Canada is betting that fraud prevention will help drive adoption of its new Real-Time Rail.
Canada is the last G7 nation to launch real-time payments, but the first to make day-one fraud prevention mandatory.
Payments Canada launched Real-Time Rail (RTR) on 9 November, bringing round-the-clock payments to the country and allowing participating financial institutions, credit unions, and payment service providers to exchange, clear, and settle payments in real time.
Initial participants include Wealthsimple, Questbank, Peoples Trust Company, Paramount Commerce, KOHO, DoBusiness.com, Digital Commerce Bank and Bank of America, with more organisations expected to join.
“The launch of Canada’s Real-Time Rail marks the beginning of a new era for payments in our country,” said Susan E. Hawkins, President and CEO of Payments Canada.
“As a national asset that’s designed specifically for our country, the RTR gives the payment ecosystem a modern foundation to build on. By collectively leveraging this rail, our ecosystem will unleash its full potential, enabling our members to build capabilities that drive innovation, resilience and growth for businesses and consumers across the nation.”
It may feel like a long time coming for Canada, taking around 11 years from when Payments Canada started its payments modernisation project. However, it has ensured that safety and fraud defences are included from the outset.
Payments Canada has appointed Interac as the RTR’s Technical Operator and first Fraud Services Provider. Chief Executive Jeremy Wilmot said the organisation is committed to operating “always-on infrastructure Canadians can trust”, adding that Interac e-Transfer payments will clear and settle on the RTR.
Four layers of fraud protection
The RTR will launch with four centralised fraud services, giving participants tools to identify and respond to potential threats. These include confirmation of payee, available for consumer accounts from day one, which adds a check around the intended recipient of a payment.
Other services include a fraud transaction safety score, a risk list or repository of fraud risks and indicators, and a fraud reporting and intelligence platform. These services aim to provide participants with shared fraud-related information and insight that can support their own risk management processes.
Payments Canada describes the new services as working with existing fraud measures, creating multiple layers of protection across the payment ecosystem.
Can security support adoption?
Payments Canada expects the service to be available to more than 90% of Canadians within its first year. To support this goal, it cited research showing that 60% of Canadian businesses are ready to adopt real-time payments.
The potential economic benefits are significant, with projections pointing to cost savings of up to C$14.5bn ($10.26bn) from the launch functionality and economic gains of C$16bn, rising to C$27bn as further capabilities are introduced.
The appeal of real-time payments for merchants and businesses includes faster access to funds and the ability to receive payments around the clock, without being restricted by traditional banking hours and settlement delays.
However, moving money at speed also puts pressure on the ability to identify and respond to suspicious activity before funds leave an account.
Keeping fraud risks under control will be key to encouraging businesses and consumers to adopt the new rail because if users aren’t confident payments can be made securely, the convenience of faster settlement may not be enough to change habits.
Early participants have stressed the importance of security. Shayle Rothman, CEO and Co-Founder of DoBusiness.com, said: “For us, faster payments and superior fraud prevention belong together. This is an opportunity for us to help Canadian businesses modernise how they pay and verify account details before money moves.”
Sereena Boparai, Chief Revenue Officer at Paramount Commerce, also noted the combination of faster settlement and fraud protection, saying: “Being first-to-market on the RTR lets our merchants and partners benefit immediately from 24/7 settlement, higher transaction limits and proactive fraud defence.”
