesses to use scanners to process and deposit check payments, mostly for B2B transactions involving small merchants. Despite the country's embrace of mobile technology, paper checks are still widely used in Canada.
For businesses, checks are particularly popular for supply chain, procurement and other payments, Vernon said, adding about 4 million checks are still passed per day in Canada.
"The reason for that is the remittance data that goes into the check payment," Vernon said. "When a business pays another business, they want to know what they are paying for."
BMO's DepositEdge is part of an e-check processing package that's designed to help small businesses avoid using lockboxes or purchasing scanners. The businesses can rent scanners for a monthly fee; they would cost $1,000 to purchase outright.
"The small businesses can't afford the lockboxes, which aren't cheap," Vernon said.
The popularity of checks for B2B payments in Canada stands in stark contrast to other types of payments, where Canada generally adopts early and often. One of the early Near Field Communication tests involved McDonalds and Interac Flash in Toronto. Canada also regularly ranks high on MasterCard's survey of national preparedness for mobile payments.
BMO is also applying its experience in Canada to its U.S. shift to EMV. It assumes the U.S. migration target date of October 2015 will likely not be universally met, and as such it is issuing chip cards to customers only when their magstripe cards expire.
Business payment technology in the U.S. has also traditionally lagged consumer tech, though U.S. merchants increasingly embracing automation.
RBS Citizens, for example, last year introduced a mix of accounts payable and mobile technology that allows businesses to deposit checks remotely through a system that is linked to the user's other cash management relationships.
U.S.-based vendors such as Billtrust are digitizing invoice delivery. Fiserv also offers automated billing and payment technology for businesses, and software companies such as Bill.com integrate billing and payments with small-business banking.