Canada’s Real-Time Rail: Collaborating for the benefit of the payment ecosystem
This article was originally published on The Paypers on September 3.
By Jude Pinto, Chief Delivery Officer at Payments Canada
Jude Pinto is Payments Canada's Chief Delivery Officer, strategically leading large-scale delivery programs to support a payment ecosystem that is resilient, inclusive and enables fair competition as the foundation of Canada’s thriving economy. Bringing more than 30 years of experience in senior- and executive-level leadership positions in the financial services sector, Jude works with business and technology experts, members, stakeholders and regulators to lead the delivery of Canada’s Real-Time Rail.
Account-to-account (A2A) payments are gaining momentum around the world, and Canada is no exception. For instance, Payments Canada’s research shows that over a quarter of Canadians (around 29 per cent) would use pay-by-bank, an emerging A2A payment method, and 32 per cent believe pay-by-bank offers greater security than alternatives.
Globally, the use of A2A payments has been driven by the steady implementation of national real-time payment systems. When integrated with real-time payment systems, A2A payments can be processed instantly, allowing for quick, secure and cost-effective transactions.
The Real-Time Rail (RTR) will be Canada’s new national real-time payment system, facilitating instant A2A payments through the real-time exchange and real-time clearing and settlement of funds. With the RTR, consumers and businesses will send and receive irrevocable payments in real-time, which will then clear and settle between their financial institutions in real-time, 24/7/365 days a year, something that is not yet available in a single payment system in Canada.
Demand for the RTR is evident as 60 per cent of Canadians indicate wanting to send or receive payments in real-time. The real-time, irrevocable movement of money enabled by the RTR will give Canadians more control over their finances and greater confidence that payments have been finalized. The RTR is also set to benefit the broader Canadian economy, adding an estimated $3 billion in efficiency gains over the first five years. As a platform for innovation, the RTR will provide the foundation for new payment products and services, leading to greater payment efficiency, choice and convenience.
When it comes to real-time payments, Canada’s starting point is different from most jurisdictions with faster payment systems. The majority of those countries have real-time exchange, not real-time settlement. For years, Canada has had fast exchange via existing money movement systems. With the launch of the RTR, Canada will have both real-time exchange and real-time clearing and settlement in a single system.
Canada benefits from insights gained by other jurisdictions that faced challenges when launching their real-time payment systems. Almost all initiated faster payment programs without a centralized fraud service, resulting in a significant rise in fraud. Canada aims to be among the first countries to launch a real-time payment system with a centralized fraud service in operation from day one. The RTR’s centralized fraud service will include central fraud analytics, a central risk list, central fraud reporting and confirmation of payee capabilities.
Payments Canada, together with our delivery partners and the payment ecosystem, has moved into the testing phase of the program, as planned. Testing will occur through 2025 and 2026, paving the way for a robust and reliable system that meets Canadians’ needs.
Our member financial institutions have been integral to the RTR program from the start and remain deeply engaged as we enter the testing phase. Their partnership and participation, along with our delivery partners and industry stakeholders, are vital to our collaborative approach as we shift focus from technical development to testing.
Payments Canada is working in close collaboration with the payment ecosystem to deliver the RTR in a coordinated, unified effort — for the benefit of Canadians and all who call Canada home. Visit us for regular updates on the progress of the RTR.
