Payments In Canada Uncovered For 2023 And Beyond
While countries like the US, Singapore, the Netherlands, and Sweden have been fast to adopt the latest banking technologies, Canada’s banking system has been trudging along, with the launch of the new Real-Time Rail (RTR) payment system being delayed for a third time: first in 2022, then to mid-2023, and now to an undefined date. Along with open banking, the real-time payment system has been on the federal government’s radar for a while now, so why is it taking so long to reach Canada?
Uncovering Payments Systems In Canada
Too Conservative Or Just Right?
The practices and risk-averse approach adopted by Canada’s banking system, which some critics deem as “too conservative”, have played a pivotal role in safeguarding the industry from volatility and instability. Heavy regulation by the provincial and federal governments has also contributed to our ability to avoid serious economic conditions like the Great Depression (1929-1939 economic downturn) and the Great Recession (2007-2009 financial crisis).
Although this attitude has led to the delay in the rollout of RTR and other emerging technologies, the adoption of the RTR will surely improve transparency and confidence in payments among banks, businesses, and consumers. There is also growing confidence that the introduction of the RTR to Canada’s banking system will also act as a platform for innovation, enabling third-party providers to create and offer Canadians newer, faster methods for payments and money transfers.
The Real-Time Rail Payment System
Built in the hopes of modernizing Canada’s core payments infrastructure, the Real-Time Rail payment system, or RTR, will be Canada’s first real-time payments processing system that allows for data-rich payments to be sent and received instantly. With the help of Interac’s technology, the RTR will provide financial institutions with access to real-time liquidity management, offer more choices for businesses and consumers, develop new ways for Canadians to transfer money, and help streamline the government’s financial, corporate, and reconciliation processes so that it can serve the public in real-time.
ISO 20022: A Key Attribute
An important feature of the upcoming RTR is that it will be ISO 20022-enabled. ISO 20022 is an international standard for financial messaging and data exchange developed by the International Organization for Standardization (ISO). It provides a common language and syntax for the exchange of rich, diverse, and structured financial information between financial institutions, corporations, and other entities involved in financial transactions. This means that businesses, for example, will be able to extract relevant information such as invoice numbers and payment references from financial messages. Cool, right?
Canadians To Continue Using EFTs For Now
Until the RTR rolls out, however, Canadians will have to stick to EFTs (Electronic Funds Transfer), the backbone of Canada’s payment industry. Interac e-Transfer for Business, an electronic funds transfer service for businesses (B2B) to send and receive money securely, is a widely-popular option due to its convenience, accessibility, and security. Users only need an email address or mobile phone number to make payments, transfer funds, and more. Most major banks and financial institutions in Canada also support the service, making it user-friendly and familiar to many.
