What Is Payments Canada?

In 2024, an average of $424 billion in financial transactions was processed per business day in Canada.

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That’s part of the $107 trillion cleared and settled over the year, all handled by Payments Canada, the public-purpose, non-profit organization responsible for operating the nation’s payment infrastructure safely and securely.

Although you probably won’t notice or think about Payments Canada in your daily financial life, it can be helpful to understand how it helps you manage your money.

How Payments Canada works

Every time you use your debit card or credit card, make a wire payment, or even write a cheque, money moves from one account or financial institution to another. Payments Canada ensures this money arrives at its destination safely and securely.

Payments Canada owns and operates the entire payment system to clear and settle financial transactions, as well as the governing bylaws and rules.

The Canadian Payments Act is the overseeing body that created Payments Canada, formerly known as the Canadian Payments Association. The act states the legal requirements, mandates, eligible members, and the responsibilities of the Minister of Finance who oversees them.

Payments Canada also develops new technologies to facilitate payments, as per the mandate.

Payment Canada establishes bylaws, rules, standards, and procedures for the operation of Canada’s payment infrastructure. As part of the payment process, every transaction goes through two steps:

Additionally, Payments Canada owns and operates ACSS and Lynx, the two systems that enable clearing and settlement.

ACSS (Automated Clearing Settlement System)

ACSS clears 99% of everyday transactions, making up 13% of daily transaction values that include pre-authorized debits and credits, direct deposits, point-of-sale transactions and cheques.

Payments Canada’s participating members are grouped based on their responsibilities, either as direct or indirect clearers. About a dozen financial institutions are direct clearers. To become a direct clearer these members must have settlement accounts with the Bank of Canada. Indirect clearers operate through direct clearers.

All the transactions are processed through the ACSS system throughout the day and the net positions are settled the following morning . The next morning, each direct clearer’s total aggregated transactions from the previous day result in a net debit or credit position with the Bank of Canada, which is settled through its settlement account

The resulting bulk payment is then sent or received through Payments Canada’s other system, Lynx.

Lynx

Lynx, which replaced the Large Value Transfer System (LVTS) in 2021, is the electronic wire system that transfers large amounts of money between financial institutions.

Only direct clearers of Payments Canada can use Lynx to handle batched transactions by these institutions to settle on behalf of their customers as well as the indirect clearers who use them as agents.

Payments Canada continues to support the Bank of Canada’s payment-system research, , including work on modern payment networks and policy updates for Canada’s economic future, while exploration of a central bank digital currency now remains at the research stage.