Economic Benefits of Real-Time Payments Remain Largely Untapped
Canada recorded 949 million real-time transactions in 2021, which resulted in an estimated cost savings of $204 million for businesses and consumers. This in turn helped to unlock $1.1 billion of additional economic output, representing 0.06% of the country’s GDP.
With real-time transactions set to rise to $1.5 billion in 2026, net savings for consumers and businesses are forecasted to climb to $315 million. That would help to generate an additional $1.1 billion of economic output, equivalent to 0.05% of the country’s forecasted GDP.
That means for the ninth largest global economy, the potential economic benefits of real-time payments remain untapped. According to the Cebr, the theoretical impact of all payments being real-time could add 2.7% to formal GDP by 2026. However, these are theoretically modeled benefits; they do not suggest that there is no place for non-instant electronic payments or paper-based payments in the future.
Real-time payments have been available in Canada since the launch of Interac e-Transfer in 2002. The adoption and use of real-time payments steadily gained traction over the last few years, thanks to the wider participation by more than 250 financial institutions as of December 2021, and a continued preference for electronic payments among consumers.
However, real-time payments still accounted for a smaller share of 4.9% in terms of volume in 2021, compared to 77.0% of the non-instant electronic payments. This is due to the high adoption and usage of payment cards in the country. The increased contactless payments limit amid the COVID-19 outbreak has further pushed their usage for day-to-day, low-value transactions. Meanwhile, Payments Canada is developing a new and advanced real-time payments system known as Real-Time Rail (RTR), which is expected to go live in 2022. The launch of this new system is anticipated to accelerate real-time payments growth over the next few years.
Key Stats
Real-Time Payment Types
Initiation/Authorization Methods
Year of Real-Time
Payments Launch
Availability
Message Standard
20022
ACI’s Take
While not the most visible on the world stage, Canada has been — and remains — a global leader in real-time payments for more than a decade. Interac e-Transfer, the domestic real-time scheme, is the go-to for P2P payments. Request to Pay is only just breaking through in other markets but has been supported by Interac e-Transfer for years, under the name “Request Money.”
There is significant change coming down the pike, however, and all of it revolves around ISO 20022. Interac is modernizing its e-Transfer service to Interac Instant, based on the new ISO 20022 messaging, in a move intended to prompt significant growth in B2B real-time payments. Payments Canada has also selected Interac to implement its new real-time payments system, the Real-Time Rail (RTR), which will also leverage the ISO 20022 data standard. Both of these developments follow the 2021 release of Canada’s new wire system, also based on ISO 20022.
Clearly the priority for the market’s payment players is aligning their payment systems around ISO 20022, and to do so in a way that promotes greater efficiency even as payment types proliferate. Many banks implemented payment hubs about ten years ago, but these first-generation hubs often struggle to meet today’s requirements, particularly with regard to maintenance costs. These banks will need to look at modernizing their hubs to ensure they can control their costs, and continue to compete effectively with the latest payment services.
In response, some banks are running mini hubs, spreading payments between hubs according to payment type (high-value wire payments versus lower-value real-time payments) or regions. This can help with resilience, but banks often struggle to work out the best way to carve up their payments across the hubs. There is no right answer. Assuming that workloads are reasonably balanced, the bank should make an initial decision and plan now to iterate as events unfold. Don’t allow “perfect” to be the enemy of “good.” Any reasonably modern hub solution should allow the bank to adjust workflows as needed.
Finally, we expect to see fintech providers continue their campaign for open access to the payment rails. Openness will be important for innovation and consumer choice, but it’s unlikely to accelerate adoption, given the existing success of real-time payments in Canada.
History
Mobile Wallet Trends
% of adults who have a mobile wallet and have
used it in the past year (2021)
Real-Time Acceptance
Real-Time Total Participants
Population Banking Level
Number of debit, credit and
charge cards per adult
Index to global average
Real-Time Transactions
2021
2026f
F5 Yr CAGR
Payments Fraud Rate
Population who reported being a
victim of fraud in the last 4 years
Top 3 Payment Fraud Types
| % of fraud victims | Trend |
| 20.3%
Card details stolen online |
 |
| 18.6%
Card details stolen/skimmed in peron |
 |
| 10.7%
Identity theft |
 |
Shares of Volumes by Payments Instrument
Transactions
- Paper-based payments
- Electronic payments
- Real-time payments
Spend (USD)
Real-Time Payments Volume and Its Share in Overall Non-Paper-Based Transactions, 2015-26f
Cebr
Canada is a high-income country ranked as the ninth largest global economy in 2021 (Cebr World Economic League Table, 2022).
Real-time payments accounted for 4.9% of all transactions in 2021, a relatively typical share for an advanced economy. Net benefits of real-time payments for consumers and businesses hit $204 million in 2021, mainly due to the reduction of failed transactions which contributed to half of these savings ($102 million). Failed transactions generate an associated annual cost of $118.5 billion globally, borne by financial institutions, consumers and other businesses across the globe. In Canada specifically, we estimate the total cost of failed transactions to be almost $2 billion per year.
In 2026, real-time payments are anticipated to account for 7.0% of the payments mix. The resulting net benefits of real-time payments for businesses and consumers are expected to increase moderately to $315 million.
At the macroeconomic level, the real-time payments system was estimated to facilitate economy-wide benefits worth around $1.14 billion in 2021; equivalent to 0.06% of GDP or the output of 10,966 workers. This is forecasted to drop marginally to $1.11 billion (0.05% of GDP) by 2026.
The cause of this slight decline is due to the reduced impact real-time payments are expected to have in the formalization of shadow economy activity. Cash usage is expected to be low in 2026 across Canada, with electronic (non-real-time) payments accounting for almost 83% of all transactions. Therefore, the degree to which real-time payments are displacing paper-based instruments is limited compared to 2021. As a result, we expect a fall in the absolute value of informal activity that real-time payments are credited for formalizing.
For Businesses and Consumers
2021
Net savings stimulated by real-time payments
2026
Projected net savings stimulated by real-time payments
GDP Growth
2021
of economic output
2021
of GDP facilitated by real-time payments
2026
Projected of economic output
2026
of GDP facilitated by real-time payments
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