Firm that bought MintChip tech seeks Canadian banking licence

Nanopay Holdings would reportedly do business as a payments bank if approved

TORONTO A Toronto-based payments company that bought the Royal Canadian Mint’s digital-cash platform and that is backed by a former economic adviser to U.S. President Donald Trump is now interested in acquiring a banking licence.

Recent notices in the Canada Gazette show Nanopay Holdings Inc. plans on applying to the minister of finance for a legal instrument, letters patent, needed to incorporate a bank in Canada. Nanopay’s bank would do business as “payments bank,” the announcement says, and its head office would be in Toronto.

Nanopay was founded in 2013 by former telecom executive Laurence Cooke. In 2016, it was announced the company bought MintChip, a digital-payment technology developed by the Royal Canadian Mint, for an undisclosed sum.

Since then, Nanopay has been selling businesses and banks on payment and liquidity-management products that are built on the company’s “hybrid blockchain” technology. Nanopay also continues to eye opportunities to provide digital currency for central banks, such as the Bank of Canada, which has considered the idea.

Cooke, however, sees the pace of financial innovation in Canada as relatively slow. Years-long efforts to modernize the country’s payments system and the federal government’s review of open banking, for example, are still ongoing. Meanwhile, the global payments business has recently become a hotbed for investment and rife with competition from non-banks.

Nanopay’s idea now, if approved, is to open a bank acting as a “national payments utility,” Cooke said. Rather than taking deposits and making loans, it would offer financial-technology firms and other businesses a different route to accessing the payment system.

“We’re hoping that this way we can stimulate the Canadian economy, we can make all of these Canadian businesses competitive at a global level and we can offer consumers and businesses in Canada much better payment solutions,” Cooke said in an interview. “The big concern is if we don’t do anything and carry on with the speed that we’re at right now, the big non-bank technology platforms and foreigners will come and eat our lunch.”

In addition to not actually lending or accepting deposits, Payments Bank also wouldn’t offer any investment advice. As its name suggests, it would instead be all about payments, which would be provided via secure online channels.

“The proposed bank will engage in payment processing, clearing and settlement activities for customers, including fintechs, payment technologies, large billers, payroll, tuition, rent payments and insurance companies,” the notice in the Canada Gazette said. “The bank will offer both domestic and cross-border payments services through application programming interfaces (APIs) and white label web interfaces.”

If it gets all the necessary approvals, a bank owned by Nanopay could do something that Nanopay itself cannot currently do: participate in the national payment systems overseen by Payments Canada. A banking licence could also allow Nanopay to become a participant in Interac Corp.’s debit network. This lack of direct participation can leave startups relying on approved financial institutions, which Cooke said can cost a company time, money and data. Financial Post