3 min read
Canadian businesses have become accustomed to the unwieldy complexity to transfer large sums of money — delays of hours or days for electronic funds transfers (EFTs) and wire transfers, the clumsiness of cash transactions and the uncertainty around bank drafts and cheques. But a new payment system set to launch in Q4 this year, Canada’s Real-Time Rail (RTR), will launch with an instantaneous single transaction value capability of up to $100,000, fundamentally changing how money moves for millions of consumers and businesses.
The RTR is owned and operated by Payments Canada, the organization responsible for the country’s payment clearing and settlement infrastructure. The new payment system has been specifically built to address friction points that Canadians and Canadian businesses have long worked around.
The RTR also supports smarter transaction data. Each payment has the ability to carry remittance details, invoice references and purpose codes, which gives businesses and compliance teams clearer records, reducing manual reconciliation. That helps to improve transaction transparency, aid in compliance with Canadian anti-money laundering legislation and drive enhanced fraud detection.
With higher transaction limits and 24/7 availability, the RTR is set to streamline payments across Canada’s economy.
For businesses, it’s about getting paid faster — and doing more with that money
“Canada’s incoming RTR will be most useful for industries that need fast settlement, 24/7 payments and rich transaction data,” says Pamela Draper, president of DCPayments, a leading Canadian payment technology provider. “Businesses will benefit from the RTR by receiving payments within seconds, improving and maintaining real-time visibility into cash flow, and making it easier to receive larger payments from customers.”
Industries that stand to gain the most from the RTR are those where there is a need for a payment to be received immediately, cash-flow timing is critical and where delays create friction resulting in a negative customer experience.
These include:
- Financial institutions and fintechs that will offer instant, data-rich payments to provide real-time transfers and new products.
- Payroll and HR services that will make just-in-time payroll and contractor payments more practical.
- Insurance providers that can pay out instant claims.
- E-commerce and retail companies that will provide faster refunds, checkout payments and merchant reconciliation.
- Utilities and billers that will facilitate faster bill payment posting and better cash flow management for recurring payments.
- Marketplaces and gig platforms that can pay workers, sellers or drivers immediately while providing clearer tracking.
“Most businesses would have a lot better use for money that’s already theirs than sitting in their accounts receivable for days at a time — and knowing exactly how much,” Draper says. “Think of a contractor who can pay suppliers the same day a client pays them or a retailer who can reinvest same-day settlement into inventory. That can mean the difference between being in the red or the black that month.”
From quicker payroll to instant refunds, the RTR promises to reshape how money is sent and received nationwide.
What changes for everyday Canadians
For consumers, whose financial institutions participates in Canada’s RTR, the system will offer an alternative to wire transfers, EFTs, e-transfers and paper-based transactions such as bank drafts and certified cheques. Late fees for payments made on weekends will be a thing of the past, and refunds can be issued immediately.
“The RTR eliminates all of these pain points for consumers,” says Draper. “It facilitates transactions between consumers and businesses within seconds, operates 24/7, even on weekends and holidays, and allows people to send as much as $100,000 at a time, initially.”
Canada isn’t the first country to launch real-time payment rails — countries including the United States and India have already adopted their own versions.
“Observing the rollouts of systems in other countries has allowed Payments Canada to avoid some of the challenges that these other jurisdictions faced,” Draper says. “For example, Canada’s RTR was created to incorporate real-time fraud services. That’s become even more imperative when transactions of as much as $100,000 are moving in real time.”
Payments Canada notes that Canada’s RTR will be the first such system to require the use of a centralized fraud utility service from day one, designed to minimize the risk of fraud to support a safer transaction ecosystem.
The RTR means Canadian insurance providers that can pay out instant claims.
RTR adoption
Businesses must partner with a provider who has direct access to the RTR to take advantage of the new payment system. DCPayments is the fintech partner that anticipates providing the technology required to complete transactions on the RTR via its banking partners, including Digital Commerce Bank.
“We’re entrepreneurs with a quick and nimble team,” Draper says. “We own and operate our payments technology in Canada, and we have an onshore development shop that represents a significant portion of our staff. This allows us to more quickly enable new financial technology than legacy financial institutions, and we love being among the first to offer such innovative products to our clients.”
For more insights from DCPayments about the advantages of adopting the RTR, click here.
This story was created by Content Works, Postmedia’s commercial content division, on behalf of DCPayments.