What’s Driving Instant Payments in Canada?

As digital commerce, on-demand services, and the gig economy continue to grow, the demand for real-time access to money has never been greater. Consumers expect immediacy—and waiting days for payments to process can be a disadvantage to businesses. Instant payments are set to redefine this dynamic, and 68% of businesses are hopping aboard with plans to adopt instant payments within two years. 

In Canada, this movement is gaining momentum with initiatives like Interac e-Transfer and the Real-Time Rail (RTR) being developed by Payments Canada. Near-instant payments are possible today with e-Transfer and, slated to launch in 2026, RTR will enable Canadian consumers and businesses to send and receive money instantly. This system is expected to play a pivotal role in increasing the adoption of real-time payments across the country. So, what’s driving the need?

1. Consumer Expectations for Speed

Canadians increasingly demand seamless transactions, especially as digital commerce continues to thrive. With the rise of on-demand services and digital banking, these savvy shoppers expect instant access to their money. That’s likely why 70% of Canadians predict they’ll abandon cheques altogether, and 40% said they will increase their use of e-transfer over the next five years. And those preferences don’t stop at personal banking—they extend to the way we shop.

“We are seeing a consumer who will not hesitate to switch retailers when problems occur,” says Diane Brisebois, President and CEO at the Retail Council of Canada. Customers don’t want to deal with long lines at the checkout or experience friction when shopping online. They expect a smooth, hassle-free experience.

2. Regulatory and Technological Advances

Earlier this year, the Government of Canada announced first steps in introducing an open banking framework, which will allow third-party financial services to access banking data with consumer consent. This is encouraging more innovation in the financial sector and driving the development of integrated payment solutions.

Further driving the shift are technologies like blockchain and AI-driven fraud detection, helping institutions to not only speed up payment processing but also enhance security. Together, these advancements have created fertile ground for innovation as Canada’s financial institutions come together to build the infrastructure needed to bring instant payments to life.

3. Digital and Mobile Payment Preferences 

In Canada, mobile wallets, digital banking apps, and contactless payments have become increasingly popular. Services like Apple Pay, Google Pay, and Interac e-Transfer® have made it easier for consumers to send and receive money instantly, fueling demand for faster, more convenient payments. The COVID-19 pandemic further accelerated the shift to mobile payments as businesses and consumers sought contactless alternatives for everyday transactions. 

The Benefits of Instant Payments for Canadian Businesses

Instant deposits and payouts have the power to positively impact your business in many ways:

1. Improved Cash Flow

For small and medium-sized enterprises (SMEs), managing liquidity is often a challenge. Instant payouts can help by reducing the time it takes to access funds, allowing you to reinvest quickly, pay suppliers on time, and operate without the need for short-term financing. 

For example, an e-commerce business using instant payouts can immediately access customer payments to restock inventory, avoid supply chain delays, and maintain smooth operations without relying on credit or loans.

2. Customer and Employee Satisfaction

Businesses that offer instant payouts—whether for insurance claims, tips, gig worker payouts, or refunds—can improve customer and employee loyalty, because the convenience of receiving funds instantly makes for a better experience. 

For example, an insurance company that offers instant claim payouts allows policyholders to access funds immediately after an approved claim, alleviating financial stress and providing a frictionless experience.

Additionally, waiters who receive tips instantly at the end of their shift, versus waiting for credit card transactions to be processed and settled, are more likely to stay with their existing employer than look around in an industry in which turnover can be a headache. 

3. Cost Savings

Instant payments can reduce transaction costs by eliminating the need for multiple intermediaries, such as banks and clearinghouses, in traditional payment systems. This can be especially valuable in industries like e-commerce for example, where margins are often tight, and using instant payments like e-Transfer can bypass high credit card processing fees. This reduces transaction costs and allows the business to pass on savings to customers or invest in growth initiatives.

4. Better Security

Instant payments come with enhanced security that allow businesses to monitor transactions in real time, significantly reducing the risk of fraud. Advanced authentication methods and real-time fraud detection help identify suspicious activity as it happens, offering an added layer of protection. 

For example, a fintech company using AI-powered fraud detection can immediately flag and halt fraudulent transactions before they are processed, providing peace of mind for both the business and its customers.

The Challenges of Instant Payments in Canada

Despite the benefits, there are challenges to adopting instant payments across Canada, too. These include:

Canada is slightly behind other countries like the United States and United Kingdom when it comes to integrating instant payments. While the Real-Time Rail is a promising initiative, its full implementation won’t be ready until 2025 or later. And when that infrastructure does roll out, smaller businesses may lack the necessary technology and resources to fully embrace it, potentially delaying their ability to leverage these security advancements and reap the cost and efficiency benefits of instant transactions​. 

As instant payments become more common, strong security measures are key to keeping transactions safe. Real-time monitoring and AI-powered fraud detection help spot unusual activity and take action quickly, which is especially important because instant transactions leave little time to reverse fraudulent transfers. By using advanced technology to catch suspicious patterns early, financial institutions can ensure that real-time payments remain secure without adding extra steps or delays for users. 

As businesses and consumers increasingly use various platforms and networks to send and receive money, the lack of interoperability can create friction and slow down transactions. For example, payments made through one financial institution or app may not instantly be compatible with another, especially across borders. Solving this issue requires collaboration between financial institutions, fintech companies, and regulators to develop common standards.

How Can Your Business Prepare for Instant Payments?

As Canada’s financial ecosystem continues to evolve with innovations like the Real-Time Rail, the use of instant payments is only going to increase. While this poses a unique opportunity for your business, it’s also essential to remain competitive. DC Payments is here to guide you through this transition. With our expertise in payment solutions, we can help you implement tools like Interac e-Transfer® into your payment processes, ensuring you’re ready to embrace instant payments and reap the benefits they bring. Let us support you in preparing your business for the future.