Wealthsimple’s head of government relations says Canada should have had real-time rail five years ago.
When Visa Canada’s Chris Ferron asked the audience at the Canadian FinTech Forum how many of them thought Canada was in line with its global peers in modernizing payments, few hands went up.
For one of Canada’s largest fintech companies, a seven-year delay in implementing a real-time payments system is a key factor in the lukewarm response.
News: In a conversation with Tetra Digital Group product manager Lily Hansen-Gillis and Ramp digital asset engineer Alex Bazhenov, Wealthsimple’s head of government and regulatory affairs Jessica Oliver noted that Canada is dragging its feet on the development of its long-awaited Real-Time Rail (RTR) system. She argued that political will was needed to move forward and that the competitive advantages it would bring to both industry and consumers were long overdue.
From the source: “This file has not been moved despite every major party in the House of Commons supporting a settlement in real time over the last five years,” Oliver said. “This speaks to powerful forces that perpetuate inertia.”
Context: Canada has been waiting years for its cheaper, faster and always-on payment settlement system known as Real-Time Rail. Wealthsimple (whose VP of Payments Strategy and Chief Compliance Officer Hannah Zaidi sits on BetaKit’s board of directors) is one of many Canadian FinTech companies that have lobbied for the file to move forward. However, Payments Canada’s original promise to introduce RTR in 2019 has been delayed multiple times, first pushed back to 2022, then pushed back to mid-2023. Finally, the first “wave” of participating companies should begin using the system in the fourth quarter of this year, but it is unclear when banks will join the system.
Last thought: The status quo regarding settlements and associated delays is “extremely beneficial,” Oliver said. Financial institutions whose business models are based on payments and settlement fees have little incentive to promote something like RTR compared to fintech companies that could benefit from offering faster payments. Oliver argued that government mandates are the strongest lever for requiring participation in the real-time payment system. “If you allow people to delay settlement, they will,” she said.
Artistic image provided by Madison McLachlan for BetaKit.