Faster money transfers with RTR will take a while to adopt, says Scotiabank
A new report from Scotiabank says Payments Canada's recently announced upgraded digital payments framework could take several months or years to become the norm.
Scotiabank warns that implementing the new Real-Time Rail (RTR) payment system in Canada will take some time to become the standard for most major financial institutions and banks. According to a report by senior economist David Cimon, Ottawa's plans for instant payments won't happen instantly across the country. While RTR offers the potential for instantaneous payments between businesses and consumers, 24/7, Cimon notes that structural changes by businesses will take longer than merely activating the system.
The RTR launch, announced by Payments Canada on Monday, aims to streamline electronic money transfers between consumers and businesses. It could lead to faster transactions for gig workers and Canadians transferring money between accounts. However, not all banks and financial institutions will immediately adopt RTR. The report mentions that Canada's largest commercial bank, RBC, plans to introduce the system in the second quarter of 2027, with most other big banks expected to follow suit shortly after.
Currently, only smaller Canadian institutions and Bank of America participate in the initial RTR launch, as larger banks are being eased into the system to test its stability. Despite the excitement around RTR's use cases, businesses and consumers who rely on cash or paper cheques for transactions might be slower to adapt. Cash payments remain popular, with average transaction sizes around $24, while commercial cheques have a higher average value of $13,600.
Cheques, however, are slower and less efficient compared to RTR, but the report suggests that they may persist due to their benefits for users who prefer non-traceability and independence from intermediaries. Still, the report highlights that cheque use may need disruption due to its inefficiencies. The report also mentions that while RTR can benefit employees by enabling quicker wage payments, businesses will need to make structural changes for this to become a reality for the majority of workers.
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