Payments Canada, the organisation that owns and runs the country’s core payment systems, has switched on the Real-Time Rail (RTR), a national system that lets businesses and consumers move and settle money instantly at any hour of the year.
Through the new rail, participating members, including banks, credit unions and payment service providers, can exchange, clear and settle transactions for their customers in real time around the clock. Users get immediate settlement, live visibility over cash flow and richer payment data, all through the banking and payment channels they already use.
The economic case is substantial. According to projections from the C.D. Howe Institute, the functions available at launch could cut costs by as much as $14.5bn over the next decade by lowering processing expenses, reducing reliance on cash and cheques, and shrinking float, the window in which money sent has not yet reached the recipient. Beyond these savings, the RTR is forecast to deliver $16bn in economic gains, a figure expected to climb to $27bn as additional features are added.
Security has been built in from the outset. Canada is the first G7 nation to roll out a real-time payment system that requires centralised fraud services from launch.
These tools will operate alongside the existing controls of each participant and include confirmation of payee for consumer accounts from the first day, a safety score for each transaction, a shared repository of fraud risks and indicators, and a platform for reporting and sharing fraud intelligence. Payments Canada acknowledged that no system can eliminate risk completely, but said the measures create a coordinated defensive layer across the network.
The first group of live participants comprises Wealthsimple, Questbank, Peoples Trust Company, Paramount Commerce, KOHO, DoBusiness.com, Digital Commerce Bank and Bank of America.
More members, including every major Canadian financial institution, will join over the coming months, putting the RTR within reach of over 90% of Canadians within a year of launch.
Payments Canada owns and operates the RTR, which was developed with delivery partners CGI, Deloitte Canada, IBM Canada and Interac Corp. The system runs on the ISO 20022 messaging standard, a common technical language that the organisation believes can bolster the nation’s economic autonomy and its competitive standing internationally.
Demand appears to be in place. Research from Payments Canada shows 60% of Canadian businesses are prepared to adopt real-time payments to tackle problems such as cash flow forecasting and delays in moving funds, while 52% of consumers surveyed said they were interested in using them. The organisation described the rail as a platform on which participants can develop new products, serving groups including small businesses, newcomers and rural communities.
Canada’s minister of finance and national revenue François-Philippe Champagne said, “A stronger, more productive economy relies on modern financial infrastructure that can match our ambition. The launch of Canada’s Real-Time Rail lays the foundation for a more dynamic and competitive digital economy, driving innovation, expanding choice and creating new opportunities for Canadians while positioning our country for long-term growth.”
Payments Canada president and CEO Susan E. Hawkins added, “The launch of Canada’s Real-Time Rail marks the beginning of a new era for payments in our country. As a national asset that’s designed specifically for our country, the RTR gives the payment ecosystem a modern foundation to build on. By collectively leveraging this rail, our ecosystem will unleash its full potential, enabling our members to build capabilities that drive innovation, resilience and growth for businesses and consumers across the nation.”
Bank of Canada governor Tiff Macklem added, “The Real-Time Rail is an important step in modernizing Canada’s payment infrastructure and ensuring it keeps pace with Canadians’ evolving needs. The Bank will oversee the system so that it operates safely and reliably while ensuring Canadians can benefit from innovations in financial services.”
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