Canada’s Real-Time Rail Moves Closer to Launch: RTR By-law Officially Published

On July 1, 2026, the federal government published Canadian Payments Association (Payments Canada) By-law No. 10 — RTR (the RTR By-law) in the Canada Gazette, Part II, marking a significant milestone in the launch of Canada's Real-Time Rail system (RTR).

Key Takeaways:

The new RTR By-law provides the foundational legal framework for Payments Canada's real-time payment system and is scheduled to come into force on August 24, 2026. Payments Canada’s rules governing RTR (the RTR Rules) have also been approved and will come into force on the same date.

More importantly, the RTR By-law gives legal shape to several of the core policy choices underlying Canada’s payments modernization agenda:

• broader access to national payment infrastructure;
• transition from the higher-risk batch-deferred net settlement to real-time gross settlement;
• enhanced operational resilience; and
• balancing innovation with system-wide risk controls.

The publication of the RTR By-law follows years of consultation, policy development, industry engagement and infrastructure build-out, as we previously discussed in Payments Canada Launches Consultation on RTR Bylaws, Rules and Policy.

A New Legal Framework for Real-Time Payments

The RTR By-law creates a comprehensive framework governing the operation of the RTR system and the rights and obligations of its participants.

Among other things, the RTR By-law:

• establishes the RTR system as a Payments Canada-owned and operated real-time exchange, clearing and settlement system;
• contemplates different types of participants in the RTR system, including direct participants, settlement agents and indirect participants;
• establishes emergency powers and business continuity mechanisms;
• details the obligations as between participants, payees and Payments Canada; and
• incorporates consequential amendments to existing Payments Canada by-laws.

Direct and Indirect Participation

One of the most important features of the new RTR framework is its two participation models—direct and indirect participation. Under the RTR By-law:

Direct Participants

• hold settlement accounts at the Bank of Canada; and
• settle RTR payment obligations through those accounts.

Indirect Participants

• settle RTR payment obligations through a designated settlement agent.

The model aligns with the broadening of Payments Canada’s membership to allow a wider range of members to access Canada’s payment rails. This is demonstrated by the marked increase in non-bank members in recent months, which have included, among others, credit union locals and Fintechs. The RTR By-law also contains provisions governing settlement agents, designation requirements and termination procedures.

The distinction between direct and indirect participation will be strategically important. Direct participation may offer greater control over settlement, risk management and operational arrangements, but it also requires the participant to satisfy more demanding eligibility, liquidity, technical and operational requirements.

Indirect participation may provide a more accessible path for newer entrants, including some Fintechs and payment service providers, but it will also require careful negotiation of settlement agency arrangements, net debit caps, service levels, risk allocation, data access, termination rights and contingency arrangements.

Settlement Finality

A central policy objective reflected throughout the RTR By-law is the mitigation of credit and liquidity risk. In the RTR system, clearing and settlement can only occur once all required conditions are satisfied, including the availability of funds. Subject to limited exceptions prescribed in the RTR Rules, settlement is final and irrevocable between participants. 

This is particularly important in a real-time environment. Unlike batch-based systems, real-time payments compress the window for fraud detection, liquidity management, exception handling and operational intervention.

The By-law’s emphasis on prefunded or condition-based settlement is therefore central to reducing credit exposure between participants and supporting confidence in the irrevocability of RTR payments once settled.

Funds Availability

The RTR By-law also contains provisions that require receiving RTR participants to make payment funds available to payees within the narrow timeframes established by the RTR Rules, subject to limited exceptions. Accordingly, participants will need to ensure that their operational processes, fraud controls and customer-facing procedures are aligned with the RTR specifications for funds availability.

At the same time, the funds availability requirements will need to be implemented against the backdrop of heightened fraud, scam and authorized push payment risks associated with instant payments.

Participants will need to design controls that are fast enough to meet RTR timing requirements while still supporting sanctions screening, anti-money laundering monitoring, fraud detection, exception handling and customer communications. This may require a reassessment of existing fraud models, customer journey design and back-office escalation procedures.

Payment Refusal

Section 45 of the RTR By-law functions as an important exception-handling and payment refusal provision. It recognizes that, while receiving participants are generally expected to make payment amounts available to payees within the timeframes established by the RTR Rules, there are specific circumstances in which a receiving participant must instead follow the applicable Rules procedures rather than complete funds availability.

These circumstances include where the payment message contains specified errors or omissions, requires currency conversion, contains suspected malicious or harmful content, cannot be processed due to circumstances beyond the participant’s control, is affected by restrictions on the payee or account, must be withheld to comply with law or a court order, or is subject to the payee’s request that the funds not be made available.

In this way, section 45 provides the legal basis for receiving participants to reject or otherwise refuse to make available certain RTR payments in defined exceptional circumstances, while ensuring those refusals are handled through the procedures established under the RTR Rules.

Participants will need to ensure that their procedures related to exception handling are updated to comply with the RTR By-law and Rules, including having the necessary specificity for internal teams to be able to identify when an exception applies, including setting out clear parameters for what is considered “malicious” or “harmful” content.

Third-Party Exchanges

In addition, the RTR By-law contemplates the possibility of payment exchanges operated by third parties (Third-Party Exchanges). A payment exchange is defined as an electronic system that facilitates the exchange of payment messages.

Third-Party Exchanges will be required to enter into an agreement with Payments Canada, and meet certain other requirements, but once approved, will be permitted to submit settlement instructions to the RTR system for clearing and settlement.

While the practical significance of this model will depend on how the RTR Rules and approval processes are implemented, this aspect of the framework presents potential opportunities for innovation by allowing broader payment ecosystem participants to leverage the RTR clearing and settlement infrastructure while maintaining Payments Canada's risk management controls.

Emergencies

The RTR By-law also includes an emergency framework that is important for operational resilience. It recognizes that disruptions may affect the RTR system as a whole or a participant’s ability to access or use the system.

In those circumstances, the President of Payments Canada may take specified actions to manage the disruption, protect the integrity of the RTR and support continuity of clearing and settlement. When read together with the RTR Rules, these emergency powers provide a framework for coordinated action by Payments Canada, the Bank of Canada and RTR participants in response to potential disruptions or other emergencies.

Related Legislative Amendment - Immunity for Payments Canada

Separately, Bill C-30 An Act to implement certain provisions of the spring economic update tabled in Parliament on April 28, 2026, which received Royal Assent in June, recently amended the Canadian Payments Act to provide immunity for Payments Canada, its directors, its officers, its employees and other individuals whose services are engaged by it, from any civil liability, other than in contract, for anything done or omitted to be done in good faith in the administration or discharge of any powers or duties conferred under that Act.

This amendment is relevant in the RTR context and aligns with Section 4 of the RTR By-law, as Payments Canada will play a central role in operating, administering and enforcing a system that is expected to support high-volume, high-speed payments on a continuous basis. The immunity provision may provide additional legal certainty for Payments Canada in carrying out these statutory functions, while preserving contractual remedies where applicable.

What’s Next?

The coming into force of the RTR By-law on August 24, 2026 is expected to coincide with a critical phase of RTR implementation. After years of modernization efforts, RTR in Canada is now finally moving from planning to implementation, and instant, data-rich, 24/7/365 payments are mere months away, with anticipated launch set for Q4 of 2026. The RTR By-law is more than a technical rulemaking milestone - it is a key legal building block for a more open, real-time and risk-sensitive Canadian payments ecosystem.

For banks, credit unions, Fintechs, payment service providers and other prospective participants, attention should be focused on the practical implications of the RTR By-law and RTR Rules, fraud management expectations, operational readiness and customer-facing implementation activities.

Prospective participants should be assessing eligibility, settlement arrangements, technical connectivity, operational readiness, fraud and risk controls, exception handling, customer disclosures and internal governance.

Customer-facing implementation will also be critical. Participants will need to consider how RTR payments are described in account agreements, online and mobile banking interfaces, customer disclosures, fraud warnings, complaint-handling processes and customer support scripts. In an instant-payment environment, clear customer communications may become an important part of both compliance and fraud-loss mitigation.

Please do not hesitate to reach out to the authors of this post or your legal professional at McCarthy Tétrault LLP for assistance with navigating the legal and compliance aspects of Canada’s payment systems, including participation in RTR.

For more information about our firm’s Fintech expertise, please see our Fintech group’s page.