Canada's Real-Time Rail Could Save Up to $14.5 Billion

Payments Canada's Real-Time Rail is due in the fourth quarter: 24/7/365 settlement, funds available at once, the same class of system already running in more than 70 countries. A new estimate from Peter MacKenzie, Thorsten Koeppl, and Jeremy Kronick puts ten-year savings at $5.3 billion in a pessimistic case and $14.5 billion in an optimistic one. Their 2023 range was $1.7 billion to $7 billion over five years.

The money comes from resource costs and from float, the stretch when a payment has left one account and is not yet spendable in the other. Most of the resource savings are cheques dying faster, then cash, with EFTs peeling off later. RTR is more expensive to run at first because of fraud controls and instant settlement. Average cost per payment falls as volume rises. The overnight-repo to T-bill spread has narrowed since 2023, so the float prize is smaller than in the last pass.

Canada already has Interac e-Transfer, so adoption looks more like the UK's slower fast-payment ramp than Australia's, which filled an empty hole. Rent, wages, insurance, government payouts, SME suppliers, me-to-me transfers: the use case is unlocking cash that is already yours.

Float is purchasing power sitting in a pipe. Instant settlement is that cash showing up today. The rail is the cheap part. Using it is the rest.