TBH, if you are launching a startup, it might not be a terrible idea to incorporate in Canada. Canada has the notion of federal incorporation in addition to each province having its own corporate registry. Federal corporations can exist in any province but all the filings are done in one place.
The new mega-deduction recently announced [1] results in an effective 6% corporate tax rate, which is among the lowest in the world and certainly in the G-7. Things like the RTR are just one example among many of the efficient infrastructure that Canada is introducing to address a very long term productivity gap (the mega-deduction is another).
And, R&D conducted in Canada is always a current-year expense and never capitalized. And there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries (in most provinces). And those salaries are lower than they are in the US (something that engineers in Canada have a right to complain about).
No the tax rate isn't 6%, this is incorrect. The 6.4% is the marginal effective tax rate on new investment. Rates are unchanged: 26.5% combined federal/Ontario, or 11.2% for CCPC small-business income. And it's still draft legislation released Sept 15
> Attracting strong talent in Canada is hard given the massive pay differences gained by moving south of the border.
The size of the pay difference is something you, as the prospective employer, have significant direct control of. It is within your authority to point the dial anywhere from "hard to find anybody because of the massive pay difference" to "easy to attract strong talent, while still saving money relative to what it would cost to attract the same level of talent in the US".
The Canadian business establishment will not come after you to break your knees if you offer higher wages than they do.
If you pay more while earning less (or attracting less investment money) you are at risk of being outcompeted. I'm not an expert in Canadian economy, however I guess paying the same salary in Ontario costs more vs profits, than in California, or Texas.
If you are competent at identifying talent and hiring it, paying more in this market is actually a quite "neat hack" to slay any competition that is obsessed with low margins and therefore ends up with, frankly, mediocrity, as a result.
I was actually pleasantly entertained by this movie, despite the inaccuracies. Loved to see the rise and fall and not just rise and conquer that so many biopics portray today.
The lack of immigration problems is one reason why the talent is less expensive. The other reason is probably because people in Canada get compensated in other ways. Many of my American friends who left Canada for employment eventually return when their kids reach school age because they can't stomach the harsh reality of the US education system. Or something happens to their health.
It's easy to knock Canada for its personal income tax rate, but compared to European alternatives, it's still quite low, despite offering a whole lot of baseline public goods.
The deal used to be that it cost less to live here, so the lower pay was mostly made up for. Now it doesn't because housing costs hyper-inflated under low interest rates, lax regulation, and high immigration.
That said, while senior SWE salaries here absolutely not even close to competitive with the Bay Area or NYC they are not that far off from other places in the US (like smaller midwest cities etc). While Canadian salary packages are depressed, it's also partially a result of: they're not inflated.
The bigger concern is more the lack of interesting work.
And a lot don’t leave if their spouse can’t work in the US (or has no interest in being sah). I know lots with partners who would never give up their Canadian gov pension track. That and other family obligations make it harder to move.
Yep. In the mid-2000s when we first got married and had young kids my wife worked for Apple Canada, and I worked for a company that was just getting acquired by Google. We could easily have just both company-transferred to the Bay Area and made 3x the money and had much nicer weather. My mother-in-law had just passed away (fuck Cancer, etc) and there was little tying us here family wise. But choices were made: Canadian public school system vs US, being a citizen and secure in that here (vs insecure visa status), I wanted a rural property and to live rural (which would not have been a viable option there), etc. etc. For better or for worse we stayed here.
Many do similar calculations. Home is home. It's profoundly arrogant (and very American) to assume that the "best talent" moves for money and opportunity.
Americans have very high labour mobility rates, and often assume that's how the whole world works. But in most places in the world the idea of uprooting your whole life for a job is seen as odd.
I'm a dual citizen living in Canada and ehhhhhhh idk about this. I incorporated a startup in the states because so much internet infrastructure presumes that's where you'll be and only handles Canada as an afterthought, if at all.
Most recently I tried to use Airwallex (payments provider) for a product that does international payouts and they ONLY let you use their product if you're based in the States.
Canada sometimes has alternatives on offer, but they're usually broken and lacking features.
>Canada has the notion of federal incorporation in addition to each province having its own corporate registry. Federal corporations can exist in any province but all the filings are done in one place.
I don't personally think federal incorporation is a huge benefit relative to provincial/state-level incorporation. It mainly provides name protection in every province/federally and makes it marginally easier to expand nationally in Canada. It's main disadvantage is a requirement for Canadian-resident directors which can make it a bit difficult to sell the corporation. The tax laws are the same (though for the most part, if you operate outside of Quebec, you're only dealing with one tax agency), and you still have to file extra-provincially in each province you carry on business, which itself comes with provincial filing requirements (i.e. not a one stop shop).
>The new mega-deduction recently announced [1] results in an effective 6% corporate tax rate, which is among the lowest in the world and certainly in the G-7. Things like the RTR are just one example among many of the efficient infrastructure that Canada is introducing to address a very long term productivity gap (the mega-deduction is another).
This is only for new business investment, though granted since you're discussing startups, it's valid to mention that.
>And, R&D conducted in Canada is always a current-year expense and never capitalized. And there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries (in most provinces). And those salaries are lower than they are in the US (something that engineers in Canada have a right to complain about).
This is true. I do wonder how much of an comparative advantage this is now that engineer salaries are no longer capital deductions in the US. I also recall Canada had a startup visa program to bring co-founders to Canada, but that program is paused and I don't know if it really worked.
More than anything, despite all these advantages, I would imagine access to capital is more important to any startup. You can live in the best regulatory environment in the world, and it would mean nothing if you run out of runway. The investment landscape in Canada is hugely conservative overall, and despite being flagged under successive governments that there's a huge death valley between seed to commercialization, no risk has actually been taken to meaningfully address it. [1]
My brother worked for a startup where the HQ and funding was all SF but the staff was all UK and Denmark (until they hired 3 Americans to service a contract with Microsoft in Seattle).
If you are a US citizen, the IRS will likely classify your startup as a Controlled Foreign Corporation (CFC), so be prepared to navigate the many tax pitfalls like PFIC, GILTI (now called NCTI).
the downside of canada is the capital market. You need to take things ridiculuosly further to get less money for them vs usa. Plan on twice as long for exposure and possi ly having to go public to get any value. Just hope a us company doesbt steal your idea and do it better over that whole extended exposure period. I dont do any angel investing in canada anymore because of this.
I have long felt that this is true of much of the western world. The conservatism of investors vs the US must be one of the biggest reasons for US advantage
Its the population density and tax regime. Usa has high enough population density to have real wealth pools and low enough taxes that those wealth pools can create new billionaires when they invest in good ideas. Europe could do it if they dropped their tax rates and crazy labour protections to get more dynamic, but i think the current rich there like that the system aborts new billionaires before they are born.
Its always what the greatest fool will pay. Usa has way more fools, at way more levels of company development leaving way more out opportunities. In Canada be prepared for 7 to 10 years slog to get to where you can list on a low scam stock exchange or be sold to an international company at a discount. Better hope nothing happens in that time to tak your 10x to 100x return to zero. Vs usa if you have strong growth or strong cash flow you can usually get out within a year of starting to earbestly look no matter what stage you are at usually without the discount applied to being a Canadian company. The only things that make sense to do in canda is resource extraction and cheaper north american holding of foreign workers us companies dont want to leave in the third world but who cant get into the usa and canada has not yet impoverished itself enough to get the idiots in the east that control everything to allow major expansion in that. Basically this place should be a no go for startups except for very rare exceptions.
Getting funding in Canada is significantly more difficult, though. There are fewer investors at every stage of the startup lifecycle here, and those that do exist are more risk-averse. The cheques they write are smaller, too.
Money is fungible; the funding can come from anywhere. Heck, these days it's not uncommon for Softbank in Japan to invest money from Saudi Arabia into companies in California.
Canadian investors are much too risk-averse, but they will happily follow a funding round led by an American VC.
Canadian investment naturally gravitates towards real estate. Current systems and colonial history are conducive to this. Striking to see billboards of real estate agents line major roads of Canadian cities. Founders are not allotted the same sort of financial/cultural capital in Canada.
And a govt program to boot. I doubt they get it from non-govt Canadian firms like banks. They usually don't understand startup culture and seem to want close-to-profitability before investment. Risk averse business culture.
Does it have to be Canadian investors though? Why don't Sequoia et al invest in Canadian (or Japanese or German) companies directly? I'm aware that many VC firms have a foreign presence and I'm not talking about that.
It's always struck me as a little weird that a company has to be within driving distance of Sand Hill road to get attention from a Silicon Valley VC. VCs can't hop on a flight to do some due diligence? Video conferencing isn't good enough for monthly status meetings?
> VCs can't hop on a flight to do some due diligence?
I think it's more of an issue of familiarity with the regulatory environment. VCs and PE know how to operate in specific legal and regulatory landscapes. With standard paper.
Asking them to operate in new jurisdictions requires a lot of effort and legal know-how; it's not just a matter of cutting a check, but understanding how to navigate the legal landscape for these financial transactions, rights of the investor, tax implications, legal recourse, etc. There's going to be a lot of friction such that they'll either: 1) not seek those opportunities, 2) ask the founders to move to the US if it's a really promising team (see this a lot; was in one startup where a co-founder moved from AUS to the US).
Melanie Perkins talks a bit about this in the Canva episode of How I Built This[0] and how SV wanted them to relocate. AUS government ended up matching some of the investment through a new program so they reached their target for their raise.
> Why don't Sequoia et al invest in Canadian (or Japanese or German) companies directly?
Economies of scale. Many investors can review and fund a standard Delaware C corporation without even passing it to outside counsel.
For Canada, not only will you probably special counsel, you may also have additional up front and ongoing accounting costs related to tax treatment, et cetera. You also know that this is potentially a hurdle that start-up will face in every sale and supply-chain contract it signs, unless it relents and just chooses a normal jurisdiction, at which point why don't they just create a Delaware entity and headquarter in Canada?
I take your point, really, and I understand there's more friction. But do the people who authorize the checks also do the beancounting personally?
Accounting and legal stuff is going to be farmed out to licensed professionals regardless of where the company is. And you can't tell me there's a shortage of US + Canada tax or legal specialists.
> do the people who authorize the checks also do the beancounting personally?
There are a lot of small-shop and even one-man private investors. Increasingly as wealth accumulates and AI automates.
> you can't tell me there's a shortage of US + Canada tax or legal specialists
They're usually a different partner at a big, expensive firm. Or, if you use a small firm, it means establishing a brand new engagement.
I make personal investments. That would be a dealbreaker for me. If I really liked the company I might try to talk a cross-border friend into running a fund that makes the investment so I don't have to deal with the B.S.
It's not crazy. A VC isn't one person. A VC is a team and a community. Plus you don't really know how that money is tied up and what forces are at play securing it; some of those forces will be immovable or not viable in other countries.
My primary point is that if a particular investor wants to have dinner with a prospect and bring 4 or 5 of his colleagues, he can't easily do that anywhere else. The secondary point may be small or may be massive, nobody can really know since nobody outside of those directly influenced by shadow money could know.
This is what does happen, except "fly out to meet the VC and have dinner" usually means "fly to the Bay Area", rather than "fly to Vancouver or Waterloo", at which point many Canadian founders who want VC funding realize their time is more efficiently spent if they just launch in the US rather than commuting there.
> It's always struck me as a little weird that a company has to be within driving distance of Sand Hill road to get attention from a Silicon Valley VC
Is it actually true as of 2026? Asking because it sounds like a pure cope.
I was under the impression that Silicon Valley VCs have no issues with funding tech companies based in major US tech hubs outside of SV(especially ones like NYC).
Canada/Japan/Germany/etc. is a whole separate story though, and I am not contesting that (given there are plenty of very obvious reasons for why a SV-based VC firm wouldn't want to invest in a company based in one of those places).
In my experience VCs suffer from immensely-inflated senses of self-importance, and think that they possess some unique skill/knowledge to "pick the winners", and so they expect you to come kowtow to them rather than deign to come meet you where you're at. Whether or not that's why there's less VC presence/deal flow in Canada I'm not sure.
> there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries
I really wish Canada told American companies to fuck all the way off with that. I hate that we support foreign corporate profits with our tax money. It seems like such a scam. I am sure initially it was meant to help innovation and give small businesses an edge, but somehow the googles and the metas can freely take advantage of it too.
Insane that the US does not have a realtime payments network in 2026. FedNow exists but is supported by handful of banks which charge fees to use the feature.
> Outgoing transfers cost 0.75% of the transaction amount (minimum of $1, maximum of $30). SoFi does not charge a fee for incoming transactions.
> SoFi Plus members save 50%. They pay 0.375% of the transaction amount with a maximum of $15 (minimum remains $1).
> Insane that the US does not have a realtime payments network
The U.S. invented real-time gross settlement electronic payments with Fedwire in 1915 [1]. FedNow is the newest real-time end-to-end payment system [2]. It launched in 2023.
For nearly 20 years the UK has had "faster payments", free instant transfers, now up to £1m, and while you can't send to a phone number, the routing numbers needed can't be used to withdraw so are generally safe to give to people.
UK system is rather inconvenient and most web sites do not have even an option to use that. And forget using that to pay in a shop. Compare that to Bizum in Spain or Vipps in Norway where one can very conveniently pay using that both online and in shops and the systems naively supports refunds and payment reservations and subscriptions similar to debit cards.
Yes, it's less about payments than more modern systems. The UK has free current ( checking) accounts with debit cards that are essentially free to use, so there's not much incentive for other payment systems. A contactless debit card is quicker and easier to use than an app anyway, although google/apple apps work with that too.
Subscriptions are often done via "direct debit" ( since 1970 ), which is safer than letting anyone take money if they have your details, so that's been a solved problem here for a while too.
The downside is the first-movers problem, where the UK having been ahead a couple of decades ago will now likely be behind for a while, because there isn't so much incentive.
Hopefully not as long as the USA has been behind though!
I get the benefit for the merchant to use an instant payment system. On the other hand, I don't understand the benefit is for the consumer. An increasing number of UK merchants use Pay By Bank (which is essentially an easy way to make a payment by pre-filling the merchant's bank details in your banking app), but if you choose to use it you're instantly losing the consumer protections that come from using a debit or (especially) a credit card: https://www.moneysavingexpert.com/banking/pay-by-bank-warnin...
The only way I would use such a system for purchases would be if the merchant refused debit/credit cards, and even then only if there wasn't an alternative merchant I could use.
I've always paid for Airbnb type places (not actually airbnb, obviously) in the UK using the fast electronic payment system. There's usually a button on the web site or they email their account and routing number.
It mostly replaced paying with cash for people to people transactions and removed the massive delay doing online payments to people. It didn't change payments to businesses.
To be fair, SEPA instant payments only became mandatory late last year too.
The big difference is that the EU has mandated (effectively) fee-free availability to all end users, while the US is only making it available as an infrastructure layer. Most banks don't bother offering any product on top of it, or own-account-transfers for a fee at best as mentioned by GP.
Mostly the curse of the first mover, with a dash of corruption for spice.
Part of it is "the curse of good enough": the US has had good credit-card style infrastructure for over a century and digital infrastructure since the POTS days. Part of it is that we lost our appetite for anti-trust in the 80s. Part of it is that the price structure of this infrastructure has wormed its way into everything in a way that is difficult to undo without causing high-visibility inconvenience for low-visibility benefit. The good-enough is the enemy of the good.
I think it's mainly because they aren't forced by regulation.
Germany is another first mover with decades old banking systems and standards. German banks also dragged their feet supporting SEPA Instant or they added additional fees so that barely anybody wanted to use it.
Then the EU stepped in with regulation: If you support classic SEPA transactions, you also have to support SEPA Instant for the same price (which is almost always free for retail banking accounts). And suddenly banks did.
Yes, this could be fixed with regulation -- but whoever did the regulation would have to contend with angry fools complaining about how "the government took away my credit card rewards!!!" for years and of course the credit card companies themselves would stir and amplify those voices as much as possible.
> the price structure of this infrastructure has wormed its way into everything in a way that is difficult to undo without causing high-visibility inconvenience for low-visibility benefit
I think the “recent” change allowing merchants to pass along the credit card fees is a step in the right direction.
I think a lot of people would still choose fraud protection for the extra costs, though.
The US also has incredibly pro-consumer regulation over credit cards, compared to most of the world. There is no such thing as "not protecting your card" as a way for the bank to get out of paying for credit card fraud. Legally, you are liable for the first $50 of unauthorized charges, and that's it (though most cards will cover all of it).
> The US also has incredibly pro-consumer regulation over credit cards
Not to take away from your example, but I was under the impression that transaction fees charged when using a credit card in the US were significantly more than in say, the EU?
Australia recently capped credit card fees. Yes, it has lead to a decline in credit points/cashback but in the end it's leaving more money in your pocket.
Payment processors and banks lobby for control over this.
As usual, a service/product is bad because no one is allowed to create a better alternative, this is an almost universal rule.
Specific to this case: the government is included in the list of parties not allowed to make it better.
Mostly deficiencies of the political system: regulators see themselves, call themselves and act like "watchdogs", whereas in other countries financial regulators act like shepherds and lead the market. Hence in this country relatively minor players with interests not exactly aligned with the general public can hijack the process. That's what we are witnessing.
Banks earn money on card payments and pay (via explicit fees or implicit fraud liability without compensation) for interbank transfers, so without any external forcing function (market or regulatory), it seems pretty clear to me why they prefer one over the other.
I've signed up for or seen the contracts for several payment processors across several companies. Rack rate for ACH debit starts at $0.25/trx and goes down to sub-penny at scale. Returns can be high though ($2 per, going down as well).
Edited to add: that's not a defense, I *loathe* ACH. It's a negative-reporting system which is such a pain to deal with.
My understanding is that sameday ACH does not cost extra (from a network perspective) than regular ACH, it's just that some shitty banks apparently like to charge extra for it.
Outside the AI summaries, I couldn’t easily find the sources. But a couple of different sources say same-day ACH is 5.2 cents per outgoing item while overnight is 0.35 cents.
What I can say is the Fed has draconian rules for pricing its services. The services cannot be subsidized but must be priced to recover costs, including a return on capital similar to what a private payment system (ie from the Clearinghouse) would expect.
I read it as the sending institution pays 5.2 cents to the receiving institution per item, on top of the 0.35c/item + 0.1c/item same-day surcharge for a maximum of 5.65 cents/item before volume discounts.
Our federal representatives are mostly incompetent and technologically illiterate. When a large project does materialize, the funding is wasted on contractors who actively scam the government.
In most part of the world, the government just force the bank to join the payment system and restrict how they charge the customer.
In the USA, no single regulator have that power. Basically only congress can do something like this.
The us Congress ain't famous for being fast, you know.
The Fed prints a fraction of a fraction of the actual money in circulation. Private banks in practice control the money supply. As such, they want to maintain their monopoly.
The countries that have innovated the most in regards to automated payments are the ones trying to escape US influence: look at PIX in Brazil, BRICS pay, etc...
In America, the payment system is an oligarchy, they protect their own (the bankers), what need is there for innovation when they are making a killing out of the current inefficiency?
The one place where the US haven't been slow is in stablecoins, making them dollar donominated, to ensure the monopoly the US dollar has on international trade stays strong. That way, when the US has a crisis, they take down the rest of the world too, to the joy of non-US countries.
Venmo, CashApp, Apple Pay, and Zelle are free for person to person transactions and you get the cash in your account the following day.
I’ve never been in a position where I needed a cash transfer to an account the very same day, I have tens of thousands of dollars of credit available so there’s very little need for immediate transfers, at least for me personally. I do virtually all of my spending on credit cards so I have up to 60 days to pay the loan back without interest.
Ever buy something from a rando, or split the bill with a colleague or friend?With real time transactions, you can confirm that you actually received the money immediately.
Zelle is ACH, everyone else uses card processing rails. It's not the same as real instant transfers between banks. There are middlemen involved that don't need to be there.
Others have pointed out that we do have this and there are some reasons it's not the same scale as credit card infrastructure, but I'll just observe there's a cultural difference
We've had a billion discussions on Hacker News about payment rails and it's invariably always a European incredulous that Americans can't/won't do a digital payment instantly and for pennies. These Europeans are typically operating with a mental model where they have cash in a bank account and every transaction gets funded from cash on hand.
Americans - for better or for worse - want longer cycles to pay for their charges and many want rewards for their spend. I don't think it's uncharitable to describe those who pull out debit over credit during a transaction as lower income and higher credit risk than those who prefer credit. (Europeans will decry that this is Americans living beyond their means. Maybe! Maybe.)
But when it comes to business, I've never understood this argument from Europeans. Invoicing works on net-30/60/90 terms. In B2B payments you could reduce payment cost by doing invoicing with instant low-cost payment in 30 days, but incur a different "cost" in cash flow management. Credit card payments are a risk-based financial product that does a magic trick of arbitrage for merchants between a service/good sold and payment received as a net-30 invoice to the cardholder, and you should expect to pay a fee for that. An economy where businesses need to pay each other immediately out of cash-on-hand is less dynamic and less efficient than one where all that cash flow can get smoothed out via payment intermediaries. (Money you have to keep on hand for bills is not being deployed doing other things in the economy - this is inefficient!)
For C2B payments, this is probably a helpful and lower-cost innovation over debit rails. But credit is a different product, financially and culturally, in the United States.
FedNow is still roughly an order of magnitude more expensive than the EU's TIPS (EUR 0.002 vs. USD 0.045, last time I checked) in terms of "sticker price", but yes, at least there's some movement, and as you say I'm not sure who actually pays that sticker price in the US.
The real problem is that, even if costs were to come down to zero, there is nothing incentivizing banks to actually make RTP available to their customers. In the EU, customer-initiated "push" bank transfers are considered an essential part of a checking account; in the US, they're not.
For purchases, the US has debit cards and Zelle. Banks instantly exchange non-revocable promises to pay and the money follows at the end of the day. This is more capital (cash) efficient because it allows netting. One key here is that everybody in the US banking system is under the same regulators (Federal Reserve, FDIC/NCUA) so there's greater trust that they won't go under before the cash comes.
A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods). FedNow, Zelle, wires, ACH do not and people have lost money by scams this way.
If you don't need it right that second, same-day ACH is widely used, and again the delay allows more efficient netting.
The Clearing House's CHIPS is a good in-between, it's not guaranteed instant, but uses an algorithm to match transactions as fast as possible with constrained float.
I want to send money between accounts I own in real time. I want to deposit money in brokerage accounts in real time. I want to stop connecting my accounts to services like Wise to make money transfers. I want to pay off a credit card and have that payment clear instantly. FedNow could enable all of this.
Purchases are an afterthought. A system like Brazil's Pix could be rolled out on top of FedNow.
>I want to pay off a credit card and have that payment clear instantly.
Why? At least 2/3 of my cards do same-day ACH (the other is at the same bank, so I can't tell), so the transaction clears in hours. The point of a large credit limit (supposed to be at least 3x normal spend) is so that it doesn't matter anyway.
>FedNow could enable all of this.
Clearing House's RTP has been around since 2017 and it hasn't.
A non-hypothetical scenario is that I make a credit card payment via ACH. That money does not leave my account until EOD. Some other transaction causes my balance to fall below the amount required for that transfer. The transfer fails and I am dinged for a missed payment by the CC company (and if the bank sucks they charge a fee too).
Now you could argue this is an accounting issue "Why doesn't the bank reserve the funds until the transfer is complete?" Answer, I don't know ask Capital One. But RTP eliminates the question entirely.
This is a thing already in the UK. I can make a credit card payment from my account using the credit card number. It applies to the balance in real time (realistically in minutes). I don't have to worry that the payment could fail at any point.
>Now you could argue this is an accounting issue "Why doesn't the bank reserve the funds until the transfer is complete?" Answer, I don't know ask Capital One.
Because transaction ordering isn't guaranteed. Say I know that I'm getting paid on the 1st, and I want to spend my paycheck immediately on rent. If the rent transfer gets processed at 11:00 and the payroll provider gets around to doing it at 11:15, I don't want my rent to be rejected.
Therefore, the bank allows transactions to happen and only checks at the end of day for overdraft. They then apply a time-independent ordering to transactions they can reject like paper checks.
In fact, this same scheme applies to banks, Fed only looks at their accounts at end of day, why you have overnight funding.
The major exception to this is debit cards, which Congress made them reject if the money isn't there at time of authorization.
You don't need to worry about any of this backend reconciliation transaction ordering shitfuckery if the money is actually transferred immediately, like it is in countries whose banking systems don't suck.
> I want to deposit money in brokerage accounts in real time.
My broker credits me for deposits immediately, switch brokers.
> I want to pay off a credit card and have that payment clear instantly.
Why? There is zero benefit to doing this, a credit card payment is applied to the account on the day you choose to pay it, whether it is removed from your checking account or not. I guess I could see if you are constantly over drafting your account, but you could just .. keep cash in the account so you don’t overdraft.
I leave enough money in my checking account to cover all auto paid bills for at least 30 days just in case I end up in the hospital or something.
> For purchases, the US has debit cards and Zelle.
Both are a very poor alternative to something like UPI or even EU-style bank transfers as a mass retail payment system. Cards are orders of magnitudes more expensive; Zelle has no standardized interface and is explicitly geared only towards P2P Payments, lest it cannibalizes the banks' golden goose, i.e. payment cards.
> same-day ACH is widely used, and again the delay allows more efficient netting.
Importantly, customer-initiated/"push" ACH is largely not a thing in the US, unlike in many other countries. This is what people unfamiliar with the US landscape often have a hard time understanding.
> A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods). FedNow, Zelle, wires, ACH do not and people have lost money by scams this way.
That's the crux of it: The US seems to be culturally unwilling to accept the risks (fraud) and rewards (practically free P2P and B2C payments) that come with a customer-initiated/push payment system.
Instant for USA banks doesn’t mean instant for USA banking customers, and deposits can be held per fed and banking policies for variety of reasons especially larger deposits. Also, it’s increasingly common to have financial routing intermediaries playing by different rules and non-insured financial accounts that result in no coverage when the money is spent/lost elsewhere and not returned to end customers. Take a look at Zelle case in New York and the nearly $100M customer funds missing with the Synapse bankruptcy.
My point is that these properly designed national systems should also be considered in the USA as well, and not dismissed because something is kind of working right now with a long list of exceptions to a good and safe experience.
Is this correct - A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods) - I was under the impression that only credit cards offer chargeback protection?
Liability is covered under the Electronic Fund Transfer Act
> You have zero liability if you report before any unauthorized charges are made. Reporting within two business days caps your liability at $50. However, if you wait over two business days but less than 60 calendar days after your statement is sent, your maximum liability jumps to $500. Beyond 60 days, you could be liable for all unauthorized charges.
As far as I know, in India, debit cards don't offer chargeback protection presumably because they are PIN enabled. Which means, in practice, nobody can use your card without knowing your PIN. And so it is assumed that any transaction on it has been done with your permission. Debit cards also don't offer chargebacks for consumer protection against faulty goods.
I think you might want to check that again. If the card is Visa or Mastercard, then it should offer fraud protections in mostly the same way as a credit card. You might be pleasantly surprised.
Most debit cards today have PIN, but that doesn't waive fraud or theft protections. If I purchase something online the purchase of course has my permission. If the goods are faulty or not delivered, then that is fraud and has chargeback protection. Even if you used your PIN, even if you used two factor authentication.
Not in the US. The major card networks give you 120 days versus 56 for SEPA. In fact, that's illegal in the US because Regulation E gives you 60 days after the bank sends the statement.
As a Canadian, I like this. It really sounds like they're taking Interac's proprietary e-Transfer system and rolling it out as a public good for any bank to build on. That's pretty cool. It also seems smart to have involved Interac as partner, instead of trying to build around them.
Like all things from any government -- let's see how the rollout goes. But I am cautiously happy to hear about this.
I like this too. It’s worth noting that interact debit has been around in Canada forever (got my first card in the 90s), etransfer (using just an email address) for a long time and in general Canadian banks have been great at working with each other and abroad. And there was never a ton of private apps you had to rely on.
Both places are better now but I remember being in the US in the 2010s and having an easier time using my bank card to get cash than an American far away from their credit union. In Japan in 2012 I also sometimes used my Canadian bank card when my Japanese bank was closed for a holiday (this was fixed in 2015).
E-transfer is not a real time payment system. The recipient's financial institution lends the money to them and then the actual funds (which were frozen by your bank to ensure money is available) gets transferred asynchronously over a period of a few days, as with any legacy bank transfer. It's just hidden away from the end-users.
This is how all real time payment systems work if the recipient institution != sender institution. Credit cards, iDeal, Bancontact, SEPA instant... In the end it's reconciled within the next few days with a pinky promise between institutions the money will actually arrive.
I'm very comfortable. Interac purchased and enhanced the SecureKey Verify.Me service and rebranded it as Interac Identity. It's a reliable way of determining identity and eliminating fraud (I helped integrate it into a company's customer sale process which was rife with fraud). This page on the Real-Time Rail shows that it's definitely using Interac e-Transfer https://www.payments.ca/systems-services/payment-systems/rea...
"To rail someone" means to have vigorous sex with someone. I believe the poster to whom you replied was making a joke about the name being unfortunate.
Naming is hugely important. I'm always catching downvotes on here for complaining about otherwise-decent open source projects that will never gain traction because they have moronic names like Xonaly or whatever. But I suspect "hey can you rail me 20 bucks" won't be how it gets referred to, and "I don't have cash, does e-transfer work?" will continue to be how it's referred to.
As a historical note, "e-transfer" is actually the third major branding of the service.
Acxsys [1] was launched by the Canadian banks in 1996 as a for-profit startup meant to develop online payment solutions, and they original launched the service as "certapay".
Acxsys was folded into Interac in 2018, but I think it was somewhat prior to that the certapay name was discontinued in favour of "email money transfer". Everyone called them e-transfers though, and so eventually Interac gave up on EMT and just went with that name, which is what it is now: https://www.interac.ca/en/resources/personal-resources/perso...
E-transfers sucked for the first decade because there was a several dollar fee associated with them, making them impractical for small amounts. I’m miserly so I low-key dreaded ordering takeout with other staff on night shifts, and having to pay the fee to square up with the person who ordered.
As an aside, there was an e-purse pilot sometime between 1996-1998 in Southern Ontario. It may have been Visa or MC driven rather than Interact/Acxsys.
I remember seeing a booth at the Canadian National Exhibition in 1996 where they demoed a smart card that could be used for web transactions (!) using a floppy drive adaptor (!!).
We Canadians love our sexual innuendos in language. Asking someone to rail us would fit in nicely: "I'm fucking the dog, can ya rail me enough for a forty?"
Nice to see how many mentions to Pix (Brazil) and how its shaping global economy!
Its really nice to see top engineers from our top colleges ahead in the financial tech frontier (Ita, Ime, unb, ...)
Doesn't look like any of Canada's major banks are taking part?
> The initial cohort of active RTR system participants includes: Wealthsimple,
Questbank,
Peoples Trust Company,
Paramount Commerce,
KOHO,
DoBusiness.com™,
Digital Commerce Bank,
Bank of America,
> However, many of Canada’s major banks are expected to join in as well. Royal Bank of Canada, for example, is expected to introduce RTR in the second quarter of 2027.
Wealthsimple has 170 billion in assets under administration, while BMO, the smallest major bank, only has 310 billion. Considering WS is 100% retail, it's arguably a major financial institution at this point (though legally not a bank).
Isn't it legally a bank? It provides chequing and savings accounts (registered and unregistered), and it's even CDIC-backed on at least their managed products.
They don't hold a schedule 1 banking license, so not technically a bank, but a FinTech with a banking partner who holds funds in a way that allows for CDIC backing. As a WS customer, when I send a bill payment to a non-WS account it arrives as "RBC" on the other end so I assume WS holds funds through an RBC account they maintain.
This is the hope of something like RTR - for anyone who can meet the participation requirements, an ability to operate independently of a banking partner who might be your direct competition.
It's true they built their reputation and brand by being a robo-advisor, but I don't personally know anyone who uses it that way today and many people in my social circle instead use them as a cheap HISA and online self-directed brokerage, perhaps more like Robinhood or Ally
They'll be in later phases, once they feel confident enough to significantly ramp up volume:
> Participants will be added to the RTR in three phases to help control the volume of transactions added to the system, with the goal of including every Canadian financial institution on the rail by mid-2027.
> The major banks – which will shift massive amounts of volume onto the RTR – are not involved in the first phase of the rollout, but will join in the second and third phases.
I would expect the integration into the Interac network (itself a sort of consortium of the big banks that provides a number of debit-adjacent services) will mean that adoption by the big players will be pretty quick.
Ah, this is the SEPA Instant problem. SEPA Instant was introduced a decade ago, and remained largely useless until bank support was made mandatory last year.
It is harder for major banks to update their systems for this, so it will take them a while to implement. Smaller more nimble institutions will jump on first.
It does say "With additional participants onboarding continually in the coming months, including all major Canadian financial institutions and other members applying for access, the RTR will be available to more than nine in 10 Canadians within the first year after launch."
This mostly is referencing ETF tranfers that are relevant to consumers - e.g. bill payments and employer pay deposits that currently take several days.
So basically a modernized M-PESA? Where you just scan a QR code or such, and then say how much $$ you want to transfer to that account, with cash-like low effort?
The last bastion of cash, for me, here is garage sales. Absolutely everything else has gone cashless, but low-friction, low dollar transfers between individuals is still ruled by cash. Not that I haven't paid for stuff via Interac e-transfer but that has high friction (log into bank app, add one-time payee etc.) so only for cases where suitable cash isn't on hand.
The consumer infrastructure isn’t part of this agreement, so don’t expect it to be better than interac on that front. (Interac etransfer can also do the above with QR codes, but most people don’t bother. I’ve only seen street musicians set it up.) The primary benefit here is reducing interac settlement time from 30 minutes to less than 2.
So the quiet voice here is I think the desire to stop small businesses being the working capital providers of larger ones (“take the 90 day payment terms or go find someone else”)
I couldn't find this info in the release, but I assume account information and transactions go through the Bank of Canada? That's how the closest analogy, Brazil's Pix, works.
RTR is owned and run by Payments Canada, which is a crown corp that also runs Lynx (large value transfer system) and ACSS (cheque clearing system.) PayCan itself is overseen by the Minister of Finance, but there is Bank of Canada oversight (risk and prudential) of the key designated systems RTR, Lynx, ACSS under the Payment Clearing and Settlements Act (PCSA)
For those unfamiliar with the term, a "Crown Corp" is a private company, but wholly owned by the government.
It's not an unusual structure here, the BoC is itself a Crown Corp.
To contrast, Interac, the system used for canadian debit and person to person transfers, is a private company, with ownership by the banks.
If you look at their "about us" section, they just say they are "a corporation". https://www.payments.ca/about/who-we-are Although they were created by a law (Canada Payments Act) and have a public mandate:
Payments Canada has formed a critical part of Canada’s financial market infrastructure for over four decades. The Canadian Payments Association was created by the Canadian Payments Association Act in 1980, now known as the Canadian Payments Act (CP Act).
I think its because its a membership association (like a non profit), where crown corporations are structured like for profit companies where the crown (government) owns all the stock.
PayCan maintains most of the designated systems that underpin the national financial infrastructure - so no, I'd say no more alarmed than anyone is at the structure of ACSS or Lynx
It's a niggle upon a niggle but I do not believe payments Canada is formally a crown corporation. It's primarily a member consortium / industry governance body, though to be muddied further, Minister of Finance does have some oversight responsibilities / accountability.
I always viewed it as one of the "we will govern and regulate ourself so government doesn't fully have to" bodies, but I'm an outsider so happy to be corrected :).
Interesting it have "lower processing costs". It could be free at all like Brazilian PIX... but certainly it wouldn't be liked by Visa and Mastercard.
People in Brazil can simply generate a one time PIX code or use own key and instantly receive. It is now the most used payment mode for more than a hundred million people... this is why Trump attacked the Brazilian financial system as unfair with North American payment systems.
Yes, it can have no cost, receiver can have no cost, payer need not to have a hidden cost at price tag and it can save billions of dollars and make products and services circulate more, warming economy , reducing unemployment and avoiding money dump to external countries for the local enterpreneurs.
Canada already has Interac e-transfer for p2p which is largely free (banks are allowed to charge, but in practice they don't charge consumers).
E-transfer was launched 17 years before Pix so it runs on email addresses as an identifier. In my experience most people use e-transfer more often than cash for person to person and many small businesses like farm stands, etc.
Interac is not settled realtime - it uses the same infrastructure that was built 50 years ago but has a more modern interface. UPI, Pix and now RTR are new settlement systems that are meant to be realtime from the get-go.
Nothing is free, not even Pix. It had costs for development and has costs for running it. If it's free for the end user, then somebody else is paying.
As a physical person, you can receive 30 Pix payments per month without having to pay a fee, but send as many as you please.
A business however can be obliged to pay fees for receiving Pix payments from physical persons (ie customers), and when using the more advanced Pix features.
Banks very likely choose to not put any fees on Pix payments for their business clients for now, since it's beneficial to keep their money flowing in. But that's not different than European SEPA payments or American ACH payments being "free" for businesses.
Yes, but there is no first-party end-user interface unlike UPI (BHIM). So participating banks will decide how the interface works on their end. There is no implementation available yet but it will likely be something like UPI anyway with a QR code for quick detail sharing, if I had to guess.
It's not instant and it relies on a private company for settlement. Even though customers typically get this for "free", the institutions themselves are paying interac for these (so the account-holders are paying for this one way or another)
From what I can tell, e-transfers will continue using interac's network, so I'm not sure if this will benefit users at all. Depends if banks integrate a new user-facing money transfer option. I suspect it'll take years if not decades for banking institutions to roll this out to users, though they may use this behind the scenes for inter-institutional transfers without Interac.
Someone who's more knowledgeable about Canadian banking and payment processing, feel free to jump in here because I'd like to know more as well.
You're correct on the first point, and it's worth adding that Interac is a closed network - Interac has no obligation to let anyone participate, and it's been a pain point in the FinTech world that you either have to convince them to let you in (e.g. Wealthsimple) or piggyback on a banking partner (e.g. most other FinTechs.) Maintaining that banking relationship is a big burden for fintechs, especially if you rise to a level where a bank views you as direct competition.
RTR's membership requirements are set by PayCan, who have a mandate to foster competition. Any FinTech who can meet requirements can, in theory, hold a settlement account on RTR and participate. Interac has an incentive to keep the club small, so to speak, and prevent new up-and-comers from cannibalizing their market share.
From a competition lens, the hope here is that RTR levels the playing field for both the big banks and fintechs and opens the door to a lot more consumer-facing innovation. That will, of course, depend on the network effect and who gets onboard.
> From what I can tell, e-transfers will continue using interac's network, so I'm not sure if this will benefit users at all.
quote from the page:
As Interac e-Transfer payments begin to clear and settle on the RTR, we will put this world-class infrastructure to work for consumers and businesses.”
Jeremy Wilmot, President and CEO
Interac Corp.
Interactive etransfers are far from instant. My last company supported etransfer payments. On a good day they would take ~10s to process, 30s was decent, and single digit minutes were normal. Legitimate payments that got flagged by Interac's fraud detection rules were often subject to delays measured in hours, sometimes days.
Good enough for consumer to consumer use and some online use cases, but definitely not good enough for retail.
When I sell things on local used sites I started only accepting cash because e-transfer is so slow and led to situations of someone standing in my entryway while we wait to confirm the money went through.
Or giving up and saying "alright, I guess I'll trust you and hope the money comes soon"
Maybe a dumb question, I skimmed the post but it's a lot to take in. Would this potentially enable third party integrations, like Venmo or sending money through iMessage? That's something I've always been a bit jealous of with Americans. E-transfer has been fine but it's clunky.
If you're jealous of the US, better don't look to India or even the EU. Free or very cheap, instant P2P and B2C payments have reached mass adoption in many parts of the world at this point.
Venmo and iMessage are actually more annoying than you might think. Both silo your funds and you'll have to pay significant fees for instant withdrawals to your bank account, while regular withdrawals take at least a day.
Zelle is a bit better since it draws/deposits directly from/to your checking account, but most banks' UX is moderately to extremely janky.
>Switching banks in Canada seems like a much easier proposition to get a better UI/UX for money transfer than any option in the US with Venmo.
That's predicated on there being a better bank UI in the first place. Venmo's UI is far more consumer-friendly than any bank's Zelle payment UI that I know of.
Sure, but "I want everyone to standardize on Venmo because their UI is better than banks'" is a very different argument than "I want the market to compete for a better money transfer UI/UX."
It's like the difference between Twitter as the UI/UX leader (humour me and assume that part is true) stomping all over the market due to the network effect, and the ability for Mastodon instances to compete for the best UI/UX.
If better payment UI were a compelling reason to choose one bank over another, banks would have improved their Zelle UI years ago. But it isn't, so they don't.
The Venmos of the world have all the incentive to improve their UI, because they don't have anything else drawing customers to them and causing them to stay.
PS - Twitter is more important than ever in terms of driving the news, while the last time Bluesky or Mastodon broke the news on anything was March 32nd of twenty twenty-never. Mastodon instances stand out mostly in their ability to self-immolate over the latest Maoist struggle session. <https://news.ycombinator.com/item?id=34748195>
> If better payment UI were a compelling reason to choose one bank over another, banks would have improved their Zelle UI years ago. But it isn't, so they don't.
Sure, but that's not in opposition to my point. I'm saying that for any individual, switching banks for money-sending is much easier than switching from e.g. Venmo to Apple Pay, because at least half the people you know don't know anything about Apple Pay.
> The Venmos of the world have all the incentive to improve their UI, because they don't have anything else drawing customers to them and causing them to stay.
The network effect. If you're in the US, you use Venmo because everyone else uses Venmo.
> PS - Twitter is more important than ever in terms of driving the news [...]
Yes, my analogy works with that. Twitter is Venmo. Everyone is on Twitter/Venmo because that's where the network effects are.
Canada's Interac is anagolous to US' Zelle payment network (which is owned by the largest US commercial banks), while RTR is the US FedNow equivalent ("true" instant payment and settlement with broader use case support, operated as a utility by the US Federal Reserve).
(it should be expected that newer, utility ran instant payment systems cannibalize existing, more expensive, lower speed payment rails; going fast and being cheap as a utility is the innovation)
My credit unions now offer ach, same day ach, and instant transfers between them.
Same day ach launched with a user fee, so they usually prompt to confirm and offer to send it via normal ach instead, which I find amusing?
I also see instant transfer support at some other places I bank. I can't say if bill payment happens instantly or not, my finances don't run close to the edge, and I don't need to know exactly when a bill pay (which I generally schedule) is taken out and when it's applied; as long as both happen, I'm good.
~$800B/year in annual volume run rate, as of this comment. You can move up to $10M per value message for less than 5 cents, with a max 20 second time to completion SLA.
(i am contributing subject matter expertise to policymakers to make offering FedNow rails to financial services customers a requirement of having a banking license, so I'm a bit biased; this is the only way we'll get off of closed payment rails like Zelle, slow open rails like ACH, or expensive faster legacy credit card rails)
> Are bill payments and bank to bank transfers now happening instantaneously?
Walmart is currently rolling it out. I expect others to start to as you see them surcharge credit card payments (US mobile phone providers, internet providers, etc). It's trivial to build into an app experience, with or without a partner like Plaid (for example).
> “It surprised me,” Henry said of adoption of Walmart’s first iteration of pay-by-bank, which is available online but hasn’t been marketed to customers. “It’s certainly surpassed our expectations of the amount of customers that have registered and actually use the payment type.”
> Walmart’s upgraded pay-by-bank offering will be rolled out in 2025. The transactions will occur over bank technology provider Fiserv’s NOW Network, which integrates with The Clearing House’s Real Time Payments network and the Federal Reserve’s FedNow. Until now, large retailers hesitated to launch real time payment options because many banks were not connected to an instant settlement system, meaning their customers would not be able to use the product. NOW Network aims to connect to as many banks as possible to reach 100% of deposit accounts by combining its own network with RTP and FedNow.
Can you explain to me what The Clearing House is as an organization, and how many participate in their RTP? I have tried to look this up but can only find vague promotional material by banks.
They are a consortium owned by 20 of the world’s largest commercial banks. They are a direct competitor to the Federal Reserve as it relates to payment infrastructure.
Has this lead to any user-visible changes? Like, can you pay your bills on the due date now instead of a couple of business days earlier, not having to worry about it arriving on time?
The most visible change I've seen is that I can move funds instantly between my credit union (which I maintain solely for Zelle access at this time in my financial system) and Wise, for free, others would have to chime in for more pireps/ground truth on this which apps are getting this value in front of users.
I have. It is indeed nice. I haven't interacted with American bill payment infrastructure though during my visits. I read Bank of America website though, and it recommends sending bill payments 5 business days before the due date. Are they incorrect?
> How long does it take for an online payment to reach a biller?
> We recommend scheduling your payments to be made at least 5 business days prior to the actual payment due date on the bill. Scheduling your payments sufficiently in advance of the due date allows enough time for the biller to receive the payment and credit it to your account.
Checking account "Bill Pay" features are a fusion of multiple ideas that you access through a single interface.
Adding a biller to it involves typing in the biller name, providing the account number (e.g. your credit card number) and the ZIP where your bills say to mail a check.
Big billers (like say, Chase credit cards) register with the other big banks and the handful of companies who provide white-labeled platforms for all the small banks and credit unions so that when you input one of their accounts this way, it'll match it up and turn into an electronic transfer which tends to show up pretty quickly (though I assume it does still take a couple of days to fully clear, you'll usually "get credit for it" the day of the payment).
But you can also just add literally any person or company name and address. Say, Bob Smith, 123 Example Street, City, ST 12345 and they'll just mail Bob a check on your behalf. So, those will always require days of time because they have to print and mail a physical check in those cases.
So, the generic advice has to assume it's not matched to an electronic biller profile.
In the case of most banks I've used, they hide this implementation detail slightly -- they just always have you pick the date the payment 'will be received' - and when it's not an electronic biller, you just can't pick a date that's too close.
That's pretty general advice, and probably the safe choice, but anecdotally all of my bill pay ACH transactions these days are executed on the due date. The only exception is if the due date is a weekend, in which case it executes on the preceding business day. It takes usually one day, maximum two before it actually shows up as a withdrawal in the source account, but my payees all recognize the credit on the day of execution.
That's the worst-case-scenario guidance. Bank of America will print and mail a check if it can't find an electronic method. I have a client who sends me his monthly payment this way.
If you're sending to a known entity like the electric company or a credit card, it's immediate.
As you, yourself noted, "I haven't interacted with American bill payment infrastructure."
Perhaps reserve your comments for things you know about.
Behind the scenes the money doesn't actually move day of. The people that accept payments are doing you a favor and crediting you before the funds settle.
If you pay a bill on the 1st, the money does not land in the payees account that day (barring in person cash transactions). Best case scenario, funds are available on the 2nd to the payee, although, more commonly, it is several days before the funds are settled. Banks will frequently paper over this showing the funds where they will eventually go, but the clearing house still hasn't finished. If you try to spend too much of that unsettled money, the bank will be glad to inform you that the money isn't actually available yet.
When people talk about instant payments they mean a few seconds, not overnight -maybe.
I used to be in charge of a payments dev team that oversaw several billion dollars of bill payments per year. There is nothing instant about moving money in the US.
Considering that Zelle is largely marketed for p2p and not as a general all-purpose payment mechanism, you need to compare it to Venmo or Square. For reference Venmo is on track for ~$400 billion this year.
Draw your attention to YoY upward volume trajectory in my first citation in the comment you replied to. It is still "warming up." TAM is all existing check, ACH, Zelle, and credit card volume. Takes time for folks to get the warm fuzzies and migrate to new systems.
The faster merchants offer instant payments for making payments for free and surcharge credit card rails for payments (to cover the exorbitant cost), the faster volume moves over (imho).
What are the provisions for privacy - preventing my every financial transaction, and thus everything I do involving money, from being centrally tracked, and shared with private institutions?
And what about for preventing government from cutting people off from the financial system (without a court order)? Edit: The US government already commonly does it with non-citizens in the context of other financial systems.
At least, how does that work with FedNow if not Canada's RTR?
Access to your personal information is governed by PIPEDA for private entities and the Privacy Act for government entities. Additionally each province has its own version of the Privacy Act. Since most of the big banks are headquartered in Toronto, the Ontario's Privacy Act (FIPPA) may also have some jurisdiction but not clear.
That is a function of the legal framework and government regulations of each country an instant payment system operates in. I don't have those specifics per country.
The government can cut you off as easily as Binance asking other platforms to block transactions when called upon, for example. If you don't want to be blocked, use cash or other bearer instruments. Every other traditional finance or crypto ecosystem has a throat to choke. Show me the financial services consumer persona and use cases and I'll walk through the attack path to cut their access to the financial system, as someone who has contributed to building financial infrastructure both in traditional finance, capital markets, and crypto rails for traditional folks.
> That is a function of the legal framework and government regulations of each country
I want to add that it can also be built in on a technical level. Some cryptocurrency already does it (I'm not advocating unregulated monetary systems or blockchain technology, I'm just saying it's possible and already done). For example, transactions could be anonymized, with PKI-type keys available only with a court order.
It can be built, it won't be built. There is no material demand or incentive to require building it. Crypto primitives, in this context, are just ceremony on top of legal systems. "You are trying to solve a people and politics problem with technology."
Sadly, I could imagine it won't be built, or not soon, but things do change; people make change.
I think govermnment and tech leaders greatly underestimate demand for privacy (confidentiality). People in polls consistently say they are worried about government and corporate surveillance and want privacy; you can see the response to Flock cameras right now. Apple, the most successful computer company, clearly sees demand for it, devotes extensive engineering to it, and markets products on that basis. People in other places (e.g., the EU) have passed laws with much greater privacy protection.
The public doesn't understand what's happening - how they are tracked (e.g., all electronic monetary transactions) and what the power/impact of that surveillance is - and they are givin no path forward but to submit. When they have a path (again, Flock, Apple, other countries), they take it. They need tech people to take the lead, educate people in plain English (not 'PKI', etc.), and develop options technical and political - politicians generally are non-technical too.
The solutions require both legal and technical components. With no technical limitation - if data is open on the laptops of everyone in the legal / finance / national security communities - the legal constraints won't work; people will use the data anyway. If there is no legal restriction, they'll obtain access anyway.
Totally OT, but such a glorious name of the guy in the middle of the top photo, "François-Philippe Champagne". If I read that in a novel I'd be rolling my eyes.
Making Mr. Champagne the minister of Finance is a great nomative determinism, only slightly dulled by the fact he's been minister of like 5 other things over his career
basic something like alipay or wechat pay? like china did at least for 10 years? at a country scale?
anyway they are super useful, to personal users and for stores/small shops/....when traving abord, i have to carry a visa/mastercard,and worried i might lose my card somewhere, or got stoled. i know apple pay is pretty good, but i am not a fan of apple product and i guess it's not only me ( or the price issue), a universal online payment systems, run as an app, and qr code is the right way for basilly every country.
Alipay and wechat pay are not settlement mechanisms. They act more like wallets that you can transfer money in and out of, and there is very little interoperability because of this.
Canada's RTR has no chargebacks so it's not comparable to visa/mastercard where you can yank the money back up to 6 months later if the seller doesn't send you what they promised. Pretty much every modern phone can do tap to pay, you don't need an iPhone
> Pretty much every modern phone can do tap to pay, you don't need an iPhone
but you do need a device to read the phone right? to support all kind of difffent payment system. compare to a simple picutre printed QR code, which one is more convenient?
Same way you can tap your credit card on their phone to pay them. It's the same protocol, just with biometrics on the buyer's phone so the limit is $50k instead of $10k
A credit card, an iPhone behaving like a credit card (AKA apple pay), and an android phone are all using the same protocol. Why don't you just try it? Pretty much every grocery store, gas station, etc accepts tap to pay. Any phone or card will work with any terminal. Like I said, the only difference between a card and a phone is that the latter has a $50k limit instead of just $10k.
Not so hot on the name, initially thought it was some kind of train system payment thing. But that just lends to the coverage of this out in random mainstream media confusing consumers - not really a consumer thing but an infrastructure thing on the backend for banks/institutions. On the consumer side many will immediately think of Interac eTransfers, which this has little to do with as far as consumer experience, but it will also use this on the backend for things. Carry on.
Yeah, why on earth would they shove "Rail" into that name? I'm sure it makes sense internally, but as external name it doesn't make much sense. None of the people are even using the rail/train analogies that are right there, then what's the point even?!
> "Payment rail" is a very long established term og art.
Yes, by all means, use the existing terms internally, but when you launch things, remember you work in somewhat of a bubble, and figure out names that make sense to people. 99% of the people aren't gonna know about "payment rails", and when they hear "rails", they either think about trains, or they're a programmer and starts thinking about Ruby. And then of course there is a third group of people, like the ones that say "Payment rail is actually an established term".
> > "Payment rail" is a very long established term og art.
> Yes, by all means, use the existing terms internally, but when you launch things, remember you work in somewhat of a bubble, and figure out names that make sense to people.
This is to be used by people in the same bubble, and it does make sense, it's about as descriptive as it could be.
99% of people aren't going to need to touch this. This is underlying infrastructure for banks to build on top of. Most people don't know what a clearing house is or what Payments Canada is or that most of their money passes through them, but they are still perfectly capable of understanding what direct deposit does - which relies on Payments Canada's clearing house.
Wait whats new then, dont they have interac, its at least real time on the surface and you can bind cards, bank accounts etc to it, so what am I missing?
I believe it's a show-off of "progress" on the fintech side. Not saying it's bad and for sure some good will come out of it. But a lot of government projects are just how money is created in Canada and to keep the economy moving. It makes Canada look important and enhances the "Canada" brand. This can be dangerous as it can give you a feeling of accomplishing something without really innovating anything.
Interac (eTransfer/EMT) is a great system that has already rolled out nation-wide.
Unfortunately its utility is curtailed severely if your bank doesn't trust your mobile OS (LineageOS, for me). For security purposes, my bank (RBC) triggers identity checks every time I try to send an EMT, and even after sending selfies, drivers licences, etc. — it still rejects the transfer.
So, security at the cost of all utility.
I have now resorted to transferring money between my accounts using paper cheques... like it's the 90s. If somehow they deny me cheque deposits I'll have to use an ATM and walk the money to the other bank. Given how there are now banks that don't even have branches, this could be a major problem in the future.
This Real-Time Rail system sounds promising, but that's not the link that'll kill it for everyone.
99.999% of people don’t root and install custom operating systems on consumer hardware. The bank derives immense security value by enforcing this, at the expense of your hobby installation.
I don't think this is as unusual are you're implying it might be.
I've moved funds ranging from 10k to $1m between banks in Canada much more than once, and every single time, I go to one and get a draft and drive that draft over to the destination bank. It's just easier...and its absurd.
When you show up to get a cashier’s check, the teller has very strong proof that you’re not a scammer sitting in Malaysia. And you’re presumably OK with waiting the 1-3 days for the cashier’s check to clear.
This might be true in Canada too: the real estate industry down here is entirely dependent on wire transfers, and yet they are absolutely terrified of wire scams. Maybe if FedNow had existed when I bought my place, I could have gotten a draft slip from my bank and driven it over to the title company.
While i agree it is uncommon - i disagree that banks get much security value from this. Most banks let you do etransfers from a desktop computer just normally. I dont really see what attacks banning rooted phones stop when you can just use your normal linux desktop.
Weird... I've never had problems using eTransfer from a browser (firefox) on my computer (linux)... which has got to be as untrustworthy a device as there is.
For the last several months, eTransfers initiated from my desktop browser (Firefox on Linux, same as you) have required confirmation via the RBC app on my iPhone. Definitely seems like they have multiple scales of trustworthiness for people/devices/activity. Kind of wish they'd be more transparent about what they are, but I guess that sort of transparency can easily become a vulnerability.
These are also obnoxious - RBC has checked whatever box makes Google's RCS web app refuse to render them, so if I'm am my computer, now I have to get up and go find my phone so that I can manually input the code.
Similar experience. No real problems. However, RBC limits the amount I can transfer to 2k per day from browser and like 5k per day from the app.
I don't send anything from TD, but if I buy anything online half the time it forces a 2FA which requires signing into the app and confirming the transaction. I imagine signing into the app might not work nicely if I was on LineageOS.
Used to be the case, yes. However even web-initiated EMTs trigger device confirmation. RBC seems to have made this mandatory for at least my account as of this summer.
Unless I'm missing something I'd expect Payments Canada to have similar issues for you, since it'll still be the banks that you interact with. What changes is the settlement and messaging system between the banks.
Interesting, did you try other apps if they work on grapheneos/lineageos like koho or wealthsimple? If they do, maybe you can use it as an intermediate tool.
Bieng in a similar situation, my back up plan has been to keep a phone that is used exclusivly for personal banking and pull the sim and shut it off when not in use.
Currently I have a much fiddled with android phone and a browser that will interact with the banks web sites for banking.
I get a lot of paper cheques and convert to cash for much of my personal spending, and my hope is that the new system will facilitate timely clearance of paper cheques and actualy make them more atractive.
High on self-approval but low on details. Are the transactions reversible? For instance, can a scammer convince an elderly person to transfer money to their account (instantaneously) and then split it and send the money to partners in crime (also instantaneously)? What is the process for conflict resolution, for cases like the product fully paid for (instantaneously) doesn’t work as advertised? How much information on payer identity is being shared with a recipient, to be recorded, cross-matched and sold to the highest bidder?
Sometimes I think that the slow speed of moving money is a feature, not a bug.
Just like the EU started their independent EU-wide (500 million people) payment network to become independent of the American payment monopolists. It took a fascist US admin to get the move world-wide rolling to decouple from the US and towards smaller sovereignty, but ultimately it is for the better.
If you are referring to SEPA Instant, thats not true: It started operating in 2017, though not many participants back then.
What happened last year/this year, is, thats its mandatory for banks to offer it across the EU.
Far more likely was the election of a banker as PM. He did chair both the Bank of Canada and the Bank of England. No doubt he knows how to get banks to do things.
EU has been down this road with SEPA Instant Credit Transfer since 2017.
Two lessons from that rollout worth watching for Canada:
1. Reachability matters more than speed — SEPA Inst was technically live
years before most PSPs actually supported it. A real-time rail no-one
connects to is just a slower rail with marketing.
2. ISO 20022 as the message format was the right call but underestimated
operationally. Smaller banks and PSPs still struggle with the schema's
flexibility — same transaction encoded two different "valid" ways is
a real integration tax. Canada using 20022 from day one is smart;
publishing strict usage guidelines beats expecting consensus.
So FedNow for Canada, meaning you can't use this outside of Canada at all.
Crypto blockchains like Solana, XRP, Stellar and Tempo on the other hand can be used anywhere worldwide, 24/7 and sends stablecoins like USDC in seconds with extremely low fees.
Crypto blockchains are useless for these kinds of transactions because in the real world people make mistakes, get scammed, or myriad other things that requires a transaction to be reversed.
Suppose you transfer $1000 to me on Monday via ACH (the old thing - pardon my American terminology). If I'm lucky, I can wire that money out of my account, or pull it out in cash, on Wednesday. Maybe Thursday. During that time it's definitely possible you can get the banks to reverse this transfer.
If payment is instant, what that has to mean is that the funds are actually made available to me right away. If you transfer $1000 to me on Monday, and 10 minutes later I've drained my account of funds and disappeared, how can that be "reversed"? Is one of our banks going to just eat it?
If payment is "instant, but the funds are held for several days and can't be spent or transferred" then the payment isn't instant in any meaningful way.
There's a clear reason why they don't want to waste their time chasing other banks in recovering your $100 that you sent by mistake and instead warn you to check everything.
The point is they know a transfer cannot be reversed, especially when the money has been spent already.
Even a bank who sent out £130M [0] in error to multiple people still cannot recover all of it after 4 years.
The bigger take-away is that relying on US companies here,
is very risky. Canada understands this. Europe does not (at
the least most politicians in Europe do not understand the
problem). I'd almost suggest canadian politicians to help
run the EU for a while, just to fix numerous issues that
arise due to a lack of understanding. Canadians really
understand the problem domain soooooo much better than
Europans. This also includes a nuclear arsenal - both the
EU and Canada need their own arsenal (details need to be
mapped out, of course, but just blindly relying on the
USA is a losing option; you can see it now with Ukraine,
where the USA blackmails Ukraine to give up territory.
Agent Krasnov is doing his dirty deed and will get billions
from the mini Darth Vader in Russia. Yuri explained this
in 1984: https://www.youtube.com/watch?v=9apDnRRSOCk and
he was spot on. A shame he is not among us anymore, unlike
Putin).
I don't know why anyone would trust the Liberal government with a payment system, after they went rogue and froze about 200 bank accounts without court orders during the convey protests using the emergencies act which has since been deemed illegal.
> Using powers granted under the Emergencies Act, the federal government has directed banks and other financial institutions to stop doing business with people associated with the anti-vaccine mandate convoy occupying the nation's capital.
> ... financial institutions are required to monitor and halt all transactions that funnel money to demonstrators — a measure designed to cut off funding to a well-financed protest ...
If you think they wouldnt abuse this, good luck to you.
With or without this new payment system, they can order the banks to freeze your account or block transactions (as your example shows they were able to do before this payment system was rolled out).
While it may have been since deemed illegal, they found a few of those trucks to be armed to brim with munitions. It was strong reaction to try and prevent a violent insurrection on Parliament Hill, which was still fresh on many Canadians minds from Jan 6.
> why anyone would trust the Liberal government ... after they ... froze about 200 bank accounts ... during the convey protests
Wasn't that almost 5 years ago - was it the same government? Is there reason to believe it's the Liberals and not the prime minister at the time, or that the Conservatives would be different?
You're conveniently leaving out that the PEO report found they were justified in using the emergency powers act since it was a complete failure of the local and provincial police to act, so they had to do something.
These payment systems need network effects, otherwise they just won't matter. Another private provider won't generate these effects. Just look at the list of participants, they're small players in Canada's marketplace. They won't generate net effects.
Besides, in times of renewed imperialism it is very crucial that a country has full control of their payment systems.
And, at last, they must offer guarantees that there will be no friction and won't be subject to enshitification.
So, what Canada needs is a system implemented, enforced and managed by the government, like Brazil's Pix and India's UPI.
> So, what Canada needs is a system implemented, enforced and managed by the government, like Brazil's Pix and India's UPI.
Payments Canada is a corporation fully owned by the government and overseen by the Department of Finance. It was formed by an Act of Parliament. Short of rolling it into the department of finance it couldn't be more of a government effort.
Also, the small partners are the launch partners. The Big 6 are part of the second phase of rollout in 2027. The projection is that 90% of all canadian bank accounts will be covered in the next year.
Why not? Payments Canada isn't a "private provider" like Interac. This new payments system is also ISO 20022, as is Pix. Although high level, their list of features seems close to Pix:
* The real-time clearing and settlement component
* The real-time exchange component
* Third party exchanges flowing through the clearing and settlement component
> This new payments system is also ISO 20022, as is Pix.
This is a good step. But the devil is in the details.
And I don't see the details that matter the most:
* Network effects: will it be widespread (from city buses to fruit stands)? Compared to UPI and Pix, Interact has a pathetic history of adoption. What sets RTR apart from Interact?
* Friction: Will it be instantaneous and free of charge? Can it be used by illiterate persons? QR codes? NFC tags?
In Brazil/India those payments systems are used by the most informal of agents: fortune tellers, prostitutes, merchants in crime ridden favelas, ... This is what real mass adoption looks like.
Being from Brazil I'm well aware of the shortcomings of Interac!
Its early to say if this new payment system will be "Canada's Pix" or not, but to me it seems that's the direction they're going:
- The release statement takes great pains to make it clear the payment system is "instantaneous" or "within a few seconds", unlike Interac
- Same ISO standard as Pix
- Some sort of centralization (they just say "centralized fraud prevention"; I'm assuming that means some sort of BoC coordination. Also: "exchanges flowing through the clearing and settlement component")
And most importantly, unlike Interac (a private company), this comes from a quasi-public company with a clear government mandate.
I think your two points will, in this case, be a question for the financial institutions and fintechs who jump onboard here. RTR won't be immediately consumer-visible, but if FinTech A starts offering some consumer-facing elements ala UPI/Pix using their newfound access to RTR to bypass the traditional banking system and settle directly, then we get there.
I'd look at this as not a consumer product, but a scaffold that allows consumer products to be built ontop of a new system that should, hopefully, allow an end-run around the stuffy traditional infra that is Canadian banking.
Adoption of NPP and PayTo in Australia is moving at a snails pace. NPP came out in 2018. Don't underestimate how sticky people and institutions are with their habits.
TBH, if you are launching a startup, it might not be a terrible idea to incorporate in Canada. Canada has the notion of federal incorporation in addition to each province having its own corporate registry. Federal corporations can exist in any province but all the filings are done in one place.
The new mega-deduction recently announced [1] results in an effective 6% corporate tax rate, which is among the lowest in the world and certainly in the G-7. Things like the RTR are just one example among many of the efficient infrastructure that Canada is introducing to address a very long term productivity gap (the mega-deduction is another).
And, R&D conducted in Canada is always a current-year expense and never capitalized. And there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries (in most provinces). And those salaries are lower than they are in the US (something that engineers in Canada have a right to complain about).
[1] https://www.canada.ca/en/department-finance/news/2026/09/gov...
No the tax rate isn't 6%, this is incorrect. The 6.4% is the marginal effective tax rate on new investment. Rates are unchanged: 26.5% combined federal/Ontario, or 11.2% for CCPC small-business income. And it's still draft legislation released Sept 15
That is indeed correct, and I'm sorry for framing the 6% rate as if it were the overall general rate.
Claude? (I jest)
oui!
“You told me these are the best engineers in the world!”
“I said they were the best engineers in Canada.”
(Quote from the BlackBerry movie)
Attracting strong talent in Canada is hard given the massive pay differences gained by moving south of the border.
> Attracting strong talent in Canada is hard given the massive pay differences gained by moving south of the border.
The size of the pay difference is something you, as the prospective employer, have significant direct control of. It is within your authority to point the dial anywhere from "hard to find anybody because of the massive pay difference" to "easy to attract strong talent, while still saving money relative to what it would cost to attract the same level of talent in the US".
The Canadian business establishment will not come after you to break your knees if you offer higher wages than they do.
If you pay more while earning less (or attracting less investment money) you are at risk of being outcompeted. I'm not an expert in Canadian economy, however I guess paying the same salary in Ontario costs more vs profits, than in California, or Texas.
If you are competent at identifying talent and hiring it, paying more in this market is actually a quite "neat hack" to slay any competition that is obsessed with low margins and therefore ends up with, frankly, mediocrity, as a result.
If you think talent isn't worth the price, that's also a valid philosophy! But it's not the same thing as it being hard to attract talent.
US hi-tech companies opened branches in Canadian cities. Used to be for H1B hopper but no longer the case: they have been expanding their footprints.
For Google Canada it was never about H1B hopping. They wanted the talent around Waterloo and the U of T.
(Later a large part of our staff was Canadians returning home in 2016 after doing their time in Mountain View)
I was actually pleasantly entertained by this movie, despite the inaccuracies. Loved to see the rise and fall and not just rise and conquer that so many biopics portray today.
It is one of the best movies to watch in an airplane
This is bizarrely self-contradictory. Pay differences are high because in fact there's a glut of talent.
I've worked for many companies over the years that chose to colocate here because of the relative ease of finding talent.
And there's plenty of good talent that doesn't leave. Because we don't want to. Home is home.
There's also lots of us who work remote for US or EU companies these days.
(Blackberry movie also is garbage)
The lack of immigration problems is one reason why the talent is less expensive. The other reason is probably because people in Canada get compensated in other ways. Many of my American friends who left Canada for employment eventually return when their kids reach school age because they can't stomach the harsh reality of the US education system. Or something happens to their health.
It's easy to knock Canada for its personal income tax rate, but compared to European alternatives, it's still quite low, despite offering a whole lot of baseline public goods.
The deal used to be that it cost less to live here, so the lower pay was mostly made up for. Now it doesn't because housing costs hyper-inflated under low interest rates, lax regulation, and high immigration.
That said, while senior SWE salaries here absolutely not even close to competitive with the Bay Area or NYC they are not that far off from other places in the US (like smaller midwest cities etc). While Canadian salary packages are depressed, it's also partially a result of: they're not inflated.
The bigger concern is more the lack of interesting work.
And a lot don’t leave if their spouse can’t work in the US (or has no interest in being sah). I know lots with partners who would never give up their Canadian gov pension track. That and other family obligations make it harder to move.
Yep. In the mid-2000s when we first got married and had young kids my wife worked for Apple Canada, and I worked for a company that was just getting acquired by Google. We could easily have just both company-transferred to the Bay Area and made 3x the money and had much nicer weather. My mother-in-law had just passed away (fuck Cancer, etc) and there was little tying us here family wise. But choices were made: Canadian public school system vs US, being a citizen and secure in that here (vs insecure visa status), I wanted a rural property and to live rural (which would not have been a viable option there), etc. etc. For better or for worse we stayed here.
Many do similar calculations. Home is home. It's profoundly arrogant (and very American) to assume that the "best talent" moves for money and opportunity.
Americans have very high labour mobility rates, and often assume that's how the whole world works. But in most places in the world the idea of uprooting your whole life for a job is seen as odd.
I'm a dual citizen living in Canada and ehhhhhhh idk about this. I incorporated a startup in the states because so much internet infrastructure presumes that's where you'll be and only handles Canada as an afterthought, if at all.
Most recently I tried to use Airwallex (payments provider) for a product that does international payouts and they ONLY let you use their product if you're based in the States.
Canada sometimes has alternatives on offer, but they're usually broken and lacking features.
>because so much internet infrastructure presumes that's where you'll be and only handles Canada as an afterthought
Which internet infrastructure is an afterthought in Canada?
>Canada has the notion of federal incorporation in addition to each province having its own corporate registry. Federal corporations can exist in any province but all the filings are done in one place.
I don't personally think federal incorporation is a huge benefit relative to provincial/state-level incorporation. It mainly provides name protection in every province/federally and makes it marginally easier to expand nationally in Canada. It's main disadvantage is a requirement for Canadian-resident directors which can make it a bit difficult to sell the corporation. The tax laws are the same (though for the most part, if you operate outside of Quebec, you're only dealing with one tax agency), and you still have to file extra-provincially in each province you carry on business, which itself comes with provincial filing requirements (i.e. not a one stop shop).
>The new mega-deduction recently announced [1] results in an effective 6% corporate tax rate, which is among the lowest in the world and certainly in the G-7. Things like the RTR are just one example among many of the efficient infrastructure that Canada is introducing to address a very long term productivity gap (the mega-deduction is another).
This is only for new business investment, though granted since you're discussing startups, it's valid to mention that.
>And, R&D conducted in Canada is always a current-year expense and never capitalized. And there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries (in most provinces). And those salaries are lower than they are in the US (something that engineers in Canada have a right to complain about).
This is true. I do wonder how much of an comparative advantage this is now that engineer salaries are no longer capital deductions in the US. I also recall Canada had a startup visa program to bring co-founders to Canada, but that program is paused and I don't know if it really worked.
More than anything, despite all these advantages, I would imagine access to capital is more important to any startup. You can live in the best regulatory environment in the world, and it would mean nothing if you run out of runway. The investment landscape in Canada is hugely conservative overall, and despite being flagged under successive governments that there's a huge death valley between seed to commercialization, no risk has actually been taken to meaningfully address it. [1]
[1]: https://www.bdc.ca/en/about/analysis-research/canada-venture...
HQ in San Francisco, but everyone works in Canada. That's a reasonable model.
My brother worked for a startup where the HQ and funding was all SF but the staff was all UK and Denmark (until they hired 3 Americans to service a contract with Microsoft in Seattle).
Brazil proved recently that having an alternative payment method that does not rely on American companies is safer and cheaper.
If they didn't have it, they could force a total shutdown of the market there.
And Europe is now doing the same, by integrating all the weird local methods that EU countries have come up with into one unified local system.
If you are a US citizen, the IRS will likely classify your startup as a Controlled Foreign Corporation (CFC), so be prepared to navigate the many tax pitfalls like PFIC, GILTI (now called NCTI).
the downside of canada is the capital market. You need to take things ridiculuosly further to get less money for them vs usa. Plan on twice as long for exposure and possi ly having to go public to get any value. Just hope a us company doesbt steal your idea and do it better over that whole extended exposure period. I dont do any angel investing in canada anymore because of this.
I have long felt that this is true of much of the western world. The conservatism of investors vs the US must be one of the biggest reasons for US advantage
Its the population density and tax regime. Usa has high enough population density to have real wealth pools and low enough taxes that those wealth pools can create new billionaires when they invest in good ideas. Europe could do it if they dropped their tax rates and crazy labour protections to get more dynamic, but i think the current rich there like that the system aborts new billionaires before they are born.
Now just define “any value”, and that’s a uniquely valuable comment!
Its always what the greatest fool will pay. Usa has way more fools, at way more levels of company development leaving way more out opportunities. In Canada be prepared for 7 to 10 years slog to get to where you can list on a low scam stock exchange or be sold to an international company at a discount. Better hope nothing happens in that time to tak your 10x to 100x return to zero. Vs usa if you have strong growth or strong cash flow you can usually get out within a year of starting to earbestly look no matter what stage you are at usually without the discount applied to being a Canadian company. The only things that make sense to do in canda is resource extraction and cheaper north american holding of foreign workers us companies dont want to leave in the third world but who cant get into the usa and canada has not yet impoverished itself enough to get the idiots in the east that control everything to allow major expansion in that. Basically this place should be a no go for startups except for very rare exceptions.
Rare exceptions like a “lifestyle business”?
aka someone trying to earn plenty to be okay, and maximizing the quality of life they get from the place they live,
vs your proposal (striving to do business with as many literal fools as possible as a business model)?
Getting funding in Canada is significantly more difficult, though. There are fewer investors at every stage of the startup lifecycle here, and those that do exist are more risk-averse. The cheques they write are smaller, too.
Money is fungible; the funding can come from anywhere. Heck, these days it's not uncommon for Softbank in Japan to invest money from Saudi Arabia into companies in California.
Canadian investors are much too risk-averse, but they will happily follow a funding round led by an American VC.
The trend has been for Canadian startups to find funding outside of Canada. With Cohere the government appears be trying to alter this.
>The trend has been for Canadian startups to find funding outside of Canada.
Yes, this is exactly what I was describing. The deals here tend to suck and are few. Cohere is the exception that proves the rule, if you ask me.
Canadian investment naturally gravitates towards real estate. Current systems and colonial history are conducive to this. Striking to see billboards of real estate agents line major roads of Canadian cities. Founders are not allotted the same sort of financial/cultural capital in Canada.
And a govt program to boot. I doubt they get it from non-govt Canadian firms like banks. They usually don't understand startup culture and seem to want close-to-profitability before investment. Risk averse business culture.
Does it have to be Canadian investors though? Why don't Sequoia et al invest in Canadian (or Japanese or German) companies directly? I'm aware that many VC firms have a foreign presence and I'm not talking about that.
It's always struck me as a little weird that a company has to be within driving distance of Sand Hill road to get attention from a Silicon Valley VC. VCs can't hop on a flight to do some due diligence? Video conferencing isn't good enough for monthly status meetings?
Asking them to operate in new jurisdictions requires a lot of effort and legal know-how; it's not just a matter of cutting a check, but understanding how to navigate the legal landscape for these financial transactions, rights of the investor, tax implications, legal recourse, etc. There's going to be a lot of friction such that they'll either: 1) not seek those opportunities, 2) ask the founders to move to the US if it's a really promising team (see this a lot; was in one startup where a co-founder moved from AUS to the US).
Melanie Perkins talks a bit about this in the Canva episode of How I Built This[0] and how SV wanted them to relocate. AUS government ended up matching some of the investment through a new program so they reached their target for their raise.
[0] https://www.npr.org/2021/02/26/971813519/canva-melanie-perki...
> Why don't Sequoia et al invest in Canadian (or Japanese or German) companies directly?
Economies of scale. Many investors can review and fund a standard Delaware C corporation without even passing it to outside counsel.
For Canada, not only will you probably special counsel, you may also have additional up front and ongoing accounting costs related to tax treatment, et cetera. You also know that this is potentially a hurdle that start-up will face in every sale and supply-chain contract it signs, unless it relents and just chooses a normal jurisdiction, at which point why don't they just create a Delaware entity and headquarter in Canada?
I take your point, really, and I understand there's more friction. But do the people who authorize the checks also do the beancounting personally?
Accounting and legal stuff is going to be farmed out to licensed professionals regardless of where the company is. And you can't tell me there's a shortage of US + Canada tax or legal specialists.
> do the people who authorize the checks also do the beancounting personally?
There are a lot of small-shop and even one-man private investors. Increasingly as wealth accumulates and AI automates.
> you can't tell me there's a shortage of US + Canada tax or legal specialists
They're usually a different partner at a big, expensive firm. Or, if you use a small firm, it means establishing a brand new engagement.
I make personal investments. That would be a dealbreaker for me. If I really liked the company I might try to talk a cross-border friend into running a fund that makes the investment so I don't have to deal with the B.S.
It's not crazy. A VC isn't one person. A VC is a team and a community. Plus you don't really know how that money is tied up and what forces are at play securing it; some of those forces will be immovable or not viable in other countries.
Sure maybe Japanese law and culture are a bit more opaque to your average valley VC. Canada though?
My primary point is that if a particular investor wants to have dinner with a prospect and bring 4 or 5 of his colleagues, he can't easily do that anywhere else. The secondary point may be small or may be massive, nobody can really know since nobody outside of those directly influenced by shadow money could know.
The prospect can fly out to meet the VC and have dinner.
This is what does happen, except "fly out to meet the VC and have dinner" usually means "fly to the Bay Area", rather than "fly to Vancouver or Waterloo", at which point many Canadian founders who want VC funding realize their time is more efficiently spent if they just launch in the US rather than commuting there.
> It's always struck me as a little weird that a company has to be within driving distance of Sand Hill road to get attention from a Silicon Valley VC
Is it actually true as of 2026? Asking because it sounds like a pure cope.
I was under the impression that Silicon Valley VCs have no issues with funding tech companies based in major US tech hubs outside of SV(especially ones like NYC).
Canada/Japan/Germany/etc. is a whole separate story though, and I am not contesting that (given there are plenty of very obvious reasons for why a SV-based VC firm wouldn't want to invest in a company based in one of those places).
What are the obvious reasons?
In my experience VCs suffer from immensely-inflated senses of self-importance, and think that they possess some unique skill/knowledge to "pick the winners", and so they expect you to come kowtow to them rather than deign to come meet you where you're at. Whether or not that's why there's less VC presence/deal flow in Canada I'm not sure.
Afaik even "come kowtow to them" to get funding isn't enough. A lot of Valley VCs want early stage startups to relocate.
Many countries have federal incorporation, if anything the state-based one in the US is an exception.
In Australia, the R&D credit can be up to a 100 percent of an engineer's salary.
> there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries
I really wish Canada told American companies to fuck all the way off with that. I hate that we support foreign corporate profits with our tax money. It seems like such a scam. I am sure initially it was meant to help innovation and give small businesses an edge, but somehow the googles and the metas can freely take advantage of it too.
My business was in Ontario for its first 7 years, in the US now. I do not miss collecting and reporting HST.
Other than that, Canada is amazing and I miss a lot of aspects.
Regulatory hell!
Insane that the US does not have a realtime payments network in 2026. FedNow exists but is supported by handful of banks which charge fees to use the feature.
> Outgoing transfers cost 0.75% of the transaction amount (minimum of $1, maximum of $30). SoFi does not charge a fee for incoming transactions.
> SoFi Plus members save 50%. They pay 0.375% of the transaction amount with a maximum of $15 (minimum remains $1).
https://www.sofi.com/banking/instant-money-transfer
> Insane that the US does not have a realtime payments network
The U.S. invented real-time gross settlement electronic payments with Fedwire in 1915 [1]. FedNow is the newest real-time end-to-end payment system [2]. It launched in 2023.
[1] https://www.federalreservehistory.org/essays/fedwire
[2] https://www.frbservices.org/financial-services/fednow-servic...
You conveniently missed GP's follow-up sentence:
> FedNow exists but is supported by handful of banks which charge fees to use the feature.
What good is inventing a feature if almost nobody can use it?
Pretty wild. Australia's had NPP since 2018. You can send money to somebody's phone number and it's in their bank account instantly.
https://www.rba.gov.au/payments-and-infrastructure/new-payme...
For nearly 20 years the UK has had "faster payments", free instant transfers, now up to £1m, and while you can't send to a phone number, the routing numbers needed can't be used to withdraw so are generally safe to give to people.
UK system is rather inconvenient and most web sites do not have even an option to use that. And forget using that to pay in a shop. Compare that to Bizum in Spain or Vipps in Norway where one can very conveniently pay using that both online and in shops and the systems naively supports refunds and payment reservations and subscriptions similar to debit cards.
Yes, it's less about payments than more modern systems. The UK has free current ( checking) accounts with debit cards that are essentially free to use, so there's not much incentive for other payment systems. A contactless debit card is quicker and easier to use than an app anyway, although google/apple apps work with that too.
Subscriptions are often done via "direct debit" ( since 1970 ), which is safer than letting anyone take money if they have your details, so that's been a solved problem here for a while too.
The downside is the first-movers problem, where the UK having been ahead a couple of decades ago will now likely be behind for a while, because there isn't so much incentive.
Hopefully not as long as the USA has been behind though!
> contactless debit card is quicker and easier to use than an app anyway,
How so? I just tap my mobile on the terminal just like tapping my debit or credit card. In Norway that works with both Google pay and Vipps.
The advantage with Vipps is that I can also pay other private individuals knowing only their mobile number and the payment is instant.
I get the benefit for the merchant to use an instant payment system. On the other hand, I don't understand the benefit is for the consumer. An increasing number of UK merchants use Pay By Bank (which is essentially an easy way to make a payment by pre-filling the merchant's bank details in your banking app), but if you choose to use it you're instantly losing the consumer protections that come from using a debit or (especially) a credit card: https://www.moneysavingexpert.com/banking/pay-by-bank-warnin...
The only way I would use such a system for purchases would be if the merchant refused debit/credit cards, and even then only if there wasn't an alternative merchant I could use.
Discount?
I've always paid for Airbnb type places (not actually airbnb, obviously) in the UK using the fast electronic payment system. There's usually a button on the web site or they email their account and routing number.
Has it actually helped anything? B2C is still all credit card or (due to some weird regulation) cash because of the credit card fees being passed on.
It mostly replaced paying with cash for people to people transactions and removed the massive delay doing online payments to people. It didn't change payments to businesses.
Even before that Australia had bank transfers, the US had Paypal and now Zelle.
Bank transfers weren't instant though
As a European, reading about western nations who don’t have a 24/7 payment network is .
To be fair, SEPA instant payments only became mandatory late last year too.
The big difference is that the EU has mandated (effectively) fee-free availability to all end users, while the US is only making it available as an infrastructure layer. Most banks don't bother offering any product on top of it, or own-account-transfers for a fee at best as mentioned by GP.
Can anyone knowledgeable explain (or point to a good reference) why the US doesn't have a real time payment system, say something like UPI in India?
Mostly the curse of the first mover, with a dash of corruption for spice.
Part of it is "the curse of good enough": the US has had good credit-card style infrastructure for over a century and digital infrastructure since the POTS days. Part of it is that we lost our appetite for anti-trust in the 80s. Part of it is that the price structure of this infrastructure has wormed its way into everything in a way that is difficult to undo without causing high-visibility inconvenience for low-visibility benefit. The good-enough is the enemy of the good.
I think it's mainly because they aren't forced by regulation.
Germany is another first mover with decades old banking systems and standards. German banks also dragged their feet supporting SEPA Instant or they added additional fees so that barely anybody wanted to use it.
Then the EU stepped in with regulation: If you support classic SEPA transactions, you also have to support SEPA Instant for the same price (which is almost always free for retail banking accounts). And suddenly banks did.
Yes, this could be fixed with regulation -- but whoever did the regulation would have to contend with angry fools complaining about how "the government took away my credit card rewards!!!" for years and of course the credit card companies themselves would stir and amplify those voices as much as possible.
> the price structure of this infrastructure has wormed its way into everything in a way that is difficult to undo without causing high-visibility inconvenience for low-visibility benefit
I think the “recent” change allowing merchants to pass along the credit card fees is a step in the right direction.
I think a lot of people would still choose fraud protection for the extra costs, though.
The US also has incredibly pro-consumer regulation over credit cards, compared to most of the world. There is no such thing as "not protecting your card" as a way for the bank to get out of paying for credit card fraud. Legally, you are liable for the first $50 of unauthorized charges, and that's it (though most cards will cover all of it).
> The US also has incredibly pro-consumer regulation over credit cards
Not to take away from your example, but I was under the impression that transaction fees charged when using a credit card in the US were significantly more than in say, the EU?
They are. It is a modest price to pay for legal protection at that level.
In what world is 2-3% of every payment "modest", when actual fraud losses are an order of magnitude below that?
The consumer reaps the benefits, but the 2-3% is charged to the merchant and the consumer gets some of that back as rewards points/cashback/etc.
Of course the business passes its costs right back to the consumer, but it's not visible to them, while the benefits are.
Australia recently capped credit card fees. Yes, it has lead to a decline in credit points/cashback but in the end it's leaving more money in your pocket.
Exactly, but a hidden cost is still a cost.
Also: if the merchant does not offer a cash discount, it's not the card user that's paying the cost.
Of course they still are. Just because you can't avoid paying a cost doesn't mean you're not paying it.
Payment processors and banks lobby for control over this. As usual, a service/product is bad because no one is allowed to create a better alternative, this is an almost universal rule. Specific to this case: the government is included in the list of parties not allowed to make it better.
> the government is included in the list of parties not allowed to make it better.
The government is the only one capable of changing the rules to be included in the list of allowed parties to make it better.
And the only ones capable of making the government change these rules are the oligarchs who pay them to change the rules.
Do you mean in Canada or is this also the case in the US?
Mostly deficiencies of the political system: regulators see themselves, call themselves and act like "watchdogs", whereas in other countries financial regulators act like shepherds and lead the market. Hence in this country relatively minor players with interests not exactly aligned with the general public can hijack the process. That's what we are witnessing.
Banks earn money on card payments and pay (via explicit fees or implicit fraud liability without compensation) for interbank transfers, so without any external forcing function (market or regulatory), it seems pretty clear to me why they prefer one over the other.
Not real time, but ACH is being forcibly sped up by regulators. [0]
> All U.S. financial institutions (Receiving Depository Financial Institutions or RDFIs) must participate and accept Same Day ACH credit transactions.
> However, sending (originating) Same Day ACH payments is optional for banks and credit unions.
[0]: https://www.nebankmn.com/assets/files/aijt34yD
That's great, but $1 per transaction makes same day ACH tough for small transactions
$1 is not market.
I've signed up for or seen the contracts for several payment processors across several companies. Rack rate for ACH debit starts at $0.25/trx and goes down to sub-penny at scale. Returns can be high though ($2 per, going down as well).
Edited to add: that's not a defense, I *loathe* ACH. It's a negative-reporting system which is such a pain to deal with.
My understanding is that sameday ACH does not cost extra (from a network perspective) than regular ACH, it's just that some shitty banks apparently like to charge extra for it.
Outside the AI summaries, I couldn’t easily find the sources. But a couple of different sources say same-day ACH is 5.2 cents per outgoing item while overnight is 0.35 cents.
What I can say is the Fed has draconian rules for pricing its services. The services cannot be subsidized but must be priced to recover costs, including a return on capital similar to what a private payment system (ie from the Clearinghouse) would expect.
This seems to be the official pricing info: https://www.frbservices.org/resources/service-fees/ach-2026/
I read it as the sending institution pays 5.2 cents to the receiving institution per item, on top of the 0.35c/item + 0.1c/item same-day surcharge for a maximum of 5.65 cents/item before volume discounts.
Our federal representatives are mostly incompetent and technologically illiterate. When a large project does materialize, the funding is wasted on contractors who actively scam the government.
I think it’s the general desire for a “smaller” Federal government that instead relies on private sector solutions.
For other examples, look at adoption of login.gov vs id.me, and tax filing software solutions.
Why would a Montenegro ID site have anything to do with the us?
Haha I don’t know ask the IRS, VA, and SSA, among other U.S. federal agencies.
Ah, login.gov, that perfectly reasonable thing that USDS and 18F built, before Elon Musk and his DOGE minions de-staffed both departments. https://en.wikipedia.org/wiki/18F#Mass_firings_and_eliminati... https://en.wikipedia.org/wiki/United_States_Digital_Service#...
Because why would Musk possibly be interested in saving money and making the government run more efficiently?
What an egotistical ass hat.
In most part of the world, the government just force the bank to join the payment system and restrict how they charge the customer.
In the USA, no single regulator have that power. Basically only congress can do something like this. The us Congress ain't famous for being fast, you know.
The Fed prints a fraction of a fraction of the actual money in circulation. Private banks in practice control the money supply. As such, they want to maintain their monopoly.
The countries that have innovated the most in regards to automated payments are the ones trying to escape US influence: look at PIX in Brazil, BRICS pay, etc...
In America, the payment system is an oligarchy, they protect their own (the bankers), what need is there for innovation when they are making a killing out of the current inefficiency?
The one place where the US haven't been slow is in stablecoins, making them dollar donominated, to ensure the monopoly the US dollar has on international trade stays strong. That way, when the US has a crisis, they take down the rest of the world too, to the joy of non-US countries.
It does. Outdated information RTP is what its called
Sounds great. How do I pay using RTP at the grocery store or at online merchants?
Lobbying?
Venmo, CashApp, Apple Pay, and Zelle are free for person to person transactions and you get the cash in your account the following day.
I’ve never been in a position where I needed a cash transfer to an account the very same day, I have tens of thousands of dollars of credit available so there’s very little need for immediate transfers, at least for me personally. I do virtually all of my spending on credit cards so I have up to 60 days to pay the loan back without interest.
Ever buy something from a rando, or split the bill with a colleague or friend?With real time transactions, you can confirm that you actually received the money immediately.
Zelle is ACH, everyone else uses card processing rails. It's not the same as real instant transfers between banks. There are middlemen involved that don't need to be there.
Others have pointed out that we do have this and there are some reasons it's not the same scale as credit card infrastructure, but I'll just observe there's a cultural difference
We've had a billion discussions on Hacker News about payment rails and it's invariably always a European incredulous that Americans can't/won't do a digital payment instantly and for pennies. These Europeans are typically operating with a mental model where they have cash in a bank account and every transaction gets funded from cash on hand.
Americans - for better or for worse - want longer cycles to pay for their charges and many want rewards for their spend. I don't think it's uncharitable to describe those who pull out debit over credit during a transaction as lower income and higher credit risk than those who prefer credit. (Europeans will decry that this is Americans living beyond their means. Maybe! Maybe.)
But when it comes to business, I've never understood this argument from Europeans. Invoicing works on net-30/60/90 terms. In B2B payments you could reduce payment cost by doing invoicing with instant low-cost payment in 30 days, but incur a different "cost" in cash flow management. Credit card payments are a risk-based financial product that does a magic trick of arbitrage for merchants between a service/good sold and payment received as a net-30 invoice to the cardholder, and you should expect to pay a fee for that. An economy where businesses need to pay each other immediately out of cash-on-hand is less dynamic and less efficient than one where all that cash flow can get smoothed out via payment intermediaries. (Money you have to keep on hand for bills is not being deployed doing other things in the economy - this is inefficient!)
For C2B payments, this is probably a helpful and lower-cost innovation over debit rails. But credit is a different product, financially and culturally, in the United States.
There’s the RTP network in the US as well, but both networks are growing and reach over ~70% of deposit accounts.
Pricing for customers varies by network participant. The network prices are cheap.
FedNow is still roughly an order of magnitude more expensive than the EU's TIPS (EUR 0.002 vs. USD 0.045, last time I checked) in terms of "sticker price", but yes, at least there's some movement, and as you say I'm not sure who actually pays that sticker price in the US.
The real problem is that, even if costs were to come down to zero, there is nothing incentivizing banks to actually make RTP available to their customers. In the EU, customer-initiated "push" bank transfers are considered an essential part of a checking account; in the US, they're not.
For purchases, the US has debit cards and Zelle. Banks instantly exchange non-revocable promises to pay and the money follows at the end of the day. This is more capital (cash) efficient because it allows netting. One key here is that everybody in the US banking system is under the same regulators (Federal Reserve, FDIC/NCUA) so there's greater trust that they won't go under before the cash comes.
A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods). FedNow, Zelle, wires, ACH do not and people have lost money by scams this way.
If you don't need it right that second, same-day ACH is widely used, and again the delay allows more efficient netting.
The Clearing House's CHIPS is a good in-between, it's not guaranteed instant, but uses an algorithm to match transactions as fast as possible with constrained float.
I want to send money between accounts I own in real time. I want to deposit money in brokerage accounts in real time. I want to stop connecting my accounts to services like Wise to make money transfers. I want to pay off a credit card and have that payment clear instantly. FedNow could enable all of this.
Purchases are an afterthought. A system like Brazil's Pix could be rolled out on top of FedNow.
>I want to pay off a credit card and have that payment clear instantly.
Why? At least 2/3 of my cards do same-day ACH (the other is at the same bank, so I can't tell), so the transaction clears in hours. The point of a large credit limit (supposed to be at least 3x normal spend) is so that it doesn't matter anyway.
>FedNow could enable all of this.
Clearing House's RTP has been around since 2017 and it hasn't.
> Why?
A non-hypothetical scenario is that I make a credit card payment via ACH. That money does not leave my account until EOD. Some other transaction causes my balance to fall below the amount required for that transfer. The transfer fails and I am dinged for a missed payment by the CC company (and if the bank sucks they charge a fee too).
Now you could argue this is an accounting issue "Why doesn't the bank reserve the funds until the transfer is complete?" Answer, I don't know ask Capital One. But RTP eliminates the question entirely.
This is a thing already in the UK. I can make a credit card payment from my account using the credit card number. It applies to the balance in real time (realistically in minutes). I don't have to worry that the payment could fail at any point.
>Now you could argue this is an accounting issue "Why doesn't the bank reserve the funds until the transfer is complete?" Answer, I don't know ask Capital One.
Because transaction ordering isn't guaranteed. Say I know that I'm getting paid on the 1st, and I want to spend my paycheck immediately on rent. If the rent transfer gets processed at 11:00 and the payroll provider gets around to doing it at 11:15, I don't want my rent to be rejected.
Therefore, the bank allows transactions to happen and only checks at the end of day for overdraft. They then apply a time-independent ordering to transactions they can reject like paper checks.
In fact, this same scheme applies to banks, Fed only looks at their accounts at end of day, why you have overnight funding.
The major exception to this is debit cards, which Congress made them reject if the money isn't there at time of authorization.
You don't need to worry about any of this backend reconciliation transaction ordering shitfuckery if the money is actually transferred immediately, like it is in countries whose banking systems don't suck.
> I want to deposit money in brokerage accounts in real time.
My broker credits me for deposits immediately, switch brokers.
> I want to pay off a credit card and have that payment clear instantly.
Why? There is zero benefit to doing this, a credit card payment is applied to the account on the day you choose to pay it, whether it is removed from your checking account or not. I guess I could see if you are constantly over drafting your account, but you could just .. keep cash in the account so you don’t overdraft.
I leave enough money in my checking account to cover all auto paid bills for at least 30 days just in case I end up in the hospital or something.
> For purchases, the US has debit cards and Zelle.
Both are a very poor alternative to something like UPI or even EU-style bank transfers as a mass retail payment system. Cards are orders of magnitudes more expensive; Zelle has no standardized interface and is explicitly geared only towards P2P Payments, lest it cannibalizes the banks' golden goose, i.e. payment cards.
> same-day ACH is widely used, and again the delay allows more efficient netting.
Importantly, customer-initiated/"push" ACH is largely not a thing in the US, unlike in many other countries. This is what people unfamiliar with the US landscape often have a hard time understanding.
> A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods). FedNow, Zelle, wires, ACH do not and people have lost money by scams this way.
That's the crux of it: The US seems to be culturally unwilling to accept the risks (fraud) and rewards (practically free P2P and B2C payments) that come with a customer-initiated/push payment system.
Instant for USA banks doesn’t mean instant for USA banking customers, and deposits can be held per fed and banking policies for variety of reasons especially larger deposits. Also, it’s increasingly common to have financial routing intermediaries playing by different rules and non-insured financial accounts that result in no coverage when the money is spent/lost elsewhere and not returned to end customers. Take a look at Zelle case in New York and the nearly $100M customer funds missing with the Synapse bankruptcy.
My point is that these properly designed national systems should also be considered in the USA as well, and not dismissed because something is kind of working right now with a long list of exceptions to a good and safe experience.
Most other countries low value real time systems are also net settled (as opposed to RTGS systems which as the name suggests, use gross settlement).
Is this correct - A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods) - I was under the impression that only credit cards offer chargeback protection?
You can chargeback with a debit card
https://www.chargeback.io/blog/debit-card-chargebacks-guide
Liability is covered under the Electronic Fund Transfer Act
> You have zero liability if you report before any unauthorized charges are made. Reporting within two business days caps your liability at $50. However, if you wait over two business days but less than 60 calendar days after your statement is sent, your maximum liability jumps to $500. Beyond 60 days, you could be liable for all unauthorized charges.
It is correct. All Visa and Mastercard debit cards offer these protections, and I would suspect that the smaller brands also do.
Worldwide.
As far as I know, in India, debit cards don't offer chargeback protection presumably because they are PIN enabled. Which means, in practice, nobody can use your card without knowing your PIN. And so it is assumed that any transaction on it has been done with your permission. Debit cards also don't offer chargebacks for consumer protection against faulty goods.
I think you might want to check that again. If the card is Visa or Mastercard, then it should offer fraud protections in mostly the same way as a credit card. You might be pleasantly surprised.
Most debit cards today have PIN, but that doesn't waive fraud or theft protections. If I purchase something online the purchase of course has my permission. If the goods are faulty or not delivered, then that is fraud and has chargeback protection. Even if you used your PIN, even if you used two factor authentication.
You can chargeback sepa for longer than cards. And easier
Not in the US. The major card networks give you 120 days versus 56 for SEPA. In fact, that's illegal in the US because Regulation E gives you 60 days after the bank sends the statement.
The Clearing House owns both ACH (automated clearing house)and RTP (real-time payments).
https://www.theclearinghouse.org/payment-systems/rtp
Zelle is pseudo real time. The settlement (mostly/often?) happens by ACH.
https://www.cjsoi.com/articles/fednow-vs-rtp-vs-ach
Why do you argue with fanatics? Even your sensible and informative post gets downvoted.
I wonder if Regulation E has anything to do with slow adoption of new tech that's a fraud risk?
Real Time Payments exists in the US as The Clearing House (TCH) RTP® Network
US bank has it, Mercury does as well
The networks exist, the product does not.
As a Canadian, I like this. It really sounds like they're taking Interac's proprietary e-Transfer system and rolling it out as a public good for any bank to build on. That's pretty cool. It also seems smart to have involved Interac as partner, instead of trying to build around them.
Like all things from any government -- let's see how the rollout goes. But I am cautiously happy to hear about this.
I like this too. It’s worth noting that interact debit has been around in Canada forever (got my first card in the 90s), etransfer (using just an email address) for a long time and in general Canadian banks have been great at working with each other and abroad. And there was never a ton of private apps you had to rely on.
Both places are better now but I remember being in the US in the 2010s and having an easier time using my bank card to get cash than an American far away from their credit union. In Japan in 2012 I also sometimes used my Canadian bank card when my Japanese bank was closed for a holiday (this was fixed in 2015).
E-transfer is not a real time payment system. The recipient's financial institution lends the money to them and then the actual funds (which were frozen by your bank to ensure money is available) gets transferred asynchronously over a period of a few days, as with any legacy bank transfer. It's just hidden away from the end-users.
This is how all real time payment systems work if the recipient institution != sender institution. Credit cards, iDeal, Bancontact, SEPA instant... In the end it's reconciled within the next few days with a pinky promise between institutions the money will actually arrive.
> Like all things from any government
Like all things... human???
How comfortable are you going to be requesting a payment from someone by asking them to rail you?
/s
Its already growing on me
I'm very comfortable. Interac purchased and enhanced the SecureKey Verify.Me service and rebranded it as Interac Identity. It's a reliable way of determining identity and eliminating fraud (I helped integrate it into a company's customer sale process which was rife with fraud). This page on the Real-Time Rail shows that it's definitely using Interac e-Transfer https://www.payments.ca/systems-services/payment-systems/rea...
Whoosh?
"To rail someone" means to have vigorous sex with someone. I believe the poster to whom you replied was making a joke about the name being unfortunate.
Naming is hugely important. I'm always catching downvotes on here for complaining about otherwise-decent open source projects that will never gain traction because they have moronic names like Xonaly or whatever. But I suspect "hey can you rail me 20 bucks" won't be how it gets referred to, and "I don't have cash, does e-transfer work?" will continue to be how it's referred to.
As a historical note, "e-transfer" is actually the third major branding of the service.
Acxsys [1] was launched by the Canadian banks in 1996 as a for-profit startup meant to develop online payment solutions, and they original launched the service as "certapay".
Acxsys was folded into Interac in 2018, but I think it was somewhat prior to that the certapay name was discontinued in favour of "email money transfer". Everyone called them e-transfers though, and so eventually Interac gave up on EMT and just went with that name, which is what it is now: https://www.interac.ca/en/resources/personal-resources/perso...
[1]: https://en.wikipedia.org/wiki/Interac#History
E-transfers sucked for the first decade because there was a several dollar fee associated with them, making them impractical for small amounts. I’m miserly so I low-key dreaded ordering takeout with other staff on night shifts, and having to pay the fee to square up with the person who ordered.
As an aside, there was an e-purse pilot sometime between 1996-1998 in Southern Ontario. It may have been Visa or MC driven rather than Interact/Acxsys.
I remember seeing a booth at the Canadian National Exhibition in 1996 where they demoed a smart card that could be used for web transactions (!) using a floppy drive adaptor (!!).
1990s fintech was wild.
I don't know anything about vigorous sex so I would never know that railing a person is a euphemism for that.
We Canadians love our sexual innuendos in language. Asking someone to rail us would fit in nicely: "I'm fucking the dog, can ya rail me enough for a forty?"
Yeah the day I learned (the hard way) that Americans don’t have “fucking the dog” as an idiom was quite the day
Nice to see how many mentions to Pix (Brazil) and how its shaping global economy! Its really nice to see top engineers from our top colleges ahead in the financial tech frontier (Ita, Ime, unb, ...)
Doesn't look like any of Canada's major banks are taking part?
> The initial cohort of active RTR system participants includes: Wealthsimple, Questbank, Peoples Trust Company, Paramount Commerce, KOHO, DoBusiness.com™, Digital Commerce Bank, Bank of America,
> However, many of Canada’s major banks are expected to join in as well. Royal Bank of Canada, for example, is expected to introduce RTR in the second quarter of 2027.
* https://globalnews.ca/news/12142666/real-time-rail-payments-...
Wealthsimple has 170 billion in assets under administration, while BMO, the smallest major bank, only has 310 billion. Considering WS is 100% retail, it's arguably a major financial institution at this point (though legally not a bank).
Isn't it legally a bank? It provides chequing and savings accounts (registered and unregistered), and it's even CDIC-backed on at least their managed products.
They don't hold a schedule 1 banking license, so not technically a bank, but a FinTech with a banking partner who holds funds in a way that allows for CDIC backing. As a WS customer, when I send a bill payment to a non-WS account it arrives as "RBC" on the other end so I assume WS holds funds through an RBC account they maintain.
This is the hope of something like RTR - for anyone who can meet the participation requirements, an ability to operate independently of a banking partner who might be your direct competition.
They might even have different banking partners per account type based on who wanted to deal with them/who gave the best deal for that account type.
It doesn't do lending directly (as far as I know).
Wealthsimple is best known for their robo product, not their banking. It's the Canadian equivalent of Wealthfront.
It's true they built their reputation and brand by being a robo-advisor, but I don't personally know anyone who uses it that way today and many people in my social circle instead use them as a cheap HISA and online self-directed brokerage, perhaps more like Robinhood or Ally
They'll be in later phases, once they feel confident enough to significantly ramp up volume:
> Participants will be added to the RTR in three phases to help control the volume of transactions added to the system, with the goal of including every Canadian financial institution on the rail by mid-2027.
> The major banks – which will shift massive amounts of volume onto the RTR – are not involved in the first phase of the rollout, but will join in the second and third phases.
https://www.theglobeandmail.com/business/article-payments-ca...
I would expect the integration into the Interac network (itself a sort of consortium of the big banks that provides a number of debit-adjacent services) will mean that adoption by the big players will be pretty quick.
Ah, this is the SEPA Instant problem. SEPA Instant was introduced a decade ago, and remained largely useless until bank support was made mandatory last year.
It is harder for major banks to update their systems for this, so it will take them a while to implement. Smaller more nimble institutions will jump on first.
Context: The Big Five Canadian banks have 90% of the market, compared to the Big Four US banks's 50% of the market.
It does say "With additional participants onboarding continually in the coming months, including all major Canadian financial institutions and other members applying for access, the RTR will be available to more than nine in 10 Canadians within the first year after launch."
Will be curious to see if this ends up requiring Google/Apple accounts and mobile device attestation in order to work.
Real-time Rail is for financial institutions to settle transactions not for direct consumer use.
> This new national payment system will transform day-to-day payments for Canadian businesses and consumers by enabling instant speed and settlement.
It does sound like it's for consumers as well
It will _eventually_ be exposed to consumers through their banks, but it is financial infrastructure for now.
This mostly is referencing ETF tranfers that are relevant to consumers - e.g. bill payments and employer pay deposits that currently take several days.
In the same way that PAD is for consumers as well.
if its like SEPA in europe then you dont need google or apple, its seperate network that you get access through your regular or digital bank
Of course, if you want to do it through your mobile then your bank can require attestation. No different from now.
So basically a modernized M-PESA? Where you just scan a QR code or such, and then say how much $$ you want to transfer to that account, with cash-like low effort?
The last bastion of cash, for me, here is garage sales. Absolutely everything else has gone cashless, but low-friction, low dollar transfers between individuals is still ruled by cash. Not that I haven't paid for stuff via Interac e-transfer but that has high friction (log into bank app, add one-time payee etc.) so only for cases where suitable cash isn't on hand.
The consumer infrastructure isn’t part of this agreement, so don’t expect it to be better than interac on that front. (Interac etransfer can also do the above with QR codes, but most people don’t bother. I’ve only seen street musicians set it up.) The primary benefit here is reducing interac settlement time from 30 minutes to less than 2.
So the quiet voice here is I think the desire to stop small businesses being the working capital providers of larger ones (“take the 90 day payment terms or go find someone else”)
The larger business’s still won’t pay the smaller ones any faster. Payment processing wasn’t 90 days.
I couldn't find this info in the release, but I assume account information and transactions go through the Bank of Canada? That's how the closest analogy, Brazil's Pix, works.
RTR is owned and run by Payments Canada, which is a crown corp that also runs Lynx (large value transfer system) and ACSS (cheque clearing system.) PayCan itself is overseen by the Minister of Finance, but there is Bank of Canada oversight (risk and prudential) of the key designated systems RTR, Lynx, ACSS under the Payment Clearing and Settlements Act (PCSA)
For those unfamiliar with the term, a "Crown Corp" is a private company, but wholly owned by the government. It's not an unusual structure here, the BoC is itself a Crown Corp.
To contrast, Interac, the system used for canadian debit and person to person transfers, is a private company, with ownership by the banks.
I thought it was a crown corp too, but I don't think it is: https://www.canada.ca/en/treasury-board-secretariat/services...
If you look at their "about us" section, they just say they are "a corporation". https://www.payments.ca/about/who-we-are Although they were created by a law (Canada Payments Act) and have a public mandate:
Payments Canada has formed a critical part of Canada’s financial market infrastructure for over four decades. The Canadian Payments Association was created by the Canadian Payments Association Act in 1980, now known as the Canadian Payments Act (CP Act).
I think its because its a membership association (like a non profit), where crown corporations are structured like for profit companies where the crown (government) owns all the stock.
Should we be alarmed?
PayCan maintains most of the designated systems that underpin the national financial infrastructure - so no, I'd say no more alarmed than anyone is at the structure of ACSS or Lynx
It's a niggle upon a niggle but I do not believe payments Canada is formally a crown corporation. It's primarily a member consortium / industry governance body, though to be muddied further, Minister of Finance does have some oversight responsibilities / accountability.
I always viewed it as one of the "we will govern and regulate ourself so government doesn't fully have to" bodies, but I'm an outsider so happy to be corrected :).
Interesting it have "lower processing costs". It could be free at all like Brazilian PIX... but certainly it wouldn't be liked by Visa and Mastercard.
People in Brazil can simply generate a one time PIX code or use own key and instantly receive. It is now the most used payment mode for more than a hundred million people... this is why Trump attacked the Brazilian financial system as unfair with North American payment systems.
Yes, it can have no cost, receiver can have no cost, payer need not to have a hidden cost at price tag and it can save billions of dollars and make products and services circulate more, warming economy , reducing unemployment and avoiding money dump to external countries for the local enterpreneurs.
Canada already has Interac e-transfer for p2p which is largely free (banks are allowed to charge, but in practice they don't charge consumers).
E-transfer was launched 17 years before Pix so it runs on email addresses as an identifier. In my experience most people use e-transfer more often than cash for person to person and many small businesses like farm stands, etc.
Interac is not settled realtime - it uses the same infrastructure that was built 50 years ago but has a more modern interface. UPI, Pix and now RTR are new settlement systems that are meant to be realtime from the get-go.
Nothing is free, not even Pix. It had costs for development and has costs for running it. If it's free for the end user, then somebody else is paying.
As a physical person, you can receive 30 Pix payments per month without having to pay a fee, but send as many as you please.
A business however can be obliged to pay fees for receiving Pix payments from physical persons (ie customers), and when using the more advanced Pix features.
Banks very likely choose to not put any fees on Pix payments for their business clients for now, since it's beneficial to keep their money flowing in. But that's not different than European SEPA payments or American ACH payments being "free" for businesses.
Is this similar to India's UPI? How will the end user interact with this system?
Yes, but there is no first-party end-user interface unlike UPI (BHIM). So participating banks will decide how the interface works on their end. There is no implementation available yet but it will likely be something like UPI anyway with a QR code for quick detail sharing, if I had to guess.
I guess i dont really understand what this means for the average consumer. Isn't interac etransfer essentially instant?
It's not instant and it relies on a private company for settlement. Even though customers typically get this for "free", the institutions themselves are paying interac for these (so the account-holders are paying for this one way or another)
From what I can tell, e-transfers will continue using interac's network, so I'm not sure if this will benefit users at all. Depends if banks integrate a new user-facing money transfer option. I suspect it'll take years if not decades for banking institutions to roll this out to users, though they may use this behind the scenes for inter-institutional transfers without Interac.
Someone who's more knowledgeable about Canadian banking and payment processing, feel free to jump in here because I'd like to know more as well.
You're correct on the first point, and it's worth adding that Interac is a closed network - Interac has no obligation to let anyone participate, and it's been a pain point in the FinTech world that you either have to convince them to let you in (e.g. Wealthsimple) or piggyback on a banking partner (e.g. most other FinTechs.) Maintaining that banking relationship is a big burden for fintechs, especially if you rise to a level where a bank views you as direct competition.
RTR's membership requirements are set by PayCan, who have a mandate to foster competition. Any FinTech who can meet requirements can, in theory, hold a settlement account on RTR and participate. Interac has an incentive to keep the club small, so to speak, and prevent new up-and-comers from cannibalizing their market share.
From a competition lens, the hope here is that RTR levels the playing field for both the big banks and fintechs and opens the door to a lot more consumer-facing innovation. That will, of course, depend on the network effect and who gets onboard.
> From what I can tell, e-transfers will continue using interac's network, so I'm not sure if this will benefit users at all.
quote from the page:
As Interac e-Transfer payments begin to clear and settle on the RTR, we will put this world-class infrastructure to work for consumers and businesses.” Jeremy Wilmot, President and CEO Interac Corp.
Interactive etransfers are far from instant. My last company supported etransfer payments. On a good day they would take ~10s to process, 30s was decent, and single digit minutes were normal. Legitimate payments that got flagged by Interac's fraud detection rules were often subject to delays measured in hours, sometimes days.
Good enough for consumer to consumer use and some online use cases, but definitely not good enough for retail.
When I sell things on local used sites I started only accepting cash because e-transfer is so slow and led to situations of someone standing in my entryway while we wait to confirm the money went through.
Or giving up and saying "alright, I guess I'll trust you and hope the money comes soon"
Australia launched some sort of realtime payments system a few years ago and it… changed nothing?
Credit cards just have incredible lockin.
Didn't interchange fees in Australia get capped this year? I wonder if that'll push people away from credit cards over time.
Maybe a dumb question, I skimmed the post but it's a lot to take in. Would this potentially enable third party integrations, like Venmo or sending money through iMessage? That's something I've always been a bit jealous of with Americans. E-transfer has been fine but it's clunky.
If you're jealous of the US, better don't look to India or even the EU. Free or very cheap, instant P2P and B2C payments have reached mass adoption in many parts of the world at this point.
Venmo and iMessage are actually more annoying than you might think. Both silo your funds and you'll have to pay significant fees for instant withdrawals to your bank account, while regular withdrawals take at least a day.
Zelle is a bit better since it draws/deposits directly from/to your checking account, but most banks' UX is moderately to extremely janky.
Isn't "etransfer clunky compared to venmo" just a function of how your particular bank has designed their app UI/UX?
Yes but I'd like if the market had the ability to compete for better money transfer UI/UX than switch banks because their app is mediocre.
Switching banks in Canada seems like a much easier proposition to get a better UI/UX for money transfer than any option in the US with Venmo.
You can't switch to alternative apps that use Venmo, and if your network of people uses Venmo, you can't use a different money transfer network.
>Switching banks in Canada seems like a much easier proposition to get a better UI/UX for money transfer than any option in the US with Venmo.
That's predicated on there being a better bank UI in the first place. Venmo's UI is far more consumer-friendly than any bank's Zelle payment UI that I know of.
Sure, but "I want everyone to standardize on Venmo because their UI is better than banks'" is a very different argument than "I want the market to compete for a better money transfer UI/UX."
It's like the difference between Twitter as the UI/UX leader (humour me and assume that part is true) stomping all over the market due to the network effect, and the ability for Mastodon instances to compete for the best UI/UX.
If better payment UI were a compelling reason to choose one bank over another, banks would have improved their Zelle UI years ago. But it isn't, so they don't.
The Venmos of the world have all the incentive to improve their UI, because they don't have anything else drawing customers to them and causing them to stay.
PS - Twitter is more important than ever in terms of driving the news, while the last time Bluesky or Mastodon broke the news on anything was March 32nd of twenty twenty-never. Mastodon instances stand out mostly in their ability to self-immolate over the latest Maoist struggle session. <https://news.ycombinator.com/item?id=34748195>
> If better payment UI were a compelling reason to choose one bank over another, banks would have improved their Zelle UI years ago. But it isn't, so they don't.
Sure, but that's not in opposition to my point. I'm saying that for any individual, switching banks for money-sending is much easier than switching from e.g. Venmo to Apple Pay, because at least half the people you know don't know anything about Apple Pay.
> The Venmos of the world have all the incentive to improve their UI, because they don't have anything else drawing customers to them and causing them to stay.
The network effect. If you're in the US, you use Venmo because everyone else uses Venmo.
> PS - Twitter is more important than ever in terms of driving the news [...]
Yes, my analogy works with that. Twitter is Venmo. Everyone is on Twitter/Venmo because that's where the network effects are.
The article didn’t mention how is this different from current interac, and great to see wealthsimple is already in it!
Canada's Interac is anagolous to US' Zelle payment network (which is owned by the largest US commercial banks), while RTR is the US FedNow equivalent ("true" instant payment and settlement with broader use case support, operated as a utility by the US Federal Reserve).
https://www.redcompasslabs.com/insights/why-canada-needs-ano... was something I found via a search that explains some of the nuance without writing a new post on the topic, other citations and resources are welcome.
(it should be expected that newer, utility ran instant payment systems cannibalize existing, more expensive, lower speed payment rails; going fast and being cheap as a utility is the innovation)
Has FedNow had any visible effect in the US? Are bill payments and bank to bank transfers now happening instantaneously?
My credit unions now offer ach, same day ach, and instant transfers between them.
Same day ach launched with a user fee, so they usually prompt to confirm and offer to send it via normal ach instead, which I find amusing?
I also see instant transfer support at some other places I bank. I can't say if bill payment happens instantly or not, my finances don't run close to the edge, and I don't need to know exactly when a bill pay (which I generally schedule) is taken out and when it's applied; as long as both happen, I'm good.
~$800B/year in annual volume run rate, as of this comment. You can move up to $10M per value message for less than 5 cents, with a max 20 second time to completion SLA.
https://www.frbservices.org/resources/financial-services/fed...
(i am contributing subject matter expertise to policymakers to make offering FedNow rails to financial services customers a requirement of having a banking license, so I'm a bit biased; this is the only way we'll get off of closed payment rails like Zelle, slow open rails like ACH, or expensive faster legacy credit card rails)
> Are bill payments and bank to bank transfers now happening instantaneously?
Walmart is currently rolling it out. I expect others to start to as you see them surcharge credit card payments (US mobile phone providers, internet providers, etc). It's trivial to build into an app experience, with or without a partner like Plaid (for example).
> “It surprised me,” Henry said of adoption of Walmart’s first iteration of pay-by-bank, which is available online but hasn’t been marketed to customers. “It’s certainly surpassed our expectations of the amount of customers that have registered and actually use the payment type.”
> Walmart’s upgraded pay-by-bank offering will be rolled out in 2025. The transactions will occur over bank technology provider Fiserv’s NOW Network, which integrates with The Clearing House’s Real Time Payments network and the Federal Reserve’s FedNow. Until now, large retailers hesitated to launch real time payment options because many banks were not connected to an instant settlement system, meaning their customers would not be able to use the product. NOW Network aims to connect to as many banks as possible to reach 100% of deposit accounts by combining its own network with RTP and FedNow.
Walmart Plans Instant Bank Payments, Cutting Out Card Networks - https://news.ycombinator.com/item?id=41593450 - September 2024 (3 comments)
https://news.ycombinator.com/item?id=49632105 (additional citations)
https://news.ycombinator.com/item?id=49433164 (additional citations)
Can you explain to me what The Clearing House is as an organization, and how many participate in their RTP? I have tried to look this up but can only find vague promotional material by banks.
They are a consortium owned by 20 of the world’s largest commercial banks. They are a direct competitor to the Federal Reserve as it relates to payment infrastructure.
https://en.wikipedia.org/wiki/The_Clearing_House
https://www.moderntreasury.com/learn/tch
RTP has ~1260 participants as of mid 2026.
https://www.theclearinghouse.org/payment-systems/rtp/RTP-Par...
Has this lead to any user-visible changes? Like, can you pay your bills on the due date now instead of a couple of business days earlier, not having to worry about it arriving on time?
The most visible change I've seen is that I can move funds instantly between my credit union (which I maintain solely for Zelle access at this time in my financial system) and Wise, for free, others would have to chime in for more pireps/ground truth on this which apps are getting this value in front of users.
https://www.frbservices.org/financial-services/fednow-servic... maintains a list of banks and financial service providers currently on FedNow rails.
Like, can you pay your bills on the due date now instead of a couple of business days earlier
For at least ten years now.
You should visit America. It's nice.
I have. It is indeed nice. I haven't interacted with American bill payment infrastructure though during my visits. I read Bank of America website though, and it recommends sending bill payments 5 business days before the due date. Are they incorrect?
> How long does it take for an online payment to reach a biller?
> We recommend scheduling your payments to be made at least 5 business days prior to the actual payment due date on the bill. Scheduling your payments sufficiently in advance of the due date allows enough time for the biller to receive the payment and credit it to your account.
https://info.bankofamerica.com/en/digital-banking/online-bil...
Checking account "Bill Pay" features are a fusion of multiple ideas that you access through a single interface.
Adding a biller to it involves typing in the biller name, providing the account number (e.g. your credit card number) and the ZIP where your bills say to mail a check.
Big billers (like say, Chase credit cards) register with the other big banks and the handful of companies who provide white-labeled platforms for all the small banks and credit unions so that when you input one of their accounts this way, it'll match it up and turn into an electronic transfer which tends to show up pretty quickly (though I assume it does still take a couple of days to fully clear, you'll usually "get credit for it" the day of the payment).
But you can also just add literally any person or company name and address. Say, Bob Smith, 123 Example Street, City, ST 12345 and they'll just mail Bob a check on your behalf. So, those will always require days of time because they have to print and mail a physical check in those cases.
So, the generic advice has to assume it's not matched to an electronic biller profile.
In the case of most banks I've used, they hide this implementation detail slightly -- they just always have you pick the date the payment 'will be received' - and when it's not an electronic biller, you just can't pick a date that's too close.
That is likely there to allow for billers that don't accept electronic transfers. In those cases, BofA will write and mail a paper check.
That's pretty general advice, and probably the safe choice, but anecdotally all of my bill pay ACH transactions these days are executed on the due date. The only exception is if the due date is a weekend, in which case it executes on the preceding business day. It takes usually one day, maximum two before it actually shows up as a withdrawal in the source account, but my payees all recognize the credit on the day of execution.
That's the worst-case-scenario guidance. Bank of America will print and mail a check if it can't find an electronic method. I have a client who sends me his monthly payment this way.
If you're sending to a known entity like the electric company or a credit card, it's immediate.
As you, yourself noted, "I haven't interacted with American bill payment infrastructure."
Perhaps reserve your comments for things you know about.
I didn't comment; I asked a question. You are upset that I asked whether bill payments are instant?
Behind the scenes the money doesn't actually move day of. The people that accept payments are doing you a favor and crediting you before the funds settle.
If you pay a bill on the 1st, the money does not land in the payees account that day (barring in person cash transactions). Best case scenario, funds are available on the 2nd to the payee, although, more commonly, it is several days before the funds are settled. Banks will frequently paper over this showing the funds where they will eventually go, but the clearing house still hasn't finished. If you try to spend too much of that unsettled money, the bank will be glad to inform you that the money isn't actually available yet.
When people talk about instant payments they mean a few seconds, not overnight -maybe.
I used to be in charge of a payments dev team that oversaw several billion dollars of bill payments per year. There is nothing instant about moving money in the US.
Two more years until you're off the blacklist.
Is ~800B a lot? It doesn’t sound like a lot in the context of the U.S. economy.
Considering that Zelle is largely marketed for p2p and not as a general all-purpose payment mechanism, you need to compare it to Venmo or Square. For reference Venmo is on track for ~$400 billion this year.
Draw your attention to YoY upward volume trajectory in my first citation in the comment you replied to. It is still "warming up." TAM is all existing check, ACH, Zelle, and credit card volume. Takes time for folks to get the warm fuzzies and migrate to new systems.
The faster merchants offer instant payments for making payments for free and surcharge credit card rails for payments (to cover the exorbitant cost), the faster volume moves over (imho).
Brazil's Pix (https://whatispix.com/) is what desired target end state looks like imho.
Brazil's Pix payment system faces pressure from Visa and Mastercard - https://news.ycombinator.com/item?id=48052371 - May 2026 (383 comments)
Thanks for contributing some actual expertise!
What are the provisions for privacy - preventing my every financial transaction, and thus everything I do involving money, from being centrally tracked, and shared with private institutions?
And what about for preventing government from cutting people off from the financial system (without a court order)? Edit: The US government already commonly does it with non-citizens in the context of other financial systems.
At least, how does that work with FedNow if not Canada's RTR?
EDIT: (clarified and reorganized)
Disclaimer: IANAL
Access to your personal information is governed by PIPEDA for private entities and the Privacy Act for government entities. Additionally each province has its own version of the Privacy Act. Since most of the big banks are headquartered in Toronto, the Ontario's Privacy Act (FIPPA) may also have some jurisdiction but not clear.
That is a function of the legal framework and government regulations of each country an instant payment system operates in. I don't have those specifics per country.
The government can cut you off as easily as Binance asking other platforms to block transactions when called upon, for example. If you don't want to be blocked, use cash or other bearer instruments. Every other traditional finance or crypto ecosystem has a throat to choke. Show me the financial services consumer persona and use cases and I'll walk through the attack path to cut their access to the financial system, as someone who has contributed to building financial infrastructure both in traditional finance, capital markets, and crypto rails for traditional folks.
Thanks.
> That is a function of the legal framework and government regulations of each country
I want to add that it can also be built in on a technical level. Some cryptocurrency already does it (I'm not advocating unregulated monetary systems or blockchain technology, I'm just saying it's possible and already done). For example, transactions could be anonymized, with PKI-type keys available only with a court order.
It can be built, it won't be built. There is no material demand or incentive to require building it. Crypto primitives, in this context, are just ceremony on top of legal systems. "You are trying to solve a people and politics problem with technology."
https://xkcd.com/538/
Sadly, I could imagine it won't be built, or not soon, but things do change; people make change.
I think govermnment and tech leaders greatly underestimate demand for privacy (confidentiality). People in polls consistently say they are worried about government and corporate surveillance and want privacy; you can see the response to Flock cameras right now. Apple, the most successful computer company, clearly sees demand for it, devotes extensive engineering to it, and markets products on that basis. People in other places (e.g., the EU) have passed laws with much greater privacy protection.
The public doesn't understand what's happening - how they are tracked (e.g., all electronic monetary transactions) and what the power/impact of that surveillance is - and they are givin no path forward but to submit. When they have a path (again, Flock, Apple, other countries), they take it. They need tech people to take the lead, educate people in plain English (not 'PKI', etc.), and develop options technical and political - politicians generally are non-technical too.
The solutions require both legal and technical components. With no technical limitation - if data is open on the laptops of everyone in the legal / finance / national security communities - the legal constraints won't work; people will use the data anyway. If there is no legal restriction, they'll obtain access anyway.
> “Canada is the first G7 country to deploy a real-time payment system with mandatory centralized fraud services for use at launch.”
Looks like everything will pass through a single clear text layer managed by the Canadian Government.
Totally OT, but such a glorious name of the guy in the middle of the top photo, "François-Philippe Champagne". If I read that in a novel I'd be rolling my eyes.
In Canada he's also affectionately known as Frankie Bubbles.
Making Mr. Champagne the minister of Finance is a great nomative determinism, only slightly dulled by the fact he's been minister of like 5 other things over his career
Just as long as they don't make him the minister for health. Transport might also be a bit dubious.
basic something like alipay or wechat pay? like china did at least for 10 years? at a country scale?
anyway they are super useful, to personal users and for stores/small shops/....when traving abord, i have to carry a visa/mastercard,and worried i might lose my card somewhere, or got stoled. i know apple pay is pretty good, but i am not a fan of apple product and i guess it's not only me ( or the price issue), a universal online payment systems, run as an app, and qr code is the right way for basilly every country.
Alipay and wechat pay are not settlement mechanisms. They act more like wallets that you can transfer money in and out of, and there is very little interoperability because of this.
India's UPI and Brazil's Pix are better examples.
Canada's RTR has no chargebacks so it's not comparable to visa/mastercard where you can yank the money back up to 6 months later if the seller doesn't send you what they promised. Pretty much every modern phone can do tap to pay, you don't need an iPhone
> Pretty much every modern phone can do tap to pay, you don't need an iPhone
but you do need a device to read the phone right? to support all kind of difffent payment system. compare to a simple picutre printed QR code, which one is more convenient?
nope you can just tap your phone on the seller's phone: https://squareup.com/help/us/en/article/7786-get-started-wit...
Same way you can tap your credit card on their phone to pay them. It's the same protocol, just with biometrics on the buyer's phone so the limit is $50k instead of $10k
still need a credit card? or what if the vendor using a andriod phone and the buyer using an iphone want to useapple pay?
i see no better than a phone(any phone) + payment app + qr code. no need to carry the credit card.
Dude it's called "tap to pay": https://en.wikipedia.org/wiki/Contactless_payment
A credit card, an iPhone behaving like a credit card (AKA apple pay), and an android phone are all using the same protocol. Why don't you just try it? Pretty much every grocery store, gas station, etc accepts tap to pay. Any phone or card will work with any terminal. Like I said, the only difference between a card and a phone is that the latter has a $50k limit instead of just $10k.
I really hope US equivalents gain more traction. For too long, we've borne inflated transaction prices and financial censorship.
Not so hot on the name, initially thought it was some kind of train system payment thing. But that just lends to the coverage of this out in random mainstream media confusing consumers - not really a consumer thing but an infrastructure thing on the backend for banks/institutions. On the consumer side many will immediately think of Interac eTransfers, which this has little to do with as far as consumer experience, but it will also use this on the backend for things. Carry on.
Yeah, why on earth would they shove "Rail" into that name? I'm sure it makes sense internally, but as external name it doesn't make much sense. None of the people are even using the rail/train analogies that are right there, then what's the point even?!
> "Payment rail" is a very long established term og art.
Yes, by all means, use the existing terms internally, but when you launch things, remember you work in somewhat of a bubble, and figure out names that make sense to people. 99% of the people aren't gonna know about "payment rails", and when they hear "rails", they either think about trains, or they're a programmer and starts thinking about Ruby. And then of course there is a third group of people, like the ones that say "Payment rail is actually an established term".
https://en.wikipedia.org/wiki/Payment_rail
"Payment rail" is a very long established term og art.
How dare you make people learn things!
Eventually I may learn to spell 'of' on my phone.
> > "Payment rail" is a very long established term og art.
> Yes, by all means, use the existing terms internally, but when you launch things, remember you work in somewhat of a bubble, and figure out names that make sense to people.
This is to be used by people in the same bubble, and it does make sense, it's about as descriptive as it could be.
I'd like Up-Goer Five-like language to be used everywhere.
99% of people aren't going to need to touch this. This is underlying infrastructure for banks to build on top of. Most people don't know what a clearing house is or what Payments Canada is or that most of their money passes through them, but they are still perfectly capable of understanding what direct deposit does - which relies on Payments Canada's clearing house.
This isn't aimed at 99% of people. This is an interbank tool.
Agreed! I was thinking, "That's funny, I thought Canada's rail company was called ViaRail".
The name threw me off as well. This is what happens when you don’t have a good marketing team.
is it similar to Turkiye's Fast ?
So no more visa fees?
Wait whats new then, dont they have interac, its at least real time on the surface and you can bind cards, bank accounts etc to it, so what am I missing?
I believe it's a show-off of "progress" on the fintech side. Not saying it's bad and for sure some good will come out of it. But a lot of government projects are just how money is created in Canada and to keep the economy moving. It makes Canada look important and enhances the "Canada" brand. This can be dangerous as it can give you a feeling of accomplishing something without really innovating anything.
Official release: https://www.payments.ca/canada-launches-real-time-rail-bring...
Updated.
canadian pix?
Interac (eTransfer/EMT) is a great system that has already rolled out nation-wide.
Unfortunately its utility is curtailed severely if your bank doesn't trust your mobile OS (LineageOS, for me). For security purposes, my bank (RBC) triggers identity checks every time I try to send an EMT, and even after sending selfies, drivers licences, etc. — it still rejects the transfer.
So, security at the cost of all utility.
I have now resorted to transferring money between my accounts using paper cheques... like it's the 90s. If somehow they deny me cheque deposits I'll have to use an ATM and walk the money to the other bank. Given how there are now banks that don't even have branches, this could be a major problem in the future.
This Real-Time Rail system sounds promising, but that's not the link that'll kill it for everyone.
99.999% of people don’t root and install custom operating systems on consumer hardware. The bank derives immense security value by enforcing this, at the expense of your hobby installation.
I don't think this is as unusual are you're implying it might be.
I've moved funds ranging from 10k to $1m between banks in Canada much more than once, and every single time, I go to one and get a draft and drive that draft over to the destination bank. It's just easier...and its absurd.
When you show up to get a cashier’s check, the teller has very strong proof that you’re not a scammer sitting in Malaysia. And you’re presumably OK with waiting the 1-3 days for the cashier’s check to clear.
This might be true in Canada too: the real estate industry down here is entirely dependent on wire transfers, and yet they are absolutely terrified of wire scams. Maybe if FedNow had existed when I bought my place, I could have gotten a draft slip from my bank and driven it over to the title company.
While i agree it is uncommon - i disagree that banks get much security value from this. Most banks let you do etransfers from a desktop computer just normally. I dont really see what attacks banning rooted phones stop when you can just use your normal linux desktop.
Exactly my thoughts and why I said what I said here https://news.ycombinator.com/item?id=50436011
Yeah what did you need that freedom for anyway?
The utility is preventing malware bundled with pirated apps from transferring away your personal savings in a hard-to-reverse instant transfer.
You, as a technically savvy user, could choose to use a dedicated device with an acceptable security posture for your electronic transfers.
> You, as a technically savvy user, could choose to use a dedicated device with an acceptable security posture for your electronic transfers.
Not really, I'm forced to use e.g. RBC because that's where my employer sends their matched retirement savings funds.
They mean use an old, vanilla non rooted phone that doesn't set off every alarm in the building for this kind of stuff
Oh that makes more sense, I somehow read "device" as "service".
Weird... I've never had problems using eTransfer from a browser (firefox) on my computer (linux)... which has got to be as untrustworthy a device as there is.
For the last several months, eTransfers initiated from my desktop browser (Firefox on Linux, same as you) have required confirmation via the RBC app on my iPhone. Definitely seems like they have multiple scales of trustworthiness for people/devices/activity. Kind of wish they'd be more transparent about what they are, but I guess that sort of transparency can easily become a vulnerability.
My phone app isn't verified, so it just sends an RCS message to my phone number. Works for now, but who knows what'll happen.
These are also obnoxious - RBC has checked whatever box makes Google's RCS web app refuse to render them, so if I'm am my computer, now I have to get up and go find my phone so that I can manually input the code.
Create a separate firefox profile, all defaults, no addons, and use that only for RBC/banking.
This can easily be launched from the command line via args, when needed.
Unless you let all the tracking scripts, and auth scripts load, it thinks you're evil.
Similar experience. No real problems. However, RBC limits the amount I can transfer to 2k per day from browser and like 5k per day from the app.
I don't send anything from TD, but if I buy anything online half the time it forces a 2FA which requires signing into the app and confirming the transaction. I imagine signing into the app might not work nicely if I was on LineageOS.
I've never used the TD app, but the TD website seems to be designed to be as inconvenient as possible, down to disabling pasting on 2FA input fields.
Used to be the case, yes. However even web-initiated EMTs trigger device confirmation. RBC seems to have made this mandatory for at least my account as of this summer.
Unless I'm missing something I'd expect Payments Canada to have similar issues for you, since it'll still be the banks that you interact with. What changes is the settlement and messaging system between the banks.
can't you just use the web interface?
Interesting, did you try other apps if they work on grapheneos/lineageos like koho or wealthsimple? If they do, maybe you can use it as an intermediate tool.
Bieng in a similar situation, my back up plan has been to keep a phone that is used exclusivly for personal banking and pull the sim and shut it off when not in use. Currently I have a much fiddled with android phone and a browser that will interact with the banks web sites for banking. I get a lot of paper cheques and convert to cash for much of my personal spending, and my hope is that the new system will facilitate timely clearance of paper cheques and actualy make them more atractive.
High on self-approval but low on details. Are the transactions reversible? For instance, can a scammer convince an elderly person to transfer money to their account (instantaneously) and then split it and send the money to partners in crime (also instantaneously)? What is the process for conflict resolution, for cases like the product fully paid for (instantaneously) doesn’t work as advertised? How much information on payer identity is being shared with a recipient, to be recorded, cross-matched and sold to the highest bidder?
Sometimes I think that the slow speed of moving money is a feature, not a bug.
> delivery partners CGI, Deloitte Canada, IBM Canada
oh no
Just like the EU started their independent EU-wide (500 million people) payment network to become independent of the American payment monopolists. It took a fascist US admin to get the move world-wide rolling to decouple from the US and towards smaller sovereignty, but ultimately it is for the better.
This project started in 2016. It just took a decade to roll out.
If you are referring to SEPA Instant, thats not true: It started operating in 2017, though not many participants back then. What happened last year/this year, is, thats its mandatory for banks to offer it across the EU.
I'm talking about Canada, which started formally planning this in 2016.
The US federal government also released their own version of this in 2023 (US FedNow).
It's been an obvious next step for a while now.
Far more likely was the election of a banker as PM. He did chair both the Bank of Canada and the Bank of England. No doubt he knows how to get banks to do things.
I kept looking for something referencing the railways. Was disappointed.
EU has been down this road with SEPA Instant Credit Transfer since 2017. Two lessons from that rollout worth watching for Canada:
1. Reachability matters more than speed — SEPA Inst was technically live years before most PSPs actually supported it. A real-time rail no-one connects to is just a slower rail with marketing.
2. ISO 20022 as the message format was the right call but underestimated operationally. Smaller banks and PSPs still struggle with the schema's flexibility — same transaction encoded two different "valid" ways is a real integration tax. Canada using 20022 from day one is smart; publishing strict usage guidelines beats expecting consensus.
Does it require an email? Because if it does you already failed. If you don't increase privacy protections as well, then we don't care.
So FedNow for Canada, meaning you can't use this outside of Canada at all.
Crypto blockchains like Solana, XRP, Stellar and Tempo on the other hand can be used anywhere worldwide, 24/7 and sends stablecoins like USDC in seconds with extremely low fees.
Crypto blockchains are useless for these kinds of transactions because in the real world people make mistakes, get scammed, or myriad other things that requires a transaction to be reversed.
No different to a bank transfer. You understand that they cannot be reversed either?
There's nothing technically requiring a bank transfer not to be reversed. I can appeal to my bank, legally, and to the receiving bank.
This happens all the time.
Suppose you transfer $1000 to me on Monday via ACH (the old thing - pardon my American terminology). If I'm lucky, I can wire that money out of my account, or pull it out in cash, on Wednesday. Maybe Thursday. During that time it's definitely possible you can get the banks to reverse this transfer.
If payment is instant, what that has to mean is that the funds are actually made available to me right away. If you transfer $1000 to me on Monday, and 10 minutes later I've drained my account of funds and disappeared, how can that be "reversed"? Is one of our banks going to just eat it?
If payment is "instant, but the funds are held for several days and can't be spent or transferred" then the payment isn't instant in any meaningful way.
There's a clear reason why they don't want to waste their time chasing other banks in recovering your $100 that you sent by mistake and instead warn you to check everything.
The point is they know a transfer cannot be reversed, especially when the money has been spent already.
Even a bank who sent out £130M [0] in error to multiple people still cannot recover all of it after 4 years.
[0] https://www.theguardian.com/business/2021/dec/30/santander-b...
Pix has a reversal mechanism precisely for errors, fraud, etc
As understand it, these mechanisms do not help in the case of fraud or disputes. No way to reverse transactions.
You can't reverse a bank transfer either and payment services such as Zelle are a favorite for scammers and also cannot be reversed either.
So you have not made a point here.
The bigger take-away is that relying on US companies here, is very risky. Canada understands this. Europe does not (at the least most politicians in Europe do not understand the problem). I'd almost suggest canadian politicians to help run the EU for a while, just to fix numerous issues that arise due to a lack of understanding. Canadians really understand the problem domain soooooo much better than Europans. This also includes a nuclear arsenal - both the EU and Canada need their own arsenal (details need to be mapped out, of course, but just blindly relying on the USA is a losing option; you can see it now with Ukraine, where the USA blackmails Ukraine to give up territory. Agent Krasnov is doing his dirty deed and will get billions from the mini Darth Vader in Russia. Yuri explained this in 1984: https://www.youtube.com/watch?v=9apDnRRSOCk and he was spot on. A shame he is not among us anymore, unlike Putin).
I don't know why anyone would trust the Liberal government with a payment system, after they went rogue and froze about 200 bank accounts without court orders during the convey protests using the emergencies act which has since been deemed illegal.
> Using powers granted under the Emergencies Act, the federal government has directed banks and other financial institutions to stop doing business with people associated with the anti-vaccine mandate convoy occupying the nation's capital.
> ... financial institutions are required to monitor and halt all transactions that funnel money to demonstrators — a measure designed to cut off funding to a well-financed protest ...
If you think they wouldnt abuse this, good luck to you.
https://www.cbc.ca/news/politics/emergencies-act-banks-ottaw...
https://www.cbc.ca/news/politics/emergency-bank-measures-fin...
https://reclaimthenet.org/court-rules-trudeau-freezing-civil...
With or without this new payment system, they can order the banks to freeze your account or block transactions (as your example shows they were able to do before this payment system was rolled out).
While it may have been since deemed illegal, they found a few of those trucks to be armed to brim with munitions. It was strong reaction to try and prevent a violent insurrection on Parliament Hill, which was still fresh on many Canadians minds from Jan 6.
> why anyone would trust the Liberal government ... after they ... froze about 200 bank accounts ... during the convey protests
Wasn't that almost 5 years ago - was it the same government? Is there reason to believe it's the Liberals and not the prime minister at the time, or that the Conservatives would be different?
You're conveniently leaving out that the PEO report found they were justified in using the emergency powers act since it was a complete failure of the local and provincial police to act, so they had to do something.
https://www.cbc.ca/news/politics/poec-report-released-friday...
So hey, maybe we should trust the government (who does all federal payment systems) with a new federal payment system.
TL;DR: this is not Brazilian Pix or Indian UPI.
Meh, just another "payment option".
These payment systems need network effects, otherwise they just won't matter. Another private provider won't generate these effects. Just look at the list of participants, they're small players in Canada's marketplace. They won't generate net effects.
Besides, in times of renewed imperialism it is very crucial that a country has full control of their payment systems.
And, at last, they must offer guarantees that there will be no friction and won't be subject to enshitification.
So, what Canada needs is a system implemented, enforced and managed by the government, like Brazil's Pix and India's UPI.
> So, what Canada needs is a system implemented, enforced and managed by the government, like Brazil's Pix and India's UPI.
Payments Canada is a corporation fully owned by the government and overseen by the Department of Finance. It was formed by an Act of Parliament. Short of rolling it into the department of finance it couldn't be more of a government effort.
Also, the small partners are the launch partners. The Big 6 are part of the second phase of rollout in 2027. The projection is that 90% of all canadian bank accounts will be covered in the next year.
Why not? Payments Canada isn't a "private provider" like Interac. This new payments system is also ISO 20022, as is Pix. Although high level, their list of features seems close to Pix:
* The real-time clearing and settlement component
* The real-time exchange component
* Third party exchanges flowing through the clearing and settlement component
* Centralized fraud solution
https://www.payments.ca/systems-services/payment-systems/rea...
> This new payments system is also ISO 20022, as is Pix.
This is a good step. But the devil is in the details.
And I don't see the details that matter the most:
* Network effects: will it be widespread (from city buses to fruit stands)? Compared to UPI and Pix, Interact has a pathetic history of adoption. What sets RTR apart from Interact?
* Friction: Will it be instantaneous and free of charge? Can it be used by illiterate persons? QR codes? NFC tags?
In Brazil/India those payments systems are used by the most informal of agents: fortune tellers, prostitutes, merchants in crime ridden favelas, ... This is what real mass adoption looks like.
Being from Brazil I'm well aware of the shortcomings of Interac!
Its early to say if this new payment system will be "Canada's Pix" or not, but to me it seems that's the direction they're going:
- The release statement takes great pains to make it clear the payment system is "instantaneous" or "within a few seconds", unlike Interac - Same ISO standard as Pix - Some sort of centralization (they just say "centralized fraud prevention"; I'm assuming that means some sort of BoC coordination. Also: "exchanges flowing through the clearing and settlement component")
And most importantly, unlike Interac (a private company), this comes from a quasi-public company with a clear government mandate.
I think your two points will, in this case, be a question for the financial institutions and fintechs who jump onboard here. RTR won't be immediately consumer-visible, but if FinTech A starts offering some consumer-facing elements ala UPI/Pix using their newfound access to RTR to bypass the traditional banking system and settle directly, then we get there. I'd look at this as not a consumer product, but a scaffold that allows consumer products to be built ontop of a new system that should, hopefully, allow an end-run around the stuffy traditional infra that is Canadian banking.
Adoption of NPP and PayTo in Australia is moving at a snails pace. NPP came out in 2018. Don't underestimate how sticky people and institutions are with their habits.
Payments Canada is a Crown corporation.