There's a rule (and reason) for that!
By collaborating with the payment ecosystem, our rules not only lay the groundwork for the safety and soundness of Canada’s payment systems, they also support and enable the environment for innovation and new services.
In January, Translink, the transportation agency for Metro Vancouver, British Columbia, introduced an alternative payment option to their riders: the ability to tap their debit or credit card to pay for a fare. A few months later, this service was also brought to Ontario’s Metrolinx and Toronto Transit Commission and Laval, Quebec’s Société de transport de Laval. Now, millions of Canadians have a new, convenient and easy way to pay for public transportation. It’s an impressive feat rolled out across a large nation in a relatively short period of time.
Changes to our payment systems don’t happen overnight. When industry has the opportunity to innovate, Payments Canada supports and enables this innovation by working with the payment ecosystem to establish rules where applicable. Not only do rules create the framework for the security of our payment systems, they also clearly outline the roles, responsibilities and obligations of our member financial institutions on the handling of payments that move through these systems. In other words, rules establish the playing field and what member financial institutions can and can’t do when it comes to the exchange, clearing or settlement of payment items.
This thorough rules process involves collaboration and consultation with Payments Canada members and stakeholders when needed. These industry and consumer groups come together for the same reason: to get the rule right. This means making sure that when it is operationalized and rolled out, the payment ecosystem, end users and consumers aren’t faced with unnecessary challenges and can be confident that payments from their bank account are being processed safely and soundly.
After all, there is a lot at stake. Payments Canada has a long history of ensuring money gets to where it needs to be securely. Over $36 billion dollars is exchanged over our retail batch payment system every day – that represents over $9 trillion dollars in 2022 alone.
Rule E5, the rule pertaining to the Exchange of Point-of-Service (POS) Delayed Authorization Debit Payment Items for the Purpose of Clearing and Settlement, made quick authorization of high-volume, time-sensitive debit transactions possible for public transit operators by providing a new type of POS item that does not require continuous connectivity. This change, which allowed for delayed authorization of debit purchases, is an example of the rules process at its best.
After the consultation and collaboration process, Rule E5 was implemented in January 2020, just before the start of the COVID-19 pandemic. Not surprisingly, since then, Canada has seen a growing preference for and an accelerated adoption of contactless payments, year over year. So, by ensuring a safe, secure and carefully thought-out process, the payment ecosystem could respond to the needs and preferences of Canadians; in this case, a new service that makes it easier for many to pay for transit.
Payments Canada’s system rules are the result of the payment ecosystem working together to meet the needs of Canadians. Moreover, it reflects how Payments Canada works with industry to maintain current payment systems and enable innovation to take place – even ones that we see as commonplace. Deposit a paper cheque by taking its picture? There’s a rule for that: Rule A10. Have your hydro bill or gym membership automatically debited from your bank account each month? There’s a rule for that, too: Rule H1. Get your paycheck automatically deposited into your account? That’s Rule F1. Shop online using the funds in your bank account? Rule E2.
Interested in seeing what’s next in payments? Check out our Rules and documentation page. Maybe there’s already a rule for it!
Charlie Clarke
Manager, Rules and Standards Office
Payments Canada
