Payments Canada

Last updated
Payments Canada
Canadian Payments Association
Payments Canada logo.png
Agency overview
Formed1980;44 years ago (1980)
Minister responsible
Agency executives
  • Garry Foster, Board chair
  • Susan Hawkins, President and CEO [1]
Parent departments Department of Finance
Bank of Canada
Key documents
Website https://payments.ca

Canadian Payments Association, carrying on business under the brand name Payments Canada, [2] [3] is an organization that operates a payment clearing and settlement system in Canada. The Canadian Payments Association was established by the Canadian Payments Act in 1980. Among other responsibilities, it regulates and maintains directories of bank routing numbers in Canada. [4]

Contents

In 2023, Payments Canada systems cleared and settled $112 trillion or $450 billion every business day. [5]

Services

Payments Canada is a corporation that:

Systems

Clearing and settlement systems are essential to the smooth functioning of the Canadian economy. These systems allow financial institutions to calculate how much is owed to each other as a result of their customer's transactions and to transfer those funds to settle those balances.

Payments Canada operates the following clearing and settlement systems. [7]

  1. Lynx — Canada's primary system for clearing and settling large-value, time-critical Canadian dollar transactions. Regulated by the Bank of Canada, it is an electronic wire system that facilitates the transfer of payments in Canadian dollars between Canadian financial institutions across the country. Launched in September 2021, a second release of the system is planned for late 2022 and will enable the ISO 20022 messaging standard. [8]
  2. Retail batch payment system, consisting of: [11]
    1. Automated Clearing Settlement System (ACSS) — a system through which Canadian-dollar cheques and electronic payment items (such as direct deposits, ATM withdrawals, point-of-sale transactions, online payments, and pre-authorized debit and bill payments) are cleared and settled. The system tracks the exchange of payment items and the resulting balances due to and from direct participants. ACSS was established in 1984. [10]
    2. U.S. Dollar Bulk Exchange (USBE) — a parallel system to the ACSS used for payment items in US dollars in Canada.

Governance

The Canadian Payments Association carries business under the brand name Payments Canada, [2] [3] which it adopted in 2016. [10] [ non-primary source needed ]

Payments Canada is headquartered in Ottawa, with an office in Toronto. The organization has 115 members including the Bank of Canada, chartered banks, trust and loan companies, credit union centrals, federations of caisses populaires, and other financial institutions.

The Minister of Finance has oversight responsibilities for Payments Canada. The Governor of the Bank of Canada has oversight responsibility for the LVTS and ACSS under the Payment Clearing and Settlement Act.

The 13-member Board of Directors consists of the organization's president; three directors who are directors, officers or employees of members that, in the normal course of business, maintain a settlement account at the Bank of Canada; two directors who are directors, officers or employees of members other than those described previously); and seven directors who are independent of the association and of its members.

A 20-person "Stakeholder Advisory Council" (SAC) provides advice and input to represent the interests of users of the payments system. The SAC was established in 1996 on a voluntary basis and was formalized in the Canadian Payments Act in 2001. [12] The SAC provides advice to the Payments Canada Board of Directors on payment, clearing, and settlement matters, and contributes input on proposed initiatives, including by-laws, policy statements, and rules that affect third parties. It also identifies issues that might concern payment system users and third-party service providers, and suggests how they could be addressed.

Payments Canada's "Member Advisory Council" (MAC), created in 2015, serves as a consultative and engagement forum for Payment Canada's members. [12]

Activities

Payments Canada is responsible for ensuring that significant rule changes follow an established public consultation process to seek input from key user groups. In 2010, it facilitated industry-wide development with frameworks for contactless debit payments. Payments Canada is also tasked with leading the Canadian effort to adopt ISO 20022. [13]

In 2015, Payments Canada released a 5-year corporate strategic plan, [12] the core purpose of which was to underpin the Canadian financial system and economy by providing safe, efficient, and effective clearing and settlement of payments. Payments Canada identified three long-term desired outcomes that would lead the organization to attaining their vision, addressing payment trends, and managing risks. [14] These desired outcomes are as follows:

  1. Modernize — undertaking a multi-year program to modernize the core payments systems, including the rules, standards, and technology infrastructure. In May 2017, with the Bank of Canada and the R3 consortium, as well of some Canadian chartered banks, announced the results of a year-long trial of R3 consortium's Distributed Ledger Technology (DLT), which was decided to not be adopted by Canada at the time for reasons of transaction privacy and scalability. [15]
  2. Operate and Enhance — continuing to ensure that the safety, efficiency, and effectiveness of Payment Canada's current systems are met through required enhancements to technology resilience and rules as well as through changes that respond to business needs.
  3. Transition and Renewal — continuing to build Payments Canada's organizational capacity and continuing internal process improvements "by focusing on leadership development, risk management, technology, operations and corporate administration."

Payments Canada holds Canada's largest payments conference, The Summit, on an annual basis. [16] [ non-primary source needed ]

Related Research Articles

<span class="mw-page-title-main">SWIFT</span> Financial telecommunication network

The Society for Worldwide Interbank Financial Telecommunication (Swift), legally S.W.I.F.T. SC, is a cooperative established in 1973 in Belgium and owned by the banks and other member firms that use its service. SWIFT provides the main messaging network through which international payments are initiated. It also sells software and services to financial institutions, mostly for use on its proprietary "SWIFTNet", and assigns ISO 9362 Business Identifier Codes (BICs), popularly known as "Swift codes".

The Large Value Transfer System, or LVTS, was the primary system in Canada for electronic wire transfers of large sums of money, and was operated by Payments Canada. It permitted the participating institutions and their clients to send large sums of money securely in real-time with complete certainty that the payment will settle. In September 2021, Payments Canada replaced LTVS with its Lynx high-value payment system.

Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a "real-time" and on a "gross" basis to avoid settlement risk. Settlement in "real time" means a payment transaction is not subjected to any waiting period, with transactions being settled as soon as they are processed. "Gross settlement" means the transaction is settled on a one-to-one basis, without bundling or netting with any other transaction. "Settlement" means that once processed, payments are final and irrevocable.

The Depository Trust & Clearing Corporation (DTCC) is an American financial market infrastructure company that provides clearing, settlement and trade reporting services to financial market participants. It performs the exchange of securities on behalf of buyers and sellers and functions as a central securities depository by providing central custody of securities.

The Australian financial system consists of the arrangements covering the borrowing and lending of funds and the transfer of ownership of financial claims in Australia, comprising:

ISO 20022 is an ISO standard for electronic data interchange between financial institutions. It describes a metadata repository containing descriptions of messages and business processes, and a maintenance process for the repository content. The standard covers financial information transferred between financial institutions that includes payment transactions, securities trading and settlement information, credit and debit card transactions and other financial information.

In banking and finance, clearing refers to all activities from the time a commitment is made for a transaction until it is settled. This process turns the promise of payment into the actual movement of money from one account to another. Clearing houses were formed to facilitate such transactions among banks.

Sort codes are the domestic bank codes used to route money transfers between financial institutions in the United Kingdom, and formerly in the Republic of Ireland. They are six-digit hierarchical numerical addresses that specify clearing banks, clearing systems, regions, large financial institutions, groups of financial institutions and ultimately resolve to individual branches. In the UK they continue to be used to route transactions domestically within clearance organizations and to identify accounts, while in the Republic of Ireland they have been deprecated and replaced by the Single European Payment Area (SEPA) systems and infrastructure.

<span class="mw-page-title-main">Single Euro Payments Area</span> System for money transfers within the European Union area

The Single Euro Payments Area (SEPA) is a payment integration initiative of the European Union for simplification of bank transfers denominated in euros. As of 2020, there were 36 members in SEPA, consisting of the 27 member states of the European Union, the four member states of the European Free Trade Association, and the United Kingdom. Some microstates participate in the technical schemes: Andorra, Monaco, San Marino, and Vatican City.

<span class="mw-page-title-main">Asian Clearing Union</span> International trade organization

The Asian Clearing Union (ACU) was established on December 9, 1974, at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). The primary objective of ACU, at the time of its establishment, was to secure regional co-operation regarding the clearing of eligible monetary transactions among the members of the Union to provide a system for clearing payments among the member countries on a multilateral basis.

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National Payments Corporation of India (NPCI) is an Indian public sector company that operates retail payments and settlement systems in India. The organization is an initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust payment and settlement infrastructure in India.

The Clearing House is a banking association and payments company owned by the largest commercial banks in the United States. The Clearing House is the parent organization of The Clearing House Payments Company L.L.C., which owns and operates core payments system infrastructure in the United States, including ACH, wire payments, check image clearing, and real-time payments through the RTP network, a modern real-time payment system for the U.S.

The Clearing House Payments Company L.L.C. (PayCo) is a U.S.-based limited liability company formed by Clearing House Association. PayCo is a private sector, payment system infrastructure that operates an electronic check clearing and settlement system (SVPCO), a clearing house, and a wholesale funds transfer system (CHIPS).

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<span class="mw-page-title-main">Peoples Group</span> Canadian financial services company

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The International Payments Framework (IPF) was an initiative launched in 2010 to create a global framework for payment processing by the International Payments Framework Association, a trade association headquartered in Atlanta, in the United States. The IPF standard is currently used by some organisations to process payments between the United States and Europe.

<span class="mw-page-title-main">Cross-Border Interbank Payment System</span> Financial markets payment system

The Cross-border Interbank Payment System (CIPS) is a Chinese payment system that offers clearing and settlement services for its participants in cross-border renminbi (RMB) payments and trade. CIPS is backed by the People's Bank of China and was launched in 2015 as part of a policy effort to internationalize the use of China’s currency.

References

  1. ↑ "Leadership Team". 2 August 2016.
  2. 1 2 Finextra (15 June 2016). "Canadian Payments Association rebrands as Payments Canada".
  3. 1 2 "Canadian Payments Act". May 6, 2021. section 3(1).
  4. ↑ "Financial Institutions File and routing numbers". FAQs. Canadian Payments Association. Archived from the original on March 30, 2015. Retrieved January 21, 2018.
  5. ↑ "2023 Annual Report" (PDF). Payments Canada. Retrieved 31 May 2024.
  6. 1 2 "Consolidated federal laws of Canada: Canadian Payments Act". laws-lois.justice.gc.ca. 17 November 2016. Retrieved 26 November 2016.
  7. ↑ "Canada's Major Payments Systems". www.bankofcanada.ca. Retrieved 27 November 2016.
  8. 1 2 "High-value payment system - Lynx". Payments Canada. 2021-08-26. Retrieved 2021-09-06.
  9. ↑ "High-value payment system - LVTS". Payments Canada. 2021-07-20. Retrieved 2021-09-06.
  10. 1 2 3 "Payments Canada Timeline" (PDF). Payments Canada.
  11. ↑ "Retail batch payment system". Payments Canada. 2021-07-20. Retrieved 2021-09-06.
  12. 1 2 3 "2016-2020 Corporate Plan" (PDF). payments.ca. June 2016. Retrieved 26 November 2016.
  13. ↑ "The economic benefit of adopting the ISO 20022 payment message standard in Canada". www.payments.ca. 17 November 2015. Retrieved 26 November 2016.
  14. ↑ "Workforce Payments Guide". Papaya Global. Retrieved 2024-12-10.
  15. ↑ "Could DLT underpin an entire wholesale payment system?". The Globe and Mail. 25 May 2017.
  16. ↑ "The Payments Canada Summit". The Payments Canada Summit. Payments Canada. Retrieved 2 June 2017.
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