Interac CEO works to make payments processor more nimble after long delays on upgrade project

Interac Corp.’s new chief executive officer is rejigging Canada’s primary payments processor to be more nimble as the company builds a long-awaited update to the country’s sluggish system after several delays at Payments Canada have caused the service to fall behind global peers.

Payments Canada is the non-profit organization that owns and operates Canada’s national payments infrastructure. In 2021, it tapped Interac to develop a portion of the country’s Real-Time Rail (RTR) project, a new system that would allow payments to be sent and received instantly. But the project has faced several setbacks and is years behind schedule.

Canada is the only Group of 20 country without an updated payments system. Payments Canada was initially supposed to roll out the new system in 2019, but the program has hit several delays and now testing is not expected to begin until 2026. Without RTR, Canadian businesses and consumers risk falling behind international companies and the country’s trading partners.

Less than a year into his tenure, Interac CEO Jeremy Wilmot says he plans to better equip Interac to move quickly to enhance the payments technology and services that the financial system relies on to transfer funds for millions of Canadians. He plans to invest in more staff and technology to update Interac’s services, including RTR and fraud protection.

“It’s the backbone to digital prosperity for a country,” Mr. Wilmot said in a recent interview. “Canada’s position as one of the laggards on the OECD countries digitalization index is a reality today because of the lack of that background. It makes it a lot harder for digital services to be made available from government. It’s a longer lead time for richer digitalization services from the financial community.”

Interac, which enables tap-to-pay debit cards and e-transfer services, is building half of the infrastructure needed to send money through RTR. The upgraded system is a key part of Payments Canada’s plan to modernize outdated payments processing as global peers – including Britain, Australia, India and Brazil – have already moved ahead with the update.

Under the current payments system, when one customer sends money to another, the transaction appears in the recipient’s account within minutes. However, that money does not immediately move into the account. It could take a day or two before the money is transferred, meaning that the bank is essentially lending the funds to the customer.

Under an RTR system, the payment will be transferred and settled within seconds. Financial institutions could raise the dollar limit on transactions, and businesses could send and receive money faster.

But upgrading the system has hit several snags. Payments Canada initially said it would deliver RTR in 2019, but delayed it to 2022, and then pushed it back further to 2023 to conduct reviews. In April, Payments Canada said that it had completed its latest review and resumed the development of RTR.

Meanwhile, Interac, along with partners IBM Canada Ltd. and CGI Inc., completed the exchange component, which allows for the transfer of payment messages in real time, in June, 2023. But Interac is overseeing just one-half of the infrastructure required to operate RTR.

Payments Canada selected Vocalink, owned by Mastercard Inc., in 2020 to build the real-time clearing and settlement component, but Payments Canada has not yet provided an update on this piece of RTR development.

“We are working closely with these groups to replan and confirm a revised launch date, which we will share publicly once confirmed,” Payments Canada interim co-CEO and chief delivery officer Jude Pinto said in an e-mail.

While Payments Canada has not provided a launch date, its plans to begin testing RTR in 2026.

Last month, Payments Canada tapped Susan Hawkins, global head of enterprise payments and executive vice-president of U.S. payments at TD Bank Group, as its new CEO.

“The Payments Canada and Interact relationship has been renewed and re-energized with new leadership, on my side as well as on the Payments Canada side,” Mr. Wilmot said.

He said that the RTR system, along with the federal government’s introduction of an open banking regime, would bring “increased innovation with fintech companies.”

“You’d have more open access and a larger field of providers,” Mr. Wilmot said. “And when you do that, your pace of digitalization increases dramatically.”

He also said that Canada’s RTR system will launch with fraud protection capabilities, unlike countries such as India and Britain, where the fraud component was introduced after implementation.

Mr. Wilmot, a former executive at Florida-based global payments processing software provider ACI Worldwide, joined Interac in August, 2023, as its new CEO. He replaced Mark O’Connell, who had spent 17 years at the helm of the company.

He inherited a company that has already undergone significant change in recent years. In 2018, Mr. O’Connell oversaw a major restructuring that combined Interac’s two separate entities – a stand-alone business with its non-profit association – into a single for-profit corporation. The change was meant to remove silos in the organization.

Interac earmarked more money for developing new payment products, and competing with its main rivals, credit card network and payments service providers Visa Inc. and Mastercard.

Prior to joining Interac, Mr. Wilmot spent more than two decades at Florida-based global payments processing software provider ACI Worldwide and supported initiatives across the Americas, Asia, Europe, the Middle East and Africa. Most recently, he was ACI’s chief product officer, leading the company’s product management division.

Under his new strategy, Mr. Wilmot also plans to bolster Interac’s ability to protect consumers and businesses from fraudulent transactions across all of its products. This includes enhancing digital verification capabilities, which would allow a business or individual to prove that an identity is real without meeting someone face to face.

He also plans to invest in e-commerce payment acceptance capabilities that will be easier and faster for businesses to use.