Ahead of Payments Canada Summit, Finextra spoke to Kushank Rastogi, head of Canadian real time payments, TD Bank Group about the key characteristics of real time payments, future commercialisation opportunities and how the Canadian payment ecosystem is undergoing large-scale transformation with the introduction of a real-time payment system, the Real-Time Rail (RTR).
RTR is Canada’s first real-time payment system that supports instant, data-rich payments. According to Payments Canada, real-time payments will transform Canada’s economy, giving businesses and consumers more transparency and access to their payments any day, any time, safely and securely.
As a multi-year, multi-system payments modernisation initiative, RTR will allow Canadians to initiate payments and receive irrevocable funds in seconds. The system will also utilise the ISO 20022 messaging standard to support payment information traveling with every payment.
According to Rastogi, the opportunity for the commercialisation of real time payments is in addressing customer needs; “either directly by leveraging the rail features or by building innovative overlay services on top of the core rail. For business customers, the rail could lead to improvements in cash flow management and a greater transparency of the payments process, bringing efficiency in their overall business process.
“For retail customers, it could mean immediate access of funds in more circumstances – e.g., instant claim disbursement from one's insurance company to cover damages when they are in need. Additionally, real-time clearing and settlement enables financial institutions to offer higher limits for digital payments and which help support migration of paper-based payments (cheques and draft) to digital, a more efficient and environment friendly payment option.”
Rastogi added that while the commercialisation opportunities are extensive, they “may require participants to broaden their commercialisation strategy for payments by looking beyond the traditional transactional unit economics and towards value added overlay services.”
On the RTR, he said that it is “an exciting time for the payments industry in Canada. In collaboration with financial institutions, regulators and other stakeholders, Payments Canada is leading the establishment of a new Real-Time Rail payments system.
“The real-time rail would be a combination of modern technology to support its unique features, and robust legal framework, supported by by-laws, rules, standards and global best practices, that are being developed by the industry. The Real-Time Rail will be a modern payments system which will be fast, flexible, and secure, fostering innovation and strengthening Canada's global competitive position.”