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Payments Canada announced early Monday the launch of the nation’s real-time payments network, called Real Time Rail. The system allows financial institutions and payment service providers to exchange, clear, and settle payments in real time 24 hours a day every day, the network says.
Bank of America, Digital Commerce Bank, and Peoples Trust Company are among the network’s initial participants. Major Canadian banks are expected to join the network later, according to Payments Canada, a 46-year-old nonprofit that manages the country’s national payments clearing and settlement system. The new system will be available to 90% of Canadians by the time the new system reaches its first anniversary, according to a projection by Payments Canada.
The new platform, which is open to banks, credit unions, and payment service providers, is expected to cut overall costs for the nation’s banking system, with as much as $14.5 billion in savings projected across the next 10 years, according to figures from the C.D. Howe Institute cited by Payments Canada, which owns the network. Deloitte Canada, IBM Canada, and Interac Corp. participated in developing the new system.
The launch follows the introduction in 2023 of FedNow, the Federal Reserve’s U.S. real-time payments system, and reflects a fast-growing need for immediate payment processing, according to observers.
“Contrary to some reports that the ‘bloom is off’ real-time payments, the Canadians are showing that these new rails can serve strong demand by customers for better payment opinions- if the banks get moving forward. Changing to real-time is hard, but it’s inexorable,” says Steve Mott, proprietor of the payments consultancy BetterBuy Design, in an email message.
Payments Canada in its announcement addresses the threat of fraud in real-time systems, where money can move within short minutes between accounts. Real-Time Rail features what the organization says is mandatory “centralized fraud services for use at launch” to help fight crime on behalf of both consumers and businesses. The services are expected to include confirmation of payee, a transaction safety score, and a fraud-reporting intelligence platform.
“As a national asset that’s designed specifically for our country, the [real-time rail] gives the payment ecosystem a modern foundation to build on,” says Susan E. Hawkins, chief executive and president at Payments Canada, in a statement. Beside the new real-time payment system, Payments Canada also operates Lynx, a wire platform for wholesale payments, and the Automated Clearing Settlement System, or ACSS, a retail system handing debit payments, direct deposits, and checks.
The emergence of the Real Time Rail follows similar developments designed to speed payments in North America. Aside from the Fed’s FedNow network, a real-time payments system operated by The Clearing House, based in New York City and owned by many of the nation’s largest banks, emerged in November 2017.
“We are excited to see Canada launch its Real-Time Rail and congratulate Payments Canada on this important milestone,” says Jim Colassano, a senior vice president at The Clearing House, in an email message. “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, we see tremendous opportunities to improve domestic payments and create greater connectivity for cross-border payments.”
