Canada debuts long-awaited instant payments scheme

• Key insights: Canada launched its instant payments infrastructure, called Real-Time Rail, after years of delays. 
• Expert quote: “The launch of Canada’s Real-Time Rail marks the beginning of a new era for payments in our country.” — Susan Hawkins, President and CEO, Payments Canada. 

Real-time payments have finally arrived in Canada, creating a wave of opportunities for banks to build new services, but also providing a boost for fintech rivals. 

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The country’s instant payment infrastructure, called the Real-Time Rail, launched today after more than ten years of development. 

“The launch of Canada’s Real-Time Rail marks the beginning of a new era for payments in our country,” Susan Hawkins, president and CEO of Payments Canada, said in a statement. Payments Canada is a non-profit that owns and operates Canada’s core national payment clearing and settlement infrastructure. The country’s central bank, the Bank of Canada will regulate the payment scheme. 

“As a national asset that’s designed specifically for our country, the RTR gives the payment ecosystem a modern foundation to build on,” Hawkins said. “By collectively leveraging this rail, our ecosystem will unleash its full potential, enabling our members to build capabilities that drive innovation, resilience and growth for businesses and consumers across the nation.” 

A new world for banks and fintechs

The RTR — which uses the ISO 20022 messaging system —  is expected to drive an estimated $14.5 billion in cost savings from lower processing costs, reduced use of cash and checks, and reduced float, according to Toronto-based think tank C.D. Howe Institute. RTR is also expected to generate about $16 billion in economic gains initially. 

For banks and payment companies, RTR offers a foundation on top of which they can build meaningful capabilities for retail, corporate or commercial customers, Chris Chazin, managing director and head of transaction banking product at TD Securities, told American Banker. 

“For our commercial and corporate and retail customers, the impact initially is going to be with Interac e-Transfer, which allows participants to route money in quasi-real time using either an email address, a mobile phone number, or an or actually a bank account, like Zelle,” Chazin said. 

“The first benefit to the industry of rolling out RTR is that the banks now will have the ability to clear those real-time transactions at the same time as the transactions occur, so it de-risks the financial system because you don’t have any counterparty risk,” Chazin said. 

RTR’s rollout will come in waves, with the initial launch focusing on domestic payments. That first wave is expected to be completed around August 2027, and will also overlap with an increase in the Interac e-transfer transaction limit from $25,000 to $100,000. After the domestic rollout, RTR will open up to counterparties outside of Canada for one-leg out transfers, which Chazin said will be a windfall for TD. 

“We’re planning to offer our foreign bank clients or foreign institutional customers the ability to take the wires that they send us, but instead of sending them to the beneficiary using wire, we’ll settle them over over RTR, and that will have material benefits from a cost perspective, a user experience perspective, a guaranteed settlement perspective — all the benefits that a real-time piece of infrastructure offer,” Chazin said. 

There’s also a “significant” opportunity for fintechs, Miriam Sheril, head of product for North America at Form3, told American Banker in an email. Form3 is a real-time payments technology company that sells account-to-account and payments-as-a-service infrastructure to banks and financial institutions. 

“Direct access to the rail is likely to attract international players to launch in Canada, driving competition and innovation in payment services, while putting pressure on banks to improve their own offerings,” Sheril said. 

Banks and other financial institutions in Canada will need to prepare for the rollout, said Kellie Johnson, senior vice president, payments Americas at RedCompass Labs. 

“With RTR rolling out in phases through 2027, banks must ensure their systems can handle peak volumes and operate reliably around the clock. That means modernising legacy infrastructure, managing the risk of outages and maintaining effective fraud controls,” Johnson said. 

Payments Canada expects 90% of Canadians to have access to the RTR within the first year of launch, the organization said. 

Payments sovereignty

But Canada’s RTR is about more than moving money faster and cheaper; it is also about staying economically competitive on a global scale and maintaining payments sovereignty,   according to Michael Levens, vice president and financial services payments lead at Capgemini

“The launch of Canada’s Real-Time Rail is significant because modern domestic payments infrastructure is increasingly a matter of economic competitiveness and national resilience, not simply providing faster and cheaper payment options,” Levens said. “Canada is explicitly linking payments modernization to sovereignty, including greater control over how money and data move and under whose rules.”  

“Its ambition to connect RTR with other instant-payment networks, including in Europe, is particularly encouraging,” he said. “The lesson for other markets considering similar infrastructure is clear: Modern domestic payments infrastructure is becoming a strategic national asset, providing resilience, competition and a foundation for the next generation of digital commerce.” 

RTR still faces challenges, particularly from the emerging world of digital assets.

“Stablecoins, tokenised deposits and prospective CBDCs have moved quickly from experimentation towards more practical adoption, raising new requirements around interoperability, settlement, and the ability for different forms of money to coexist,” Levens said. “Canada’s RTR was conceived well before much of this acceleration and was originally expected to launch years earlier. While it has been built to global standards and for international extensibility, it will be particularly interesting to see how readily the platform can evolve beyond conventional account-to-account payments as the definition of money itself continues to change.”