The first phase of Modernization was the development of the Vision, an industry-wide consultation exercise that identified the needs of the marketplace and the key features required of a modern Canadian payments ecosystem.
Using the Vision as a guide, Payments Canada – in collaboration with financial institutions and industry stakeholders - developed the Industry Roadmap & High-Level Plan.
Where the Vision tells us what needs exist in the marketplace, the Roadmap focuses on how Payments Canada and the industry can begin to deliver on those needs. The Roadmap Reader provides a summary version of the plan.
The Roadmap is based on five major initiatives or pillars. Together, this package of change represents a bold first step towards a modernized Canadian payments system:
1. BUILD A NEW CORE CLEARING AND SETTLEMENT SYSTEM
Replacing the existing core settlement system must be our priority due to its critical importance to Canada’s payments system. While the existing LVTS platform continues to perform well, its aging technology will not accommodate the significant changes that must be made to support the evolution of other payment systems—including Distributed Ledger Technology—and meet future regulatory requirements.
2. ESTABLISH A REAL-TIME CAPABILITY
An always available system that delivers funds in less than 60 seconds - providing a real-time capability - will satisfy the needs identified in the Vision, including real-time clearing, rich remittance information through ISO 20022, and enhanced functionality to better serve consumers, small and medium sized businesses.
3. ENHANCE AUTOMATED FUNDS TRANSFER
Automated Funds Transfer (AFT) batch payments should continue to operate along with any new real-time system. AFT batch payments should be transitioned to the ISO 20022 standard during the second phase of work by the end of 2019.
4. ALIGN WITH GLOBAL REGULATORY STANDARDS
To meet the standards of a Prominent Payment System, changes must be made to the existing Retail System (ACSS) in the near-term including the introduction of a static collateral pool. Other requirements will be met when the Retail System is replaced by the new core clearing and settlement system.
5. MODERNIZE THE RULES FRAMEWORK
We need to develop a modern rule set for high-value and retail payments so that our rules remain relevant and reflect current market practices. The appropriate balance between flexibility and compliance will foster competition and innovation.