Following months of collaborative industry effort to define requirements and map future plans, the organization has detailed its vision of the future state required to improve the way Canadians pay for goods and services, transfer money and exchange data about their payments.
The Modernization Target State provides a detailed view of Canada's Modernization program, including descriptions of core systems and their fundamental support structures, such as risk and regulatory requirements, access and settlement models, and technology platforms, Payments Canada said in a news release. It also outlines the way the systems will integrate, the potential migration of payment types and the anticipated benefits for Canadian businesses and households.
The target state is underpinned by three new systems, which will operate under an enhanced risk, regulatory and rules framework that balances the need for safety and soundness with accessibility to spur innovation. Each system use the ISO 20022 payment messaging standard, which enables the flow of more data with payments:
- Lynx – Lynx will replace the current Large Value Transfer System, a high value payment system that facilitates secure real-time payments with transaction finality and supports settlement of other payment networks and financial market infrastructures. Lynx will comply with the Bank of Canada's risk-management standards for Systemically Important Payment Systems. This will provide a safe and secure foundation that supports a dynamic payments environment.
- Retail clearing with enhanced batch payments (or SOE) – A new system will replace the existing Automated Clearing Settlement System and U.S. Bulk Exchange. The new system will clear retail batch payments and comply with the Bank of Canada's risk management standards for Prominent Payment Systems. It will also enable faster and more convenient automated funds transfers – a payment type typically associated with payroll and bill payments.
- Real-time Rail – This new, always-on payments infrastructure will support immediate payments. The real-time infrastructure will enable fast, convenient payments and funds transfers and will be a platform for future innovation, where participants in the payment system can connect and develop new ways for Canadians to pay for goods and services and transfer money.
These changes to our national payments infrastructure are the result of consultation and collaboration with financial institutions and key stakeholders, including the Bank of Canada.
The goal is to deliver a modern payments system is fast, flexible and secure, promotes innovation and strengthens Canada's competitive position, the release said.