Canada’s initial real-time rail rollout likely won’t include big banks, sources say | BetaKit
Excerpt, emphasis mine
Canada’s long-awaited instant payment system, Real-Time Rail (RTR), likely won’t include any of the country’s largest banks as participants in its first phase, BetaKit has learned.
The RTR system is meant to be an instant, always-on payment infrastructure for Canadians and their financial institutions to transfer funds. The system is under development by the national non-profit Payments Canada, which has a government-created mandate to handle the country’s payment systems. The RTR system’s rollout—the first phase of which is slated to go live in the fourth quarter of 2026— would also allow emergent financial companies to move money for customers without relying on banks or paying them a fee.
But four sources within the FinTech ecosystem that have knowledge of the rollout said none of Canada’s Big Six banks are currently scheduled to participate in its first phase, raising questions about how useful RTR will be without the banks, which settle the vast majority of the country’s payments. BetaKit is not naming the sources because they were not authorized to discuss the matter publicly.
To send and receive payments via RTR, both parties will need to be onboarded to the new system, Payments Canada confirmed to BetaKit in an email. Otherwise, institutions will have to use existing payment rails to move funds on behalf of customers.
The RTR system first began development as a payments modernization project in 2015, with a target launch of 2019. Since then, it has been fraught with delays: Payments Canada pushed back the rollout to 2022, then later rescheduled it for mid-2023, and again to 2026.
Canada is the only country in the G7 without an instant payment rail.
https://betakit.com/canadas-initial-real-time-rail-rollout-likely-wont-include-big-banks-sources-say/Open linkView original on piefed.ca
5 replies
My guess is they don't want something that interferes with their fee-overloaded oligopoly.
I skimmed right past that part of the article, but yes I think that is what the article is implying.
Betakit is focused on how this affects fintech startups (they mention in the article that "Wealthsimple vice-president of payments strategy and chief compliance officer, Hanna Zaidi, sits on BetaKit’s board of directors").
However, it also sounds like the banks are being selfish at the expense of regular Canadians too.
I have added more excerpts and emphasis to highlight that information
What makes this better/different than interac and e-transfers?
From my limited understanding, this is about upgrading the backend systems that e transfers (and other payment systems) use.
Etransfers feel instantaneous in the current system, but in the background the money doesn't actually make it in to your account right away. That's also why some payments take time to clear (whether a few hours or days), and why certain things can't be done after hours / on bank holidays.
Interac is the entity that will be running this new system: https://www.payments.ca/payments-canada-selects-interac-corp-exchange-solution-provider-canadas-new-real-time-payments
More from this article:
The Big Six will do anything in their power to keep themselves out of this scheme. I recall years ago when I worked at one of them, the first initiatives for CBDC were starting. The people involved told me the direction from above was that no system that doesn't invovle the bank should be considered. Their goal was to propose a bank-involving system to the gov't in order to ensure the bank is a necessary part of it. The whole promise of CBDC was (still is) that it allows payment transactions and "chequing accounts" that don't require private bank accounts and therefore bank fees.
It's nice to see that Payments Canada is moving. I'm guessing credit unions would also jump on it.