Ramesh Siromani, RBC’s Senior Vice-President of Strategy, Transformation & Enterprise Payments, shares his insights on Real-Time Rail (RTR), Canada's new national system for low-value payments.
1. What is RTR?
RTR, or Real-Time-Rail, is Canada’s new national system for low-value payments, supporting the exchange, clearing and settlement of data-rich payments in real-time. RTR will operate 24 hours a day, 7 days a week, 365 days a year, providing settlement confirmation within 60 seconds. This new ISO-based payment rail will be operated by Payments Canada, which has worked closely with its members, including RBC, to design and build RTR.
Participants will have the option to connect directly to RTR or indirectly through a Connection Service Provider. In some cases, participants will be able to use both methods, which will provide flexibility for various business models and strategies. Existing in-market Interac e-Transfer payments—used by both consumers and businesses in Canada—will be migrated onto the new RTR exchange, clearing and settlement system.
2. How does RTR support Canada’s overall payments modernization initiative?
The world is moving towards faster payments with more data
One of the primary objectives of the payments modernization initiative is to update and improve the systems and rules that underpin Canada’s payments ecosystem. The world is moving towards faster payments with more data, and RTR will help ensure that Canada maintains its competitive position in this space and continues to work seamlessly with our trading partners around the world. RBC and the entire Canadian banking industry have made significant investments to meet these objectives.
3. What benefits will RTR provide to clients?
Canadians have enjoyed Interac e-Transfer since it was launched in 2003 but the addition of real-time, account number-routed, data-rich payments will provide Canadian businesses with a new way to effect payments, using information they already store about their employees and customers. A new level of ubiquity in both the payment processing and display of remittance information will expand the use cases and serve as a game-changer for our clients.
RTR delivers transparency and certainty for the sender and receiver of funds
RTR will provide Canadians with a real-time capability that delivers transparency and certainty for both the sender and receiver of funds. There are a number of emerging use cases that speak to its versatility, including instant rent payments for landlords, which eliminates the wait for cheques to clear before having access to funds, or being able to facilitate insurance payouts in the event of an emergency. Real-time payments will also facilitate on demand payroll, which will benefit both businesses and employees by providing increased flexibility and convenience.
4. How is RBC supporting institutional clients in the transition to RTR?
RTR enables financial institutions and payment service providers to enhance their client experience
RBC is stepping up to offer settlement services to financial institutions that choose to connect to RTR as an Indirect Participant, allowing them to leverage our established relationship at the Bank of Canada. For others, we are conducting comprehensive testing—both internally and as an industry—to ensure that transactions sent through RTR are processed in a seamless, frictionless and transparent manner.
Over the next few years, RBC will be focusing on payment innovation through the development of a range of Application Processing Interfaces (APIs). We are also actively working to connect with domestic real-time systems across the globe through participation in SWIFTNet Instant, a real-time messaging platform that supports the secure exchange of instant payment flows between Clearing and Settlement Mechanisms (CSMs) and their participants globally.
RTR is designed to function as a platform for innovation that enables financial institutions and payment service providers to offer competitive services that drive improvements to the client experience. I am confident that the list of client benefits will continue to grow as RTR establishes itself within the Canadian payments ecosystem.