The implementation of Canada’s real-time payment system, the Real-Time Rail (the “RTR”), is expected to revolutionize the Canadian payments ecosystem by offering real-time digital payments, 24/7, 365 days a year. The Canadian Payments Association, commonly referred to as Payments Canada and responsible for Canada’s payments clearing and settlement infrastructure, conducted a public consultation between February and March 2025 regarding its policy proposals.  

What is RTR?

Payments using the RTR will be sent, cleared, and settled within seconds, giving both the sender and the recipient confidence that the payments have been finalized and eliminating traditional delays. For example, businesses could make payroll or other bill payments at any time of the day, thereby permitting greater flexibility in payment cycles. Additionally, merchants with certainty of receiving funds would require fewer assurances, such as bank drafts, from consumers – bringing both speed and convenience to the contracting parties. Such a system is therefore expected to foster economic growth by enhancing cash flow management and generally enabling better supervision over liquidity.

Who can use RTR?

As currently structured, the RTR payment system would only be available to members of Payments Canada. In June 2024, the Canadian Payments Act was amended to expand membership eligibility. While banks have always been mandatory members of Payments Canada, once amendments come into force on a day set by the Governor in Council, membership could be obtained by several other entities, such as payment service providers (“PSP”) that perform retail payment activities pursuant to the Retail Payment Activities Act. These PSPs include not only payment processors but also digital wallets, currency transfer services, and other technology firms that offer payment functions. By doing so, Payments Canada opens the door to non-traditional players, such as fintechs, to play an increasingly important role in the payments ecosystem.    

That being said, new members of Payments Canada would still need to meet existing membership requirements, such as having a settlement account from the Bank of Canada.  

What updates are expected?

In February 2025, Payments Canada proposed several amendments (PDF) to its by-laws and rules to address the entry of new players: 

  • First, PSP eligibility would be limited to those registered with the Bank of Canada.
  • Second, non-member PSPs would be able to join the Stakeholder Advisory Council (the “SAC”) to ensure that the council, whose main purpose is to advise Payments Canada, continues to reflect the diversity of participants within the payments industry.
  • Third, given the growing variety of entities involved in the payments industry, Payments Canada would remove entity-based restrictions to allow fair access to its systems – an approach that received unanimous support during its latest public consultation.
  • Fourth, Payments Canada is introducing a streamlined investigation process for straightforward and uncontested contraventions. Expediting these types of investigations is expected to be particularly useful in the context of ongoing membership expansion.
  • Finally, the maximum penalty per contravention would be increased from $250,000 to $1,000,000 to ensure further compliance.

As the public consultation indicated broad support for these proposals, we expect that Payments Canada will likely proceed with their implementation.   

What risks are we facing?

While immediate clearing and settlement represent a significant leap in efficiency, they also present increased risks related to fraud. If bad actors can have access to funds more quickly and easily, this could lead to higher losses for financial institutions. Payments Canada is therefore placing an emphasis on fraud prevention by establishing centralized fraud prevention services, which will be operational from the launch of the RTR. In today’s era of constantly evolving cyber threats, having such a proactive fraud deterrence mechanism is essential to ensuring public trust in the RTR payment system.  

Furthermore, to ensure certainty in terms of clearing and settlement, transactions will be both irrevocable and data-rich. In fact, RTR allows for more data to travel with each payment. While this increased data can assist in fraud prevention, it may also present privacy concerns that members will need to keep in mind.

What’s next?

Payments Canada is expected to begin testing the RTR payment system within the next year while continuing to collaborate with other stakeholders. It will be important to monitor these upcoming changes – not only for traditional financial institutions, but also for other stakeholders that may be joining as new members or as participants to the SAC. Should you have any questions regarding this topic, please do not hesitate to contact a member of Miller Thomson’s Financial Services Group.