Our Insights

Canada’s Enhanced Payments Systems

Supporting a Modern, Digital Economy

Canada is modernizing its payments systems to support the emerging digital economy and deliver a payment experience that is more timely, efficient and secure. The first release of Lynx, the new high-value payments system, went live in August, while release two, which will support the new ISO 20022 global messaging standard (see separate article), will go live in late 2022. The new Real-Time Rail (RTR) for low-value payments will provide instant exchange, clearing and settlement of payments in real time, and is currently planned for late 2022.

How will the Canadian payments modernization initiatives impact you and what is RBC Investor & Treasury Services doing to ensure a smooth transition?

High-Value Payments 

Lynx, Canada’s new high-value payments system, is replacing the existing Large-Value Transfer System (LVTS), which has served the Canadian market for over 20 years. Release one of Lynx was successfully implemented in August 2021 and initial feedback is positive. The new high-value payments system includes:

  1. Real-time gross settlement
  2. Payments finality and settlement certainty in line with global risk standards
  3. Flexibility to adopt new technologies, including application programming interfaces (APIs)
  4. Enhanced cyber security and resiliency
  5. Improved risk management, including compliance with Canadian and international risk standards

Release one is a critical step for Lynx and represents the culmination of a significant collaborative effort on the part of Payments Canada, SWIFT and the Canadian financial industry, including RBC. The second release will follow in late 2022, providing the ability of the high-level value payments system to:

  1. Deliver end-to-end support for the ISO 20022 messaging standard
  2. Meet SWIFT ISO 20022 global requirements, including the transition from MT to MX message types for cross-border paymentsypes

We are currently finalizing implementation plans for release two of this important initiative and will provide further details in the coming months.

Low-Value Payments

Currently planned for launch in late 2022, the Real-Time Rail (RTR) will introduce real-time exchange, clearing and settlement of low-value payments in Canada, providing the ability to initiate payments and receive final and irrevocable funds in seconds, 24/7/365. RTR will deliver faster, data-rich payments in accordance with the ISO 20022 standard, complemented by the flexibility and scalability to introduce new payment products and innovations as they become available.

Payments Canada is working closely with RBC and other industry participants to develop the new RTR. Priorities in 2021 include system design and drafting of the bylaws, rules and standards for the new system. The implementation plan includes multiple releases to get to full functionality over two to three years. Further details will be available as we develop the necessary policies and procedures for a smooth launch of RTR in late 2022.

Canada’s Payments Modernization Journey

  2021 2022 2025
Lynx High-Value Payment System Release 1:  August 
  1. Real-time gross settlement
  2. Enhanced risk model
Release 2:  Late 2022
  1. ISO 20022-compliant
Real-Time Rail Low-Value Payment System   Release 1:  Late 2022
  1. Real-time exchange, clearing and settlement
  2. ISO 20022-compliant
SWIFT ISO 20022-Compliant MX Message Format   November
  1. Receive and receive/forward cross-border payment messages
  1. All cross-border payment messages


Enhanced Transparency for Wire Payments

RBC Investor & Treasury Services is pleased to announce the launch of our new Full-Value Transfer Service, which provides domestic and international banks with a mechanism to deliver the full principal amount of select wire payments destined to Canada without further deductions to beneficiaries. The new service enables RBC to act as your single CAD payments clearer by:
  1. Offering upfront fee transparency on flows destined to beneficiaries with accounts at eligible receiver financial institutions
  2. Protecting you from unforeseen claims on eligible payments by other banks in the payment chain
  3. Utilizing RBC’s existing billing channels to process fees related to the eligible wire payments
Please contact your RBC Investor & Treasury Services representative for more information on the Full-Value Transfer Service.

Taking Care of the Details

RBC Investor & Treasury Services’ new Settlement Agent Service provides domestic Indirect Settlement Participants (ISPs) with the ability to settle low-value Real-Time Rail (RTR) payments in the Canadian market. As the ISP’s exclusive agent, RBC settles RTR payment transactions on a 24/7/365 basis, leveraging our position as the Lynx participant with the largest market share of CAD clearing.*

We take care of the details, from account registration with the Bank of Canada to comprehensive transaction and position reporting. Our payment capacity management tool generates liquidity status alerts that prompt funding or de-funding action, facilitating efficient settlement of RTR payment transactions.

Please contact your RBC Investor & Treasury Services representative for more information on the Settlement Agent Service.

*Based on Payments Canada data for the year ending December 31, 2020


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