How the Payment Processing Industry in Canada is Halting Innovation

The thinking usually goes "Our banks might not be convienient, but at least they won't fail like the ones in the US".

My understanding of the mortgage crisis, however, is that most of the problems were with large banks, not small ones.

I can tell you that small US banks an credit unions offer substantially better service at better terms than Canadian banks do.

In Ontario, for example, there's only 1 bank that offers $0 checking accounts without absurdly low transaction limits (like 1 transaction per month). That bank doesn't have branches, and offers almost no services.

It's absurd if you think about it. "You want me to pay you a fee for the privilege of loaning you money."

The only way that kind of business can be sustained is through negative externalities.

No fee bank accounts are standard practice in the US, precisely because there are many banks to choose from. Choice drives competition.

Regulation of big banks may have prevented a banking crash, but I think it's a mistake to extrapolate from that notion to "many small banks are bad", because that was not the problem in the us...

It is true that a handful of regulations kept Canadian banks out of truly severe trouble in spite of themselves - mortgage insurance, capital requirements, federal gov't guarantees through CMHC - but none of these regulations have anything whatsoever to do with the number of Canadian banks or the amount of competition in the Canadian banking industry.

When I moved to the United States I was astounded by the lower fees and better service here - and banks down here aren't particularly known for their low fees or good service. The Canadian public's "at least we're not America" nationalism is being used to rip you off.