TORONTO — Trains aren’t the only way Canada lags on high-speed rail.
The effort by Payments Canada to bring in a faster payment system, known as the Real-Time Rail, is years behind schedule, leaving Canada as the only G20 country without the system in place.
The delay means merchants have to wait for what they're owed, the amount of money consumers can send along electronically is fairly limited and anyone can get caught out with late payments because of how slowly online payments sometimes go through.
As it stands, if you paid a bill online on the Thursday evening before the Easter long weekend, the payment might not be processed until Monday.
A modernized system would mean payments go through near-instantly, 24 hours a day, bringing along billions of dollars of benefits, according to an estimate from the C.D. Howe Institute out in December.
"There's huge benefits here for people," said Jeremy Kronick, director of the Centre on Financial and Monetary Policy at the think tank.
He co-authored a report that pegged the benefits to the economy at around $3.24 billion over the first five years.
"It's not an issue for everybody, but where it is an issue, it's a big issue."
He pointed to his own experience of trying to pay a contractor by e-transfer, and having to space it over several days because of the daily limits that often top out at $3,000.
Faster payment systems have helped boost those limits and allow things like home payments and other large purchases to be done electronically rather than by cheque or money order.
The reduction in cheque use is one of the sources of benefit in the report. Another is letting businesses reduce their reliance on float, the financial buffer they need because there are delays in payments going through.
Reducing ineffiencies in how commerce operates is good for everyone, Kronick said.
"Anything that can increase efficiency, increase productivity in Canada at the moment is an incredibly important pursuit, right?"
The new system does also raise fraud concerns because it does allow instant transfers of large sums, but Kronick said there are ways to put rules and regulations in place to deal with these issues.
Getting the new system up and running will be the highest-profile task of the next CEO of Payments Canada as Tracey Black, who has run the organization since 2018, stepped down at the end of her term Monday.
Payments Canada CFO Kristina Logue and chief delivery officer Jude Pinto have been named co-CEOs on an interim basis until a successor is appointed.
The organization, established by the government but funded by industry, owns and operates Canada's payment systems, last year clearing and settling over $112 trillion.
Payments Canada originally targeted 2019 to have a system up and running, but has pushed it back several times since.
The last update in December did not set a target launch date, but said there would be an update in the first quarter.
Spokeswoman Jessica Tropea said that update will be released in the coming weeks.
The organization declined an interview request, but said in a statement that Payments Canada, its board, regulators and member financial institutions are "fully committed" to delivering a real-time payments system for Canada.
The delays, much like the slow roll out of open banking, make it tougher for smaller companies to compete, said Alex Vronces, executive director at Fintechs Canada.
"Fintech and other challengers want the Real-Time Rail to launch. The Real-Time Rail is a crucial part of the agenda to turn up the level of competition in the financial sector."
He worries that since incumbents stand to lose out on revenue, including from the float that businesses have to maintain in the current system, that they're not as motivated to get the new system in place.
But he's excited that the playing field could be levelled somewhat as Payments Canada's membership is being expanded to newer service providers and credit unions, something the federal government committed to do in the fall economic statement.
The update will mean some competitors will be able to bypass the big banks and directly access the new payments system, but it needs to be launched before it can help, Vronces said.
"It's not enough to have access to a payment system that does not yet exist. We need the payment system to exist."
This report by The Canadian Press was first published April 1, 2024.
Ian Bickis, The Canadian Press
