Interac was selected as partner to develop infrastructure for new instant payment system
Interac Corp. was selected by Payments Canada this month as the successful bidder to build the infrastructure for Real-Time Rail which will allow payments to be processed instantly. The system, which is expected to launch in 2022, will allow for instant transfers and settlement of payments between individuals, through financial institutions.
“Interac is a great brand in the Canadian marketplace that is connected to over 300 of our financial institutions in Canada so it’s a really strong partner to bring that connectivity for Real-Time Rail,” says Anne Butler, chief legal officer and vice president of research and policy at Payments Canada. “When we go live in Canada, we will have 300 financial institutions already connected to that system which puts Canada in a much stronger position than other countries that have launched real-time systems.”
Real-Time Rail will offer many benefits to Canadian consumers and businesses alike including live, irrevocable, instant payments 24/7, 365 days a year, Butler says.
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“It enables a kind of innovation on top of the payments system that we haven’t had before here in Canada,” says Butler. “Businesses will be able to build more products based on the trust of the system and the certainty of that payment moving quickly from financial institution to financial institution. It’s a very powerful innovation and a great opportunity for the country.”
As a 37-year-old network provider, Interac’s experience with e-transfer qualifies it as the ideal partner in this project. The legal department at Interac played a significant role in informing negotiations with Payments Canada for the design and operation aspects of the contract between the two partners. As development begins, the legal team will continue to be closely involved in supporting the project.
“There will certainly be shifting and adaptation for the legal department as we are in a new role as a vendor to such a critical client,” says Tara Elliott, vice president, legal at Interac. “The legal department will play an integral role in the communications out to our organization to really support that understanding and our obligations to Payments Canada and to Canadians, and to really optimize that collective delivery and performance of our obligations.”
Once the system launches, Elliott and her team will continue to draw on their competitive advantages by supporting Canadians with their specialized knowledge of the new platform, and also through Interac’s collaborative corporate culture which fosters regular communication between business units and the legal team.
“This culture has resulted in superior cross-functional fluency between the groups,” says Elliott. “We can speak the tech, and they know how to raise legal issues with us. As we adapt to an overall agile delivery model, it won’t be just our tech folks doing that in terms of the RTR exchange. It will also be the legal team.”
The legal team at Payments Canada is also heavily embedded in the Real-Time Rail program and will be developing bylaws to support the launch as well as creating a legal framework to govern the system, together with the Department of Finance and the Bank of Canada.
In addition to Interac, Payments Canada is also working with Mastercard’s Vocalink in the Real-Time Rail project. Mastercard was selected in November, 2020 as the clearing and settlement solution provider for Real-Time Rail, following an extensive procurement process that included the Bank of Canada and the Department of Finance.
Real-Time Rail is just one piece of the payments modernization system currently underway at Payments Canada. A new high-value payments system, Lynx, will be launching at the end of this summer.
“It will be very exciting to see Lynx come into play,” says Butler. “There will be new bylaws, new rules, and the adaptation of one system onto another.” Payments Canada is also implementing ISO 20022, a global payments message standard that will allow large quantities of data to be transmitted with a payment.
“That payment standard is a key enabler because it means data will be moving with payments on the Lynx program, and data will be moving with payments in the RTR, and that will enable much smarter opportunities for the use of the payments system in the future,” says Butler. Butler's department is also eagerly awaiting the launch of the retail payments oversight framework which will enable uniformity of regulation in the payment space and will broaden the scope of regulated entities that can participate in the payments system.