- Payments Canada has launched its Real-Time Rail (RTR), enabling financial institutions and payment service providers to exchange, clear, and settle payments instantly, 24/7.
- The new system includes mandatory centralized fraud prevention capabilities and is expected to generate up to $14.5 billion in cost savings and $27 billion in economic gains over the next decade.
- RTR will roll out in phases, with more than 90% of Canadians expected to have access within the first year, laying the groundwork for new payment innovations.
For years, Canada has been considered behind when it comes to banking innovation when compared to its counterparts in the US, Europe, the UK, and even Australia. Specifically, Canada has been slow to create and adopt its own real-time payments rails.
Today, that finally changes for the Great White North. Payments Canada announced the launch of the Real-Time Rail (RTR), a national payment system that enables instant payment and settlement, real-time cash-flow visibility, and data-rich messaging on existing banking and payment channels. Specifically, the RTR will enable participating members such as financial institutions, credit unions, and payment service providers, to exchange, clear, and settle payments in real time 24 hours a day, every day of the year.
One advantage of Canada’s delayed launch is that the country has had the opportunity to learn from the experiences of earlier real-time payment systems. Notably, RTR is launching with mandatory centralized fraud prevention capabilities, including confirmation of payee and transaction risk scoring, offering a coordinated approach to mitigating fraud as instant payments become more widespread.
The RTR is owned and operated by Payments Canada, a public-purpose organization that owns and operates Lynx, a high-value payment system; the Automated Clearing Settlement System, its retail batch payment system; and now the RTR. The new real-time rails were built in partnership with CGI, Deloitte Canada, IBM Canada, and Interac Corp., and leverages ISO 20022 data-rich messaging.
“The launch of Canada’s Real-Time Rail marks the beginning of a new era for payments in our country,” said Payments Canada President and CEO Susan E. Hawkins. “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.”
Payments Canada anticipates the RTR will save costs and improve economic growth in Canada over the next decade. The C.D. Howe Institute estimates that the real-time rails will generate up to $14.5 billion in cost savings from lower processing costs, reduced use of cash and cheques, and reduced float. What’s more, the RTR could generate up to $27 billion in economic gains as new functionalities are introduced in the future.
At launch, RTR is rolling out on a deliberately sequenced basis, beginning with Wealthsimple, Questbank, Peoples Trust Company, Paramount Commerce, KOHO, DoBusiness.com, Digital Commerce Bank, and Bank of America. Payments Canada plans to onboard more participants in the coming months in a rollout that will include all major Canadian financial institutions and other members. More than nine in 10 Canadians will have access to the RTR within the first year after launch.
While Canada may be late to the real-time payments game, the launch of RTR will give banks and fintechs a foundation to build more sophisticated payment experiences, particularly for businesses seeking better cash flow visibility, faster payouts, and automated reconciliation. However, as the US has demonstrated with FedNow, launching a real-time payment rail is only the first step. The real measure of success will be how quickly financial institutions adopt the system and translate its capabilities into meaningful benefits for consumers and businesses.