Update on Cost Savings from the RTR

To: Canadian financial institution customers
From: Peter MacKenzie, Thorsten Koeppl and Jeremy M. Kronick
Date: August 31, 2026
Re: Update on Cost Savings from the RTR 

This is the first of two Intelligence Memos looking at the importance of adopting the Real-Time Rail for retail payments in Canada.

Payments have increasingly become more digital in the global economy, allowing people and businesses to transfer funds faster, more efficiently and often also more safely.

In response, Payments Canada took on a large modernization initiative over the last decade. It successfully overhauled our wholesale payment system – think large financial institutions transferring funds to other large financial institutions – by introducing a Real-time Gross Settlement System called Lynx, upgraded its messaging systems to global standards, and has continued modernizing its retail batch clearing system.

The next modernization step is the Real-Time Rail (RTR), scheduled to launch in the fourth quarter of 2026. Interac is to provide the exchange component that carries payment messages, and IBM to the real-time clearing and settlement component. It will give Canada a fast payment system (FPS) that allows for 24/7/365 sending and receiving of funds that are immediately available, similar to systems now operating in more than 70 countries.

In 2023, we estimated that introducing the RTR could save between $1.7 and $7 billion over the first five years after launch. These estimates combined resource-cost savings from more efficient payment processing with savings from reducing “float” – the period during which funds are temporarily unavailable to recipients. With RTR looming, we thought it useful to update our estimates.

We follow the original methodology of Koeppl and Kronick (2023). The first step is to project payment trends over a particular horizon for four different payment methods: cash, cheques, Electronic Fund Transfers (EFT) and online transfers. EFT transactions include direct debits such as pre-authorized payments, and direct credits such as bill payments. Online transfers include Interac e-Transfers as well as other services such as PayPal. The second step is to simulate how the use of these payment methods is affected by the introduction of the RTR. And finally, we use estimated cost functions to assess resource-cost savings and savings arising from the reduction of float.

For our update, we made the following changes:

After 10 years, our results indicate a range of $5.3 billion in the pessimistic case to $14.5 billion in the optimistic case. The main resource-cost savings arise from phasing out cheques and reduced cash usage when the RTR is introduced, with EFT transactions being replaced more significantly during the later stages of adoption.

While these aggregate gains tell an important story, they are best understood through specific use-cases. These include, among others, Me-to-Me transfers between a person’s own accounts, rent payments, insurance disbursements, government payouts, real estate and auto down payments, just-in-time payments to SME suppliers, accessing earned wages earlier, and pay-on-delivery. The gains will come from unlocking funds for consumers and businesses, accelerating the demise of costly cheques, and improving how small businesses pay suppliers and get paid.

It remains clear that Canadians should care about the arrival of the RTR. Our new estimates confirm that resource-cost and float savings alone offer significant gains for Canadian households and businesses, and with launch scheduled for the end of 2026, those gains are close at hand. They are also only the beginning of the potential gains: the RTR’s open access and richer ISO 20022 data set the stage for new services and use cases, and for the economy-wide gains we take up in our companion Memo tomorrow.

Peter MacKenzie is a senior policy analyst at the C.D. Howe Institute, where Thorsten Koeppl, professor of economics and Robert McIntosh Fellow at Queen’s University, is a fellow-in-residence; and Jeremy M. Kronick is CEO.

To send a comment or leave feedback, email us at blog@cdhowe.org.

The views expressed here are those of the authors. The C.D. Howe Institute does not take corporate positions on policy matters.