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When Will Real-Time Become Reality in the U.S. and Canada?

  • By Andrew Deichler
  • Published: 5/16/2016
When Will Real-Time Become Reality in the U.S. and Canada? Andrew Deichler 2016-05-16

NEW YORK -- Experts weighed in on the possibility of real-time payments systems finally emerging in the United States and Canada during a panel session at last week's SWIFT Standards Forum.

United States

James P. McDade, senior vice president, product management and strategy for The Clearing House (TCH), began by saying that TCH’s real-time efforts really began to pick up steam when the Federal Reserve released its whitepaper in early 2015 on improving the U.S. payments infrastructure.

Since that time, TCH has held a series of workshops with its customers and other industry stakeholders to better understand what real-time payments need to be for U.S. businesses and financial institutions. What quickly became obvious is that this undertaking is not a “one-shop effort,” McDade explained. “If we want to reach the goals of ubiquity and interoperability, we can’t do it alone. We have to do it as part of a much broader effort.”

In an effort to see what works and what doesn’t, TCH did extensive research on the regions that have been successful in implementing real-time, such as the UK with its Faster Payments initiative. Additionally, given its understanding that this isn’t something it could handle on its own, TCH partnered with VocaLink and several other technology providers to develop its platform. TCH’s system is slated to roll out by the end of the year and has seen a lot of interest as of late, McDade noted. “It’s beginning to resonate now that we’re getting closer to reality,” he said.

Ken Isaacson, senior vice president and wholesale product manager for the Federal Reserve Bank of New York shared some insights on the Fed’s initiative to improve U.S. payments. After listing the Fed’s recent efforts (the 2015 whitepaper and resulting Faster and Secure Payments Task Forces) he stressed that more collaboration is needed among stakeholders. “We don’t have the authority to mandate payments system improvements, so we’re going to have to work with a broad set of stakeholders collaboratively towards improvements,” he said.


Providing the view from Canada was Mark Brule, director, project portfolio delivery for the Canadian Payments Association (CPA). He stressed that the CPA is working to advance the Canadian payments system so it can keep pace with the rest of the world. “We are looking at our core clearing and settlement systems, in addition to the payments system broadly in Canada, and the sense is, now is the time for change,” he said.

The CPA has done some basic research and collaborated with its members to put together a vision of where the Canadian payments system needs to go in the future. First and foremost, members of the CPA agree that payments in Canada simply aren’t fast enough. But it’s not enough to just be fast; payments must also be efficient. “It’s not good enough to just get the processing of the payment down to seconds between our members; it’s how quickly the payment gets to the user’s account,” Brule continued. “So we’ve got to address how that happens and the changes going forward have to focus on that as well.”

Convenience also needs improvement in Canada. “This is all about the standards,” Brule said. “We want something that’s aligned globally. We want rich remittance. But also we want notification and transparency. Users of the system in Canada want to know what is happening with their payments. It’s just not there today, and it needs to be.”
Brule added that the CPA recognizes that it does not settle enough payments in a day. “We’re T+1. We don’t feel there’s a good argument for being T+1 anymore, particularly on the domestic side. We need to address that,” he said.

Finally, interoperability is key. As an exporting nation, Canada needs to align with what’s going on globally, Brule stressed. Like TCH, the CPA has also studied the other real-time initiatives around the world and is in the process of determining what will work best for Canada.

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