Pondering (Not Jumping) Hurdles to E-Commerce in Canada

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So, what can Canada do to become a leader in e-commerce? Canada’s House of Commons Standing Committee on Industry, Science and Technology would like to offer some suggestions for how the Government can help and Industry Canada has released its 2012-2013 Plans and Priorities. There is not much in the way of innovation in these documents but one recurring issue is the fragmentation of consumer protection legislation. Might the future bring greater harmonization?

Standing Committee Report

Recently, the Standing Committee released its report entitled “E-Commerce in Canada: Pursuing the Promise” in which it summarized its investigation into the market for e-commerce market in Canada and what the Government can do to assist to overcome some of the challenges to the e-commerce market.

Canadians are on-line. Using information gathered by Statistics Canada, the Report states that 79% of Canadians had Internet access in 2010 and 74% of those with Internet access used the Internet for “window shopping” or “comparison shopping”. E-commerce is also growing in Canada; however, the Report suggests that Canadian businesses may be under-investing in this retail channel and consumers are purchasing from U.S.-based Internet retail channels.

The Report acknowledges several barriers to e-commerce in Canada, particularly for small and medium sized enterprises (SMEs). These include the cost of investment and access to capital. However, they also include the fact that Canada has a huge geography and low population density. The Report states that logistics and shipping costs in Canada are larger (even for domestic shipping) than in the United States. Furthermore, the Report notes the lack of uniformity in consumer protection laws across Canada.

The Standing Committee made 16 recommendations for the Government of Canada. They are:

1. Place an emphasis on e-commerce in its forthcoming digital economy strategy.

2. Work with the payments industry to modernize payments systems to ensure an efficient, fair, safe, competitive and world-leading payments system in Canada.

3. Work with industry to increase the affordability, reliability and speed of broadband Internet available to Canadians.

4. Reduce “red tape” and costs of cross-border business and shipping for businesses and consumers.

5. Examine disclosure and transparency rules so that businesses and consumers are aware of the total costs of e-commerce transactions prior to purchase.

6. The Business Development Bank of Canada make information and communications technology adoption a strategic focus.

7. Bring Canada’s Anti-Spam Legislation into force to help to increase consumer confidence in the e-marketplace.

8. Work with the provinces and industry to develop strategies to meet the skilled workers shortage in information and communication technology industries.

9. Provide an easily accessible directory or service containing all government programs related to innovation and R&D to help firms access the tools and support they need to increase innovation and adopt information and communications technologies (ITC).

10. Work with Internet service providers to ensure and promote the availability of 24/7 technical support to their clients to ensure their services are functioning as required, and to ensure that clients have transparent and up-to-date access to their account information.

11. Examine ways to increase the quality of information available regarding adoption and use by Canadian SMEs, and the business impact of such adoption and use.

12. Consumers and retailers should be protected by a code of conduct applicable to on-line, mobile, and other emerging transaction technologies.

13. The Government should become a “model user” of e-commerce and on-line solutions in its procurement practices and delivery of services to Canadians.

14. Ensure Government systems are secure from potential security threats to avoid lengthy shut-downs of Government of Canada on-line services.

15. Work with industry and consumer groups to increase digital literacy and simplify terms and conditions of e-commerce transactions.

16. View financial literacy and digital literacy as being intertwined due to the widespread adoption of electronic and mobile payments systems.

Industry Canada Plans and Priorities

Industry Canada has also released its 2012-2013 Estimates — Report on Plans and Priorities. If you believe the government should be facilitating the building of e-commerce capacity, it might be criticized for lack of ambition (University of Ottawa Professor Michael Geist is a critic). Some highlights are:

  • Industry Canada will participate on a federal-provincial-territorial Consumer Measures Committee to examine best practices in achieving compliance with consumer protection laws.
  • Industry Canada will also participate in developing or updating consumer information.
  • Industry Canada will review consumer issues in cross-border transactions through participation in three projects: (1) the Organisation for Economic Co-operation and Development (OECD) review of the Guidelines for Consumer Protection in the Context of Electronic Commerce; (2) the development of an International Organization for Standardization (ISO) standard for business to consumer electronic commerce, and (3) related projects regarding on-line dispute resolution and redress.
  • Industry Canada has set performance targets for its activities. These include: (1) 86% of Canadians using the Internet; (2) 65% of Canadian businesses understanding their privacy obligations; and (3) 43% for Canadians purchasing goods and services on-line.