Currency: CAD

RTGS: LVTS – Large Value Transfer System

Message format currently in use: SWIFT MT

ISO migration planned? Timeline: LVTS will be replaced by the new Lynx system in August / September 2021, initially supporting SWIFT MTs only. Lynx will migrate to ISO 20022 starting November 2022. Payments Canada is still developing an on-boarding approach for ISO messages with the new system, and will share further details with the participants in due time.[1]

Proprietary “Standard 005” format, in use for batch payments (for ACH-like low value payments) will eventually migrate to ISO 20022 as well but no timeline for completion is available yet.

On a side note, Canada will also develop a real-time payment system (Real Time Rail – RTR) that will adopt ISO 20022 as its native format when launched (date not announced yet).

Governing body of the migration: Government of Canada through Payments Clearing and Settlement Act and also Payments Canada Act.

Coexistence vs big Bang approach: coexistence with a voluntary approach first

Like-for-like vs Enhanced content: enhanced content

Message format

Payments of Canada have published ISO AFT format of Customer Credit Transfer Message. These information are available on MyStandards under Payments Canada Group, for which the access is free of authorisation.

Related remittance information: this is a new field and it will provide information how to handle the remittance information from any agent in the transaction processing chain. However this field is not mandatory but if it is used, there will be truncation of data herein.

Remittance information: this new field corresponds to the information supplied to enable the matching/reconciliation of an entry with the items that the payment is intended to settle, such as commercial invoices in an accounts receivable system. This field is not mandatory under ISO 20022 message however it brings useful information, therefore we assume that it may be used quite often.

Structured remittance: same as remittance information but in a structured way.

Ultimate debtor/creditor: is a new offered by the ISO 20022 standard. This field is not mandatory, however the party shall be identified within the payment only if different from the Debtor or Creditor. We assume that the situation may happen quite often, so the use of the ultimate debtor/creditor too.

By adopting ISO 20022, Canadian payments system users will benefit from:

1. Enhanced Remittance data: ISO 20022 addresses the current need in Canada for more remittance information to support automated reconciliation and straight-through processing. That means more information – such as information from multiple invoices – can be sent with a single electronic payment, reducing the need for manual intervention and re-keying of data, making business processes more efficient.
2. Support for global interoperability: Canada is joining numerous countries around the world in adopting ISO 20022 to facilitate cross-border payments, which will also support global competitiveness for Canadian businesses.
3. Efficiencies in managing/supporting multiple payments standards: ISO 20022 allows the financial services industry in Canada to consolidate the current LVTS, AFT and EDI payment standards into a single, global standard. This will reduce the cost and effort associated with supporting multiple standards, support innovation, and enable third-party service providers and payments system users to receive and generate both payment and remittance data in a single message.
4. Reduction in the use of paper-based payment options: ISO 20022 will provide Canadians with attractive electronic payment options that reduce costs (think fewer and fewer cheques or drafts) reduce inefficiencies over paper-based alternatives. [2]