1. Home
  2. Banking
  3. What is Payments Canada?
Published June 28, 2022

What is Payments Canada?

Payments Canada facilitates the secure movement of your money when you transact via cheque, debit, wire transfer, or e-transfer.

In 2021, an average of $539 billion in financial transactions were processed per business day in Canada. That’s more than eight billion transactions for the year, all of which were cleared and settled by Payments Canada, the public purpose, non-profit organization that provides the nation’s payment infrastructure.

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.

What is Payments Canada?

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.

How Payments Canada work

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:

  • Clearing: First, a payment order is sent between institutions or accounts, ensuring the funds are available and confirming that the transaction satisfies all the criteria for processing.
  • Settlement: This is when the money transfer takes place.

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 settled overnight. The next morning, each direct clearer’s total aggregated transactions from the day before will result in a net debit or credit position with the Bank of Canada.

The institution then sends or receives these bulk payments through Payments Canada’s other arm: 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 frequently asked questions

Is Payments Canada a Crown Corporation, government organization or agency?

Payments Canada is a not-for-profit organization that was created in 1980 under the Canadian Payments Association Act. It is not a government organization, but it underpins the entire Canadian economy and its members which include the Bank of Canada to fully fund it’s operation.

Which banks are members of Payments Canada?

The Bank of Canada and all chartered banks operating in Canada are considered mandatory members of Payments Canada.

Non-mandatory members include trust and loan companies, credit unions, federations of caisses populaires, other deposit-taking institutions, life insurance companies, securities dealers and money market mutual funds.

Payments Canada had 111 members at the end of 2021.

About the Author

Nora Dunn

Nora Dunn is a former financial planner, and has been a digital nomad since 2006. On her site,, she decodes financially sustainable long-term travel. She's on FB and IG…

Read More
Are You Ready to Switch to a Digital Wallet?

Are You Ready to Switch to a Digital Wallet?

Mobile phones have forever changed how we communicate, and they’ve also started to have a powerful influence on the way we pay for things. A steadily growing number of merchants across Canada embrace mobile payments, and digital wallets are slowly replacing physical wallets, especially among younger Canadians. What is a digital wallet? A digital wallet, […]

How Contactless Payments Work in Canada

How Contactless Payments Work in Canada

New technology continues to change the way Canadians make purchases. The use of contactless payments increased by 13% in 2020, according to a report from Payments Canada. Furthermore, approximately 37% of Canadian consumers surveyed said they avoided shopping at places that didn’t accept contactless payments in 2020. Clearly, the COVID-19 pandemic heightened interest in contactless […]

Interac e-Transfer: How to Send and Receive Money Electronically

Interac e-Transfer: How to Send and Receive Money Electronically

Nearly nine in 10 Canadians (88%) have used Interac e-transfer, according to a March 2022 survey commissioned by Interac. And, as of April 2022, Interac had processed more than one billion transactions across a 12-month period. This Canadian interbank network has facilitated electronic transfers of funds since 2003. As a result, sending and receiving money […]

How Does PayPal Work?

How Does PayPal Work?

PayPal is a popular way to send or receive money, and you can also use it to make online purchases at select merchants. Here’s how PayPal works in Canada. » MORE: How digital wallets work What is PayPal? PayPal is an online payment system used primarily as a way to process payments for online businesses, […]

Back To Top