Payment Channels in Canada
I have previously written on the status of secure funds and the following article is an update as we continue to understand ongoing developments in the secure exchange of funds and how to minimize the risk to lawyers and their clients.
Current Status:
Payments Canada sets the rules for financial institutions to transfer funds. Presently there are two payment channels in Canada: Lynx and ACSS:
-Lynx (previously LVTS) is Canada’s high-value payment system. Wire payments cleared and settled using Lynx are fast1, irrevocable and made with real-time settlement finality.
-ACSS stands for Automated Clearing Settlement System and is Canada’s retail batch payments system that clears the vast majority of payments in Canada. Financial institutions provide users with an immediate credit for the amount of the deposit, subject to it being later settled or taken back. Examples of ACSS paper-based and electronic payments:
Paper-Based
- Cheques
- Paper remittances*
- Government items (including government cheques, redeemed bonds, treasury bills, and coupons) *
Electronic
- Direct deposits
- Electronic data interchange (EDI)*
- Electronic remittances*
- Imaged paper items
- Point of service debits and credits*
- Online debits and credits
- Pre-authorized debits
- Shared ABM Networks*
(*Canadian dollar only)
In 2023, ACSS represented 99% of the transaction volume but only 8% of the monetary value, while Lynx was 1% of the transaction volume and 92% of the monetary value.
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