Payments Canada says it has launched a real-time rail national payment system that enables participating members to exchange, clear and settle payments in real time.
The Story
Payments Canada announced on Monday that it has launched Canada’s real-time rail, a national payments system designed to support real-time exchange, clearing and settlement of payments among participating members.
The organization says the system is intended to reduce costs by lowering processing expenses and reducing reliance on cash and cheques, while also shortening the time funds are temporarily unavailable to the recipient.
Payments Canada said the real-time rail system is expected to be supported initially by a group of participating financial institutions and fintech providers, including Wealthsimple, Questbank, Peoples Trust Co., Paramount Commerce, Koho, DoBusiness.com, Digital Commerce Bank and Bank of America.
Transactions that flow through Payments Canada systems include debit card payments, pre-authorized debits, direct deposits, bill payments, wire payments and cheques.
Payments Canada said additional participants are expected to be added in the coming months, including all of the major Canadian financial institutions.
The organization said the real-time rail system will include mandatory centralized fraud services and controls, including confirmation of payee, a fraud transaction safety score, a list of fraud risks and a platform for fraud reporting.
York University professor Henry Kim said the launch is a step forward, adding that real-time settlement already exists in the United States. He also noted concerns among some U.S. financial institutions related to fraud risks in real-time payments, including less time for verification and that fraudulent transactions may not be reversible as quickly.
Kim said Canada’s centralized approach to fraud is different from the U.S. model.
Claire Célérier, a Canada Research Chair in household finance and an associate professor at the University of Toronto’s Rotman School of Management, said Canada is playing catch-up but that there can be advantages to not being the first mover, particularly in building reliability and fraud resilience.
Célérier said the next question is what fees retail banking customers may face for faster transfers and urged monitoring to ensure customers benefit from the instant payment at a low cost.
← More stories