Payments industry bringing faster, more convenient batch payments to Canadian businesses

OTTAWA, July 27, 2017 -  Payments Canada, the country’s financial market infrastructure for payments, today announced new rules that will enhance automated funds transfer, a type of payment commonly associated with employee payroll and bill payments. Alongside infrastructure enhancements at Canadian financial institutions, the changes will mean faster and more accessible payments for businesses across the country.

“This is an important milestone on our journey to modernize Canadian payments,” said Gerry Gaetz, President & CEO of Payments Canada. “Canada’s ambitious payments modernization agenda will create a platform for innovation, inspiring new ways for Canadians to pay, transfer money and exchange information about their payments. The enhancements to automated funds transfer are just the beginning of some exciting changes ahead.”

Automated funds transfers – also known as batch payments – move roughly 1.7 billion payments in Canada every year and represent the greatest value of payments in Canada’s retail payments system.  Around the world, batch payments remain a staple of most payments systems because they are cost effective and efficient. With automated funds transfer, organizations can pay employees electronically at the same time rather than issuing cheques one by one. The payment type also allows for the use of Pre-authorized Debits (PADs), a convenient way to arrange for scheduled or ad-hoc payments, such as payments to a biller.

Payments Canada’s new rules, which apply to Canadian financial institutions, support infrastructure enhancements to the automated funds transfer payment stream as part of Payments Canada’s Modernization program. The changes will enable new features like same-day payroll, expedited bill payments, faster settlement of invoices, the move away from paper and cheques and more uniform service across the country in all time zones.These benefits are achieved with the introduction of a third time-of-day for financial institutions to exchange batch payments and new obligations to provide funds availability within two hours.

The new rules for automated funds transfer come into effect in the Fall of 2018, in line with the supporting infrastructure enhancements required by financial institutions. The mandatory adoption of ISO 20022, a global messaging standard that allows more data to travel with the payment, will form a second phase of work. Other key changes on the near horizon include new processes for monitoring liquidity in the high-value payment system and operationalizing a new credit risk model and framework for the retail system.

“These initial enhancements will keep Canada up-to-speed with countries around the world, help our businesses compete in today’s digital economy and offer greater choice to the marketplace,” said Jan Pilbauer, Executive Director of Modernization and CIO at Payments Canada. “Enhanced and faster automated funds transfer will promote electronic payments in Canada, reducing the reliance on cheques.”

For more information on enhancements to automated funds transfer, visit payments.ca/modernization or read Long Live the Batch: Why modernizing AFT is the right move for Canada. View the forthcoming rules here.

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About Payments Canada:

Payments Canada ensures that financial transactions in Canada are carried out safely and securely each day. The organization underpins the Canadian financial system and economy by owning and operating Canada’s payment clearing and settlement infrastructure, including associated systems, by-laws, rules and standards. The value of payments cleared and settled by Payments Canada in 2016 was nearly $51 trillion, or more than $201 billion every business day. These encompass a wide range of payments made by Canadians and businesses involving inter-bank transactions, including those made with debit cards, pre-authorized debits, direct deposits, bill payments, wire payments and cheques. Payments Canada is the brand name of the Canadian Payments Association.

For more information or to schedule an interview:

Tricia Weagant, Payments Canada, tweagant@payments.ca, 613.806.5168.