Canada launches real time payment system

Payments Canada launched its real-time payments network, called Real Time Rail, on Monday. The system enables financial institutions and payment service providers to exchange, clear, and settle payments in real time, 24 hours a day, every day.

The network’s initial participants include Bank of America, Digital Commerce Bank, and Peoples Trust Company. Major Canadian banks are expected to join later, according to Payments Canada, a 46-year-old nonprofit that manages the country’s national payments clearing and settlement system.

The new system is expected to be available to 90% of Canadians within its first year. It is also projected to cut overall costs for the nation’s banking system, with potential savings of up to $14.5 billion over the next 10 years, according to the C.D. Howe Institute.

The launch of Real Time Rail follows the introduction of FedNow, the Federal Reserve’s U.S. real-time payments system, in 2023. This development reflects a growing need for immediate payment processing.

The new platform was developed with the participation of Deloitte Canada, IBM Canada, and Interac Corp. Payments Canada also addressed the threat of fraud in real-time systems, implementing mandatory “centralized fraud services” to help fight crime.

Key features of the system include verifying recipients, assessing transaction risk levels, and a tool for reporting fraudulent activity. Susan E. Hawkins, Payments Canada’s CEO and president, described Real Time Rail as a cutting-edge framework for the country’s payment industry.

Beyond Real Time Rail, Payments Canada also manages Lynx, a platform for large-value transfers, and the Automated Clearing Settlement System (ACSS), which handles everyday payments like debit transactions, payroll deposits, and checks.

The emergence of Real Time Rail follows similar developments in North America, such as the Fed’s FedNow network and a real-time payments system operated by The Clearing House. Jim Colassano, a senior vice president at The Clearing House, congratulated Payments Canada on the launch, highlighting the growing global demand for secure and reliable payment infrastructure. The Clearing House’s real-time payments system, which emerged in November 2017, is based in New York City and owned by many of the nation’s largest banks.

The launch reinforces the growing global demand for secure, reliable, always-on payment infrastructure that enables businesses and consumers to move money instantly, 24/7, as more countries adopt instant payments, creating tremendous opportunities to improve domestic payments and create greater connectivity for cross-border payments, according to Jim Colassano.