When Visa Canada’s Chris Ferron asked the audience at the Canada FinTech Forum how many thought Canada matched its global peers on payments modernization, few hands were raised.
To one of Canada’s biggest FinTech companies, seven years’ worth of delays in delivering a real-time payment rail is a key contributor to that tepid response.
The news: In conversation with Tetra Digital Group product manager Lily Hansen-Gillis and Ramp digital assets engineer Alex Bazhenov, Wealthsimple’s head of government and regulatory affairs, Jessica Oliver, called out Canada’s foot-dragging on its long-awaited Real-Time Rail (RTR) system. She argued that political will is needed to move forward, and that the competitive benefits it would bring to both industry and consumers are long overdue.
From the source: “This is a file that has not moved, even though for the past five years every single major party in the House of Commons has supported real-time settlement,” Oliver said. “That tells you the powerful forces that perpetuate inertia.”
The context: Canada has been waiting for its cheaper, faster, always-on payment settlement system—known as Real-Time Rail—for years. Wealthsimple (whose vice-president of payments strategy and chief compliance officer, Hanna Zaidi, sits on BetaKit’s board of directors) is one of many Canadian FinTechs that have lobbied to advance this file. Still, Payments Canada’s initial promise to deliver RTR in 2019 has been repeatedly delayed: first it was pushed back to 2022, then, it was rescheduled for mid-2023. Finally, a first “wave” of participating companies is supposed to start using the system in Q4 of this year, but it’s unclear when banks will connect to the system.
Final thought: The status quo for payment settlements, and associated delays, is “extremely profitable,” Oliver said. Financial institutions whose business models rely on payments and settlement fees have little incentive to push for something like RTR, compared to FinTech companies that could benefit from offering faster payments. Oliver argued that government mandates are the strongest lever to require participation in a real-time payment system. “If you let people delay settlement, they will,” she said.
Feature image courtesy Madison McLauchlan for BetaKit.