Payments in Canada

Canada is the first country most US platforms add, and it looks close enough to home to be dangerous. The cards are Visa and Mastercard, the bank transfers are batch files, and rent is paid by debit. Then the details diverge: a different file format and holiday calendar, debit rules written by Payments Canada instead of Nacha, a 90-day consumer claim window, a domestic debit network, a federal code of conduct for card fees, a payments regulator that's only been supervising since 2025, and a province whose consumer contracts must be in French first. This chapter is what changes, with ACH & Bank Transfers as the US baseline it's compared against.

The Rails#

Payments Canada runs the clearing systems; the Bank of Canada settles them and, since 2025, supervises the payment providers that use them.

System	What moves on it	Timing	Final?
ACSS	EFT credits, pre-authorized debits, cheques, point-of-sale debit	Batch; settled the next business day	No: returns and claims follow
Lynx	High-value transfers between institutions	Real-time gross settlement, business days	Yes, immediately
Interac e-Transfer	Person-to-person and business push payments, by email or phone	Minutes	Yes, once deposited
Real-Time Rail	Account-to-account instant payments	Not live: launch targeted for late 2026	Yes

The ACSS (Automated Clearing Settlement System) is the workhorse: 10.6 billion items in 2025, about 42 million a day, including every direct deposit and pre-authorized debit. US-dollar items between Canadian institutions clear separately, through a parallel system that settles through New York correspondents, so a Canadian customer's USD account is its own integration. Lynx finished moving to ISO 20022 messages in November 2025. The Real-Time Rail has been promised since 2019; its rules took effect in August 2026, and Payments Canada is targeting a launch with its first participants in the fourth quarter of 2026, with phased onboarding through 2027 as Interac e-Transfer's clearing moves onto it. It's built with confirmation of payee and shared fraud services from the start, which will matter for payouts once it's real. Until then, plan around ACSS and e-Transfer.

EFT Files: Standard 005#

An EFT file in Canada is a CPA Standard 005 (CPA being the Canadian Payments Association, Payments Canada's former name) file, and it shares nothing with Nacha's but the idea:

• 1,464-character records. An A header, then C credits, D debits, E and F reversals of each, I and J returned credits and debits, and a Z trailer with control totals. Each detail record carries up to six 240-character transaction segments after a 24-character prefix, so one record holds six payments. Notices of change travel separately, as 208-character S, U and V records.
• Banks vary. That's the interbank format; what your bank accepts from you may be a 1,464- or 264-byte variant with its own restrictions (some allow only credits in a file). Build a writer per bank, the same way Treasury builds a parser per bank.
• The file creation number is your idempotency key. Four digits, in the header beside your 10-character originator ID, and the bank rejects a repeat. Allocate it from the database, never from a counter in memory, and record which entries went into which file so a rebuild can't double them.
• Dates are Julian (0YYDDD), institutions are nine digits (0IIITTTTT: institution number and branch transit), account numbers are up to 12 characters, and a 19-character cross-reference field carries your own entry ID for reconciliation.
• The header names the currency, CAD or USD, and anything else rejects the whole file.

Each payment carries a transaction code from Payments Canada's Standard 007, and like a US SEC code it's a statement about what the payment is: 401 for residential rent, 715 for commercial rent, the 430s for bill payments, 700 to 749 for business debits, 450 for anything miscellaneous. The code also decides which debit rules apply, below.

Files are exchanged between institutions three times a business day, at 9:30 a.m., 4:30 p.m. and 9:00 p.m. ET, and settle the next business day. Credits to most branches must be available within two hours of the exchange deadline, which makes a Canadian direct deposit faster in practice than its batch design suggests.

Returns come back fast, and claims come back slow. A bank dishonouring a debit (901 insufficient funds, 902 account not found, 905 closed, 907 no debits allowed, 911 frozen, 912 invalid account number) must return it by the next business day after the branch can decide, quicker than the US two-day window. Customer claims are a separate set of codes (915 no agreement, 916 not according to the agreement, 917 revoked, 918 no confirmation or pre-notification) with much longer windows, set by Rule H1. And an originator's own mistakes are reversed with E and F records within three business days of settlement, for a duplicate, a wrong amount, a wrong account, a cancelled agreement, or a debit not according to the agreement: the same idea as a Nacha reversal, on a shorter clock.

ISO 20022 is arriving here too: Rule F4 defines the ISO version of the exchange between banks. Whether your bank takes pain.001 and pain.008 from you instead of Standard 005 is a question for its cash management team, and the answer varies.

Calendar and Account Formats#

• A different set of holidays. Payments Canada closes on New Year's Day, Good Friday, Victoria Day, Canada Day, Labour Day, the National Day for Truth and Reconciliation (September 30), Thanksgiving (the second Monday in October), Remembrance Day, Christmas and Boxing Day. Several of those are US business days, and US holidays like Juneteenth, July 4 and US Thanksgiving are Canadian ones. Provincial holidays like Family Day and the Civic Holiday aren't system closures. A platform that settles in both countries needs both calendars as data, as Treasury describes.
• Account numbers have three parts. A three-digit institution number and five-digit branch transit, written 0IIITTTTT in files and TTTTT-III on a cheque, plus an account number of up to 12 digits whose length varies by bank. Validate the institution and transit against Payments Canada's directory, not a regex.
• Currency is explicit. CAD has two decimal places, as Money expects. USD accounts at Canadian banks are common, and a debit in the wrong currency for the account fails, days later; capture the account's currency at enrollment.

Pre-Authorized Debits: Rule H1#

A pre-authorized debit (PAD) is Canada's ACH debit, governed by Payments Canada's Rule H1, overhauled in October 2022. Where the US rules hinge on the SEC code, H1 hinges on the category and the frequency:

• Personal PADs pay a consumer's bills: rent, utilities, mortgage, insurance, property tax. Business PADs pay for commercial activity. Cash Management moves funds between related businesses, and Funds Transfer between a person's own accounts.
• Each is one-time, at set intervals, or sporadic. A sporadic PAD needs the payor's authorization for each debit, and the payor can't waive that; a one-time PAD needs a new agreement for any later debit.

The agreement must be dated and signed or otherwise authorized, and state the account, the category, the amount and timing (or what triggers a debit, or that it's sporadic), the cancellation terms, the payee's contact details, and H1's recourse statement word for word. When a payment provider collects on a merchant's behalf, the agreement says so. The payor's identity is verified by "commercially reasonable methods", and the whole audit trail is kept at least 12 months after the last debit.

Two notices, ten days each. A confirmation of the agreement goes to the payor at least 10 calendar days before the first debit, though the payor may waive or shorten that, in which case it's due within five days after the first debit (that's how a provider can debit right after signup). A pre-notification goes 10 calendar days before every variable-amount debit after the first, and before any change to a fixed amount or the dates. Fixed monthly rent needs no pre-notice until the rent changes; a utility bill that varies needs one every cycle, unless the agreement prominently waives or shortens it.

Cancellation is the payor's right at any time, and the payee must stop within 30 days, making best efforts to stop at the next cycle. A dishonoured PAD may be re-presented, but for the same amount, with no fee added: Canada has no equivalent of a Nacha return fee entry.

Claims last 90 days. A payor can claim reimbursement of a personal PAD for up to 90 calendar days after the debit, if it wasn't according to the agreement, the agreement was revoked, or the confirmation or pre-notification wasn't given; a claim that no agreement existed also has 90 days. Business PADs have 10 business days. Like an unauthorized ACH return, the claim isn't contested inside the system, so the payee's remedy is outside it.

So the ledger states are the ACH ones with Canadian numbers: probably good after the next business day passes without a dishonour, and final for a personal PAD only after 90 days. Size holds and reserves to that tail, exactly as ACH & Bank Transfers does for the US 60 days.

The rules are still moving. Paper PADs leave clearing on December 1, 2028, and a new Rule H6 adds bill-payment notification duties from December 1, 2026; check Payments Canada's rule changes before building against any number here.

Interac#

Interac is the domestic debit network, and it's three different products:

• Interac Debit is how Canadians pay with a bank card in person, including Interac Flash contactless, with per-tap limits set by each issuer, typically $250. Online and in-app it's reachable through wallets and payment providers; Stripe added it in February 2026.
• Interac e-Transfer is a push payment to an email address or phone number, irrevocable once deposited. It's how many tenants pay rent. Request Money lets a payee send the request, which carries your reference and makes reconciliation possible; e-Transfer for Business raises limits to as much as $25,000 a transaction, depending on the institution, and supports bulk files and ISO 20022 remittance data.
• Interac Online, the old bank-redirect checkout, has been discontinued. Its successor is Interac Direct, an account-based online payment launched in November 2025 under the Konek brand.

Cards#

The networks are familiar, but the rules around them aren't.

The Code of Conduct for the Payment Card Industry in Canada binds networks, acquirers and their "downstream participants", which includes payment facilitators and platforms. Its current version took effect between October 2024 and April 2025, and much of it is engineering:

• Monthly statements show the effective rate for each card type, plus a summary box and a cost-per-transaction disclosure.
• A fee increase needs 30 to 60 days' notice to the merchant, who may then cancel without penalty within 70 days of it taking effect.
• Complaints are acknowledged within 5 business days and resolved within 20.
• Merchants may accept a network's credit cards without its debit cards or the reverse, and may discount by payment method or network.

Interchange & Pricing covers per-merchant pricing; in Canada the notice periods are part of the pricing engine.

Interchange is lower for small merchants by government agreement: from October 19, 2024, Visa and Mastercard cut rates for businesses under $300,000 of annual Visa volume or $175,000 of Mastercard volume, to a weighted average of 0.95% in store. The thresholds are already moving: Visa raises its threshold to $750,000 of annual Visa volume, with lower rates, on October 24, 2026, while Mastercard's stayed at $175,000, so treat them as data with an effective date, as Interchange & Pricing recommends for every rate.

Surcharging has been allowed since October 2022, within limits the Surcharging & Fees engine has to encode per country: credit cards only, at most 2.4% and no more than the merchant's actual cost, disclosed before the payment, with notice to the acquirer, never combined with a convenience fee, and never in Quebec, whose consumer protection law prohibits it. Debit and prepaid cards can't be surcharged.

Acquiring is local. Canadian interchange rates and Interac need a Canadian acquirer and a Canadian merchant location; a Canadian card run through a US merchant account is an international transaction, with cross-border fees on top (Stripe, for one, adds 1.5% for international cards and 1% more for currency conversion). Going to Canada properly means a Canadian entity and acquiring relationship, which is a processor routing decision as much as a legal one.

Who Regulates You#

The Retail Payment Activities Act brought payment providers under Bank of Canada supervision. If you hold funds for end users, initiate or authorize transfers at their request, or clear and settle, you're a payment service provider in scope, whether you're in Canada or outside it directing services at Canadians. Banks and other prudentially regulated institutions are excluded, as are agents of a registered provider. Since September 8, 2025:

• Register before operating, with the Bank of Canada.
• An operational risk framework with incident response, and notice to the Bank "without delay" when an incident hits.
• Safeguard end-user funds in a trust account, or a segregated account backed by insurance or a guarantee: Canada's version of Treasury's FBO and safeguarding problem.
• Notify significant changes and new activities at least five business days ahead, and file an annual report by March 31.

FINTRAC registers money services businesses, and its definition explicitly includes services that pay invoices for others: rent, utilities, payroll, tuition. Payment providers have had to register since 2022, foreign ones included. The obligations are anti-money-laundering ones: records of electronic funds transfers of $1,000 or more, large cash records at $10,000, reports of international transfers of $10,000 or more, travel-rule information (the sender's and recipient's details that must accompany a transfer) on transfers, and five years of retention. The Payments Rulebook covers the US equivalents.

Open banking is coming but not here. A Consumer-Driven Banking Act was first enacted in June 2024; Bill C-15 replaced it in March 2026 with a new Act that moves oversight to the Bank of Canada and makes screen scraping an offence. Draft regulations followed in June 2026 for a first, read-only phase, and payment initiation (write access) is targeted for mid-2027, tied to the Real-Time Rail.

Privacy and language are provincial as well as federal. PIPEDA (the Personal Information Protection and Electronic Documents Act) governs personal data federally; Quebec's Law 25, phased in from 2022 to September 2024, is stricter, with administrative penalties up to $10 million or 2% of worldwide turnover and penal fines up to $25 million or 4%. Quebec's Charter of the French Language requires contracts of adhesion, the kind every payment terms page and PAD agreement is, to be given in French first. Build the French version into the product, not a translation step afterward; Internationalization covers the mechanics.

What This Means for the System You Build#

• A Standard 005 writer per bank, with file creation numbers allocated durably and Canadian transaction codes chosen from the payment's purpose.
• PAD agreements as records, with category and frequency, confirmation and pre-notification scheduled 10 days out, cancellation honored within 30 days, and the audit trail kept a year past the last debit.
• A 90-day tail in the ledger and risk limits for personal PADs, and no fees on re-presented debits.
• Interac e-Transfer Request Money for tenants who push payments, with your reference in it.
• Code of Conduct notices and statements built into merchant pricing, and surcharging rules that know about Quebec.
• RPAA registration and FINTRAC registration before launch, safeguarding in the treasury design, and French-first terms for Quebec.
• The Canadian holiday calendar and account format as data, beside the US ones.

References#

Specifications

• Payments Canada: Rule H1, Pre-Authorized Debits, categories, agreement contents, confirmation, pre-notification, cancellation and reimbursement claims
• Payments Canada: Standard 005, AFT file format, record types, segments and field layouts
• Payments Canada: Standard 007, transaction and return codes, transaction codes by purpose and the dishonour and claim return reasons
• Payments Canada: Rule F1, Automated Funds Transfer, exchange deadlines, settlement, availability and error corrections
• Retail Payment Activities Act, payment functions, scope and exclusions
• FCAC: Code of Conduct for the Payment Card Industry in Canada, disclosures, notice periods, cancellation and complaints

Reference

• Payments Canada: ACSS, what clears in the batch system and 2025 volumes
• Payments Canada: Lynx fully adopts ISO 20022, the end of MT messages in November 2025
• Payments Canada: Real-Time Rail testing and launch, the phased plan from late 2026
• Payments Canada: ACSS rule changes, paper PADs removed in 2028 and Rule H6 from December 2026
• Payments Canada: System closure schedule, the holidays when nothing clears
• Bank of Canada: Retail payments supervisory framework, operational risk, safeguarding, incident and annual reporting requirements
• FINTRAC: Money services businesses, invoice payment services as MSBs
• FINTRAC: Record keeping for MSBs, the $1,000 and $10,000 thresholds and retention
• FCAC: Surcharging by merchants, credit only, the 2.4% cap and Quebec
• Department of Finance: Credit card fees reduced for small businesses, the October 2024 reductions and eligibility thresholds
• Canada Gazette: Consumer-driven banking regulations, the draft regulations of June 2026
• Interac: e-Transfer for Business, limits, bulk payments and remittance data
• Interac: Interac Direct, the account-based online payment, launched under the Konek brand, that replaced Interac Online
• Visa Canada: Upcoming changes to interchange rates, the $750,000 small-merchant threshold effective October 24, 2026
• Interac: Contactless payments, per-tap limits set by each issuer, typically $250
• Commission d'accès à l'information: Principaux changements de la Loi 25, the three phases and the penalties
• Interac: Interac Debit online and in-app with Stripe, Interac Debit through a payment provider, February 2026
• FINTRAC: Payment service providers and MSB registration (2022), payment providers registering as money services businesses

In practice

• Stripe: Canadian pre-authorized debits, mandates, waived confirmation and timing as a provider implements them
• CFIB: Visa lowers interchange fees for small businesses, the October 2026 threshold change and new network fees
• Chase Canada: Surcharging, an acquirer's statement of which cards can be surcharged
• DLA Piper: The new Consumer-Driven Banking Act explained, Bill C-15, Bank of Canada oversight and the phases
• Stripe: Pricing, the added fees for international cards and currency conversion