Payments Canada, the country’s operator of clearing and settlement systems, and major financial institutions are gearing up for the launch of real-time payments in the form of Real-Time Rail from the organization, by the end of 2022.
However, Payments Source reports that financial technology companies based in Canada are currently unsure how (or even if) they will benefit from the introduction of real-time payments.
As it currently stands under the terms of the Canadian Payments Act, only deposit-taking financial institutions in Canada can become Payments Canada members, and only members will have access to its real-time payments infrastructure.
Fintech companies are, by nature, ineligible to become Payments Canada members, and are therefore only allowed to access Payments Canada’s retail systems through its existing members.
When the U.K. launched its equivalent of the Real-Time Rail, Faster Payments, and allowed fintech companies access, the industry (and fintechs like Wise, formerly known as TransferWise) grew considerably.
The Canadian government had promised legislative reform in 2019 that would allow non-deposit-taking financial institutions to benefit directly from real-time payments, but fintechs are still waiting for any actual action on the matter.
The Real-Time Rail is currently expected to leverage Interac’s existing e-Transfer infrastructure, which is currently available internationally, along with clearing and settlement services from a Mastercard subsidiary.
Even if the Canadian government starts working on leveling the playing field for fintechs tomorrow, the time it will take the necessary legal reform to go from a proposal to legislation and then go into effect means that the Real-Time Rail will most likely launch before fintechs get access to it.
Recently, Toronto-based fintech Wealthsimple launched a new real-time peer-to-peer payments service, called Wealthsimple Cash (click here to sign up and get $5 free). The app allows users to send and receive money in real-time, similar to a service like Venmo in the U.S., leveraging usernames to make sending money easier.