Overview of Canadian banking system

Canadian Banking system is one of the best in the world for the past 6 years. Different forums in this regard have rated the system very high. It is all because of the fact that banking in Canada is highly safe and secure. There is the number of economic forums of the world that recommends the Canadian Banking system to the investors all over the world. There is state as well as the private organizations that own many banks in Canada. The RBC or the Royal Bank of Canada is among the 10 safest banks of the world. The debit cards, internet banking as well as the telephone banking are some other non-traditional forms of banking services which the Canadians enjoy.

The Big 5

There are 5 banks in Canada which are regarded as the big 5. These banks do not belong to the country. These are actually the International conglomerates which operate the consortiums of banks. The big 5 comprises of

  1. Royal Bank of Canada
  2. Toronto – Dominion Bank
  3. Bank of Nova Scotia
  4. Bank of Montreal
  5. Canadian Imperial Bank of Commerce

All the banks are very highly rated and therefore it is highly rated by the consumers. Apart from Canadian Imperial Bank of Commerce, every other bank is almost a century old. It means that rich banking experience can be enjoyed with these banks which are the requirement of almost every consumer. The total revenue generated by these banks is $22,462 million. The GDP contribution of the banks is high and therefore the Big 5 is highly regarded by IMF and World Bank as well.

2008 crisis and the Canadian banking system

The 2008 financial crises lead many jobless and therefore the world still remembers. The Canadian banking system was standing tall as ever during the problem. The Royal Bank of Canada, Canada Mortgage, and the US Federal Reserve joined hands to provide liquidity which is required to keep the banks up and running. The total amount which was provided to the banks was $114 billion. The CMHC mortgage program was also supported by the banks and about $69 billion was contributed to the program. This program itself provided the liquidity support to the financial institutes all over North America.

Recent developments

The Canadian banks are the largest ones in the world. It is to be noted that during the 80s and 90s the major banking institutes acquired all the other banking companies of the era. It was during this time that Canada became the financial hub of the world. The US markets were captured during this era and it attracted the investors further. Since that time the Canadian Banking system has been rated high i.e. 6.8 out of 7.

Regulations

The Canadian Federal government is the final authority to make sure that the banks are running up and well. In case of any problem, the government takes necessary actions to make sure that the problem is overcome. It was this vigilance which saved the Canadian Banking during the 2008 crises.

The Most Popular Transferring Systems in North America

The notion of payments system is unknown to many people. But when it comes to Canada it is even more complicated because two systems process the payments, the Large Value Transfer System, and Automated Clearing Settlement System. Payments Canada owns both of them, and if you are interested in finding more information about them, it is advisable to check the official website of the operator.

Payments Canada

In case you do not know what Payments Canada is, it is a non-for-profit organization. The Act of Parliament created it in 1980. Payments Canada has the role to operate and establish the national systems for the settlement and clearing of payments and other similar arrangements when it comes to the exchange or making of payments. Also, it facilitates the interaction of the settlement and clearing systems with other arrangements and systems involved in the settlement, exchange or clearing of payments. Payments Canada also facilitates the creation of new payment technologies and methods.

What is a payments system?

Canadians use numerous payment tools to buy services and goods, to transfer money and to make investments. These tools include cheques, cash, e-money and credit cards. It can not go unnoticed that different payment systems help us in our everyday life. You can make shopping or account payments, but if you are the game player, you can definitely settle up your entertainment activity in the gambling houses or on such sources like ValleyGames, which provides a wide range of best online casino in Canada. The majority of payment instruments imply the claim of a financial organization as a credit union, bank, or Caisse Populaire. So when it comes to financial institutions that need to transfer money on the behalf of their customers or even on their own behalf, they need certain arrangements. The payment system is a set of technical arrangements, instruments, rules, and procedures needed to transfer funds.

The Large Value Transfer System

The Large Value Transfer System is an electronic and real-time wire transfer system that has the function to process time critical and large value payments during the day. Payments Canada operates and owns it. This system offers its users the warranty that once the payment will be proceeded and passed through the risk-control test it would be irrevocable and final. At the end of the day, every transaction will be settled on the books of the Bank of Canada. For the financial institutions to be direct members of the Large Value Transfer System, they need to meet certain requirements. They have to be members of Payment Canada and be users of the SWIFT telecommunications network. Also, they need to have a settlement account at the Bank of Canada and an adequate capability for the operations done with the LVTS.

The Automated Clearing Settlement System

Payments Canada operates and owns the Automated Clearing Settlement System. It is a deferred net settlement system that has the role to clear retail payments, including small value electronic payment items, pre-authorized credits and debits, paper-based payment items and even automated banking machine transactions. The payment obligations cleared with the help of the Automated Clearing Settlement System are then settled by the Large Value Transfer System. The members of Payments Canada have the possibility to be indirect or direct clearers in the Automated Clearing Settlement System. For being eligible to become a direct clearer the institution has to be a member of the Payments Canada and to maintain a loan facility and a settlement account at the Bank of Canada.

Online payment processors and services

Online payment provider numbers have skyrocketed and it is due to the fact that Canadian small merchants are thriving. There are many advantages of using online payment processing in Canada or anywhere in the world. There is no need of any safety measures and security as the cash is in a virtual form completely. In most of the cases, the cash transfer fees are not applicable in Canada. It is because the merchants want to capture more and more service users. The fees are charged from the merchant and so that tax is paid to the authorities. There are many options to choose from when it comes to online payment systems in Canada. Some of the best options which can transfer real money in cyber form are as follows:

FreshBooks

The best part of this system is that the fees are flat. Each and every transaction fee is charged at the rate of $2.9. The setting up of account is very simple and easy and the user needs to follow no complex process at all. The service currently has 5 million users from all over the world and 120 countries over 5 continents are covered completely. It is a regarded as a company that is rapidly expanding so that more customers are captured. The management of FreshBooks has a very straightforward point of view regarding the service. According to the top brass, the service is not limited to businesses alone. They want this service to be used by every professional regardless of the field and area of operation. From lawyer to graphics designer, the company wants to capture all.

Payfirma

The charges of the company are always based on the volume of transaction. It is a pure Canadian company founded in 2011. Since inception, it has partnered with CIBC to ensure that the service effect is maximized. The diverse solutions provided by the company include mobile, email, direct invoices and credit card. Various platforms are supported by the service which makes it too easy for the sellers and buyers to interact using their medium of choice. The service is world-class and the customer services are of top quality. The API design is simple and can be easily integrated into WordPress and .net based websites. The added layer of safety and security has also been embedded within the API.

PayPal

With 150 million customers from all over the world, PayPal definitely needs no introduction at all. It is default payment method of large corporations of the world such as eBay and Amazon. The payment options are large in number. About 200,000 Canadian small businesses and organizations trust this name. It is headquartered in San Jose California. The rates and charges are standard across all types of services. For instance, the standard service charge is 2.9% + 0.30 per transaction. The pro rates for large corporations are different. These are $35 per month and a transaction fee per transfer. There is no security risk at all and therefore it is ideal for small Canadian business owners.

Payment systems in Canada – what’s there to know?

To better understand this topic, first of all, you will have to know what a payment system is before going into further details. A payment system is a bunch of instruments purposed to pay for goods and services or make specific investments financially speaking. Transferring money from one person to another is also made via a payment system. Of course, transferring these amounts of money is done by following certain rules and procedures. Doing so will assure the wellness of both the client and the service provider implied.

Another thing you’ll need to understand before proceeding to Canada’s payment systems is how processing money is done. Usually, it takes two big steps to complete a payment: the clearing step and the settlement one. Each of these steps is paramount: the first one means transmitting and reconciling the payment order for settlement which is the second step. The latter means the two (or even more) parties implied will be released of payment obligations.

Now that you understand how payment systems work is time to get into details about Canada specifically: here you will find two main systems: the LVTS and ACSS. The LVTS system is translated into Large Value Transfer System and it is used in real time as an electronic wire transfer to process payments which require a time deadline and which are large-valued. This system launched in 1999 and since then it is used without any trouble by Canadian citizens. Payments Canada created a set of rules which need to be followed in case you want to use LVTS. Those imply being a member of Payments Canada, using SWIFT, having a settlement with a bank and pledging eligible collateral. Of course, there are details that need to be taken into consideration and you’ll need to be informed about them thoroughly. There is another characteristic of payments you’ll need to know about: tranche payments. Tranche type 1 and tranche type 2 payments are separated by a simple detail: institution and timing. There are certain operating schedules for LVTS cycle starting with 00:00 ET and concluding with 19:30 ET for the settlement.

Secondly, there is the ACSS system translated into Automated Clearing Settlement System which is focused mostly on cheques (paper-based payments). In this system, people can be either direct or indirect clearer. The criteria required for these payments are less numerous than in the case of LVTS payments.

There are specific details regarding membership in the Payments Canada system which is required in both cases of payment systems. The Bank of Canada along with other domestic and foreign banks is included in the Payments Canada system. Settlement accounts can be closed within any of them.

Once learning all the information about payment systems in Canada you will be able to take further interest into them. The process is not difficult and the Payments Canada system will allow any citizen to properly manage their finances. The Bank of Canada will assure all its members of safety and stability over the payments system and a greatly managed financial domain.