Payments Canada has finally built the Real-Time Rail instant payments system, after multiple delays and more than a decade since Ottawa first started laying the groundwork. Now, it faces the difficult task of convincing fintechs and other participants to actually use it once it goes live. Here’s what you need to know about the long-awaited payment rail and its rocky path to launch.

What is the Real-Time Rail (RTR)?

The RTR is a proposed new payment rail, a piece of infrastructure that enables the transfer of funds between parties. Other well-known payment rails include the Visa and Mastercard networks, the SWIFT global network for international transfers and Electronic Funds Transfer (EFT), which is commonly used for bill payments and transactions between businesses. More than 100 other countries, including the U.S., India and Brazil, already have instant payment systems, according to data from Pymnts Intelligence.

Set to launch as early as 2026, the RTR will be owned and operated by the non-profit Payments Canada, which also manages the country’s other national payment rails. Payments on the RTR will send, clear and settle almost instantly, 24 hours a day and 365 days a year. Transactions can include data that will make it easier to track payments and settle disputes.

Who’s paying for the RTR?

Payments Canada is. The organization is funded by its members, which include all banks operating in the country and the Bank of Canada. Other financial institutions and fintechs have the option to become members as well.

Payments Canada collects transaction fees from its members for using its systems to pay for core operations, according to its 2024 annual report. It’s paying for the RTR by borrowing money. The organization spent $11 million on its modernization program in 2024, which includes the RTR, and spent an additional $78 million to develop the RTR’s infrastructure, according to the report.

Financial institutions and fintechs also have to spend money to connect to the RTR. “Most likely, these costs will be passed on directly to the end users of the system and amortized over time,” a 2023 report from the C.D. Howe Institute concluded.

How could the RTR affect the economy?

The C.D. Howe Institute estimates the RTR will contribute more than $3 billion to the Canadian economy in its first five years by replacing outdated modes of payment, such as cheques, and giving consumers and businesses faster access to funds. Payments Canada also expects it will be a launchpad for innovation, letting businesses create new and better ways to transfer money and pay for goods and services. It’s also expected to increase competition in Canada’s concentrated financial services industry, which the Bank of Canada and the Office of the Superintendent of Financial Institutions have both recently said is important for productivity and economic growth.

The RTR also lets fintechs access the country’s payment systems directly for the first time, rather than piggybacking on partner relationships with banks and other Payments Canada members. A broad range of fintechs will be eligible for direct settlement accounts with the Bank of Canada, which will help them save money by cutting out banks as a middleman and make it easier to compete with them.

Why has the RTR taken so long to launch?

Payments Canada began the payments modernization process in 2015 to pave the way for the RTR. Its launch date, first set for 2019, has been pushed back repeatedly. As The Logic has previously reported, the RTR has been a flashpoint between fintechs, who stand to benefit from the competition and innovation it could unleash, and large banks, which risk losing market share to them. Bank executives resisted Payments Canada’s progress on the RTR in the past, although the organization denied that large financial institutions had enough influence to block reforms.

How is Interac involved with the RTR?

Interac, a for-profit payments network and software company owned by Canada’s big banks and other financial services firms, is building part of the infrastructure for the RTR. Once it’s live, Interac’s e-transfer payments system—which processed 1.4 billion transactions in 2024—will settle on the RTR.

What alternatives are there to the RTR?

Interac’s e-transfer system is one. Interac, like Payments Canada, recently opened up access to its e-transfer system to a wide range of fintechs and other financial services businesses. Some businesses are already using e-transfer to power digital payments in the absence of the RTR. Donna Kinoshita, chief payments officer at Payments Canada, said in an interview she thinks the RTR and e-transfer will complement, rather than compete with each other, adding that she’s “indifferent” as to which payment method consumers and businesses choose.

As the RTR delays piled up, fintechs have devised workarounds to use EFT and prepaid credit cards for digital payments. Many fintechs use screen scraping—a controversial method for accessing financial data. That method requires users to hand over their online banking passwords so a bot can impersonate them and log into their account to harvest account numbers, which can then be used to initiate an EFT payment directly from the bank. Open banking, another long-delayed framework that would require banks to share financial data at a customer’s request, could make this process more reliable and secure.

Prepaid credit card transactions have the benefit of wide acceptance, especially for e-commerce. Fintechs can create one-time use virtual prepaid cards to facilitate a variety of digital payments, powering everything from buy-now, pay-later transactions to gig work. Prepaid cards have been used for cheaper cross-border transactions and quick government disbursements—two use cases the RTR also hopes to facilitate.

Finally, the passage of the U.S. GENIUS Act is expected to open the floodgates for stablecoins, crypto assets pegged to the value of the dollar, to become widely used for consumer payments. Stablecoins are fast and cheap, and the GENIUS Act could pave the way for companies from Walmart to big banks to issue them. National Bank and Alberta’s ATB are among the backers of a forthcoming Canadian dollar stablecoin to be issued by crypto custody firm Tetra Trust.

Kinoshita said she’s not worried stablecoins could make the RTR obsolete before it even launches. “Canadians want choice in their payment streams,” she said. “We always promote choice.”