Payments Canada launches instant payment system after years of delays

OTTAWA · The organization that runs Canada's payment networks has started its new national system for instant money transfers. Payments Canada said Monday it is beginning the first phase of the real-time rail, which was announced in last week's federal budget. The launch makes Canada the final G7 country to get such a system. The not-for-profit group oversees the infrastructure that enables the immediate movement of funds.

Money can now be sent at any hour on any day through the rail, with payments clearing almost instantly. The system includes data to help track where funds are going. "What it does is ensure that cash remains in the hands of Canadians more of the time, and that should facilitate things like businesses improving their cash flow, consumers being able to pay and settle their bills, and having greater, more seamless access to credit when they need it, or payments," said Payments Canada CEO Susan Hawkins. This means employers could pay workers right after a shift, stores could get sales revenue in real time and rent payments would arrive immediately.

Eight financial institutions are part of the initial rollout, including Wealthsimple, Questrade, Peoples Trust, Koho and Bank of America. The country's largest banks will join in later phases, not this first one. New participants will be added in stages, with the aim of having every Canadian financial institution connected by mid-2027. Fintech companies will be able to use the payments systems directly through the rail, potentially at a lower cost than going through bank partnerships.

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The real-time rail is intended to foster more competition and innovation in the financial sector. "What we're trying to do here is support the Department of Finance and the Bank of Canada's policies to open up the national payment infrastructure and the membership of Payments Canada to qualifying members beyond the traditional financial institutions so that we create an environment for innovation and competition," Hawkins said. A recent study by the C.D. Howe Institute estimated the system would provide over $16 billion in economic benefits. The project has been delayed multiple times since work began in 2015, with an original target date of 2019. "It has taken longer than what Canada would want, but we're starting in a place now where we have a rail that's been built by a Team Canada in Canada that's internationally extensible and is ready to be built upon," Hawkins explained. The system was developed by Payments Canada in partnership with Interac, IBM, CGI and Deloitte Canada.

While instant payments increase convenience, they also raise risks of fraud and financial crime because money moves in seconds. Canada's system is launching with built-in fraud protections, unlike those in other G7 nations. The rail is currently for domestic use but follows global standards so it can later link to networks in other countries. Last month, the federal government said it would work to connect Canada's system with the European Union's to make cross-border transfers faster and cheaper.

Such connections could speed up trade and reduce reliance on U.S. banks to process payments. More than 80 percent of Canadian payments headed to Europe currently go through the United States, Hawkins noted. She described payment infrastructure as critical plumbing for the economy. "Whoever controls that plumbing has influence over who can move money, how fast the money can move and under whose rules and legal framework the money can move," she said. "What we mean when we talk about payment sovereignty at this moment in time is the ability to keep our economy running and making our own policy choices without someone else being able to switch off the systems or dictate terms to Canada."

With files from The Globe and Mail