A customer reaches checkout on a Canadian website and sees two choices:
Pay by Card
or
Pay by Bank
Instead of entering a credit-card number, the customer selects the bank-payment option, authorizes the transaction through an appropriate banking experience and sends the money directly from their account.
Now imagine the underlying transaction being exchanged, cleared and settled within seconds—even on a weekend.
That combination helps explain why account-to-account payments are attracting attention in Canada.
Two terms are particularly important for merchants to understand.
RapidCents provides a detailed merchant-focused guide to Pay by Bank Canada, including how it compares with familiar Canadian payment methods.
The company has also published a deeper explanation of Canada Real-Time Rail for businesses, the national infrastructure expected to play an increasingly important role in Canada’s real-time payment ecosystem.
Although closely connected, these are not two names for the same technology.
The 20-Second Explanation
Here is the easiest way to understand them:
Pay by Bank answers: “How does the customer want to pay?”
Real-Time Rail answers: “How can qualifying account-to-account money move and settle in real time?”
Pay by Bank is therefore closer to the checkout experience.
RTR is closer to the underlying payment infrastructure.
Once that distinction is clear, the potential for merchants becomes much easier to understand.
What Is Pay by Bank?
Pay by Bank allows a consumer or business to make a payment directly from a bank account rather than using a traditional card transaction.
At an online checkout, for example, the merchant could offer Pay by Bank beside existing options.
The exact customer journey varies depending on the payment provider and financial institutions involved, but the central idea remains account-to-account payment authorization.
Payments Canada describes Pay by Bank as an emerging A2A payment method and reports that 29% of Canadians find the concept appealing. It also found that 32% of Canadians believe Pay by Bank offers greater security than alternatives.
For merchants, the significance is simple: bank accounts may increasingly become a checkout payment source rather than something used primarily behind the scenes for payroll, bills or traditional transfers.
Why Would a Merchant Offer Pay by Bank?
Different businesses will have different reasons.
A retailer processing a $30 transaction does not necessarily have the same needs as a wholesaler collecting a $40,000 invoice.
Pay by Bank could be particularly interesting where merchants want:
More payment choice.
Customers have different preferences. Adding account-to-account payments can reduce dependence on a single payment method.
An option for larger transactions.
Some businesses sell high-ticket products or collect significant invoices where paying directly from a bank account can be practical.
Improved payment workflows.
Bank-based payment confirmation and structured payment information may eventually help connect the transaction to accounting and reconciliation systems.
Different payment economics.
Account-to-account payments do not follow exactly the same model as card payments, although actual merchant pricing will always depend on the provider and service.
Pay by Bank should not automatically be described as “free” or “cheaper than cards.” Merchant costs, fraud controls, software, settlement and provider pricing all matter.
The more useful question is whether it provides a better total payment experience for a particular transaction.
What Is Canada’s Real-Time Rail?
Canada’s Real-Time Rail is the national infrastructure intended to enable real-time, data-rich account-to-account payments.
Payments Canada says the system will allow payments to be exchanged, cleared and settled in real time and operate 24/7/365.
As of August 2026, its initial launch remains scheduled for Q4 2026 following testing and industry readiness work.
This distinction between sending and settling money matters.
A payment can appear fast to a user without every part of the underlying settlement occurring instantly.
RTR is being designed specifically around real-time exchange, clearing and settlement.
How Could RTR and Pay by Bank Work Together?
Consider a hypothetical Canadian business selling industrial equipment.
A customer needs to pay a $12,000 invoice.
The merchant sends a digital invoice containing a Pay by Bank option.
The customer selects it.
The customer authorizes the bank-account payment.
Where the financial institutions, payment provider and applicable service support RTR, the payment could eventually use the real-time infrastructure to move and settle funds.
The merchant’s system receives payment information and matches it to the correct invoice.
The value is not simply:
“The payment was fast.”
It could become:
“The payment was fast, settled promptly, available outside traditional hours and arrived with information that helped our systems identify it.”
That is a much broader business benefit.
Canada’s Existing Options Are Not Going Away
Canada already has a highly developed payment ecosystem.
RTR and Pay by Bank should therefore be viewed as additional capabilities rather than immediate replacements for everything merchants use today.
| Payment Type | Familiar Business Use |
| Credit cards | Retail and e-commerce purchases |
| Debit cards | Consumer purchases |
| Interac e-Transfer | Fast account transfers and requests for money |
| EFT | Payroll, supplier payments, direct deposits and PADs |
| Pay by Bank | Direct bank-account payment at merchant checkout |
| RTR | Infrastructure supporting real-time account-to-account payments |
EFT illustrates just how important direct bank payments already are in Canada.
According to Payments Canada’s 2025 Canadian payment research, EFT represented 63% of total retail payment value in 2024. Canada’s overall retail payment market reached approximately $12.2 trillion across 22.5 billion transactions.
RTR therefore does not introduce the idea of businesses moving money between bank accounts.
It modernizes what that experience could become.
Canadian Businesses Want Faster Payments
Payments Canada research has found strong interest among SMEs.
69% said they would use real-time payments to send money if available, and 66% would use them to receive money.
The potential use cases extend well beyond retail checkout.
Businesses may eventually use real-time payments for:
- Supplier invoices
- Customer invoices
- Employee payments
- Refunds
- Emergency disbursements
- Business-to-business payments
- Account funding
- Government-related payments
This helps explain why real-time payments should not be viewed as merely another consumer-fintech trend.
They may become business infrastructure.
Why 24/7 Payments Matter
Traditional business finance often operates around banking days.
Monday matters.
Cut-off times matter.
Weekends matter.
Holidays matter.
An always-on payment system changes that assumption.
A payment authorized on Saturday evening does not necessarily need to wait for Monday simply because conventional business hours have ended.
Payments Canada is building RTR around continuous availability and an always-on operating environment.
For businesses operating e-commerce stores, digital platforms or national operations around the clock, that can make payment infrastructure more closely match the way modern commerce actually operates.
Why Real-Time Payments Are Getting More Attention Now
Canadian consumer interest is also increasing.
Payments Canada research released in August 2026 found 52% of Canadians consider real-time payments appealing, while more than one-third—34%—say they are likely to switch once the option becomes available.
The most important part of those numbers is not that every Canadian will immediately abandon existing payment methods.
They indicate meaningful demand for another way to move money.
Frequently Asked Questions
What is Pay by Bank in Canada?
Pay by Bank is an account-to-account payment approach that allows customers to pay merchants using funds from a bank account rather than entering a traditional payment card.
Is Pay by Bank available only after RTR launches?
No. Pay by Bank services can exist independently of RTR. RTR creates new Canadian real-time infrastructure that providers may use as the ecosystem develops.
Is Pay by Bank the same as Interac e-Transfer?
No. Both involve bank-account payments, but they are distinct payment products and experiences.
When is Canada’s Real-Time Rail launching?
Payments Canada currently targets Q4 2026 for the initial launch, followed by sequenced participant onboarding and migration.
Will merchants receive every RTR payment instantly?
Merchant availability will depend on the participating financial institutions, payment providers, product design and rollout. The infrastructure being instant does not mean every Canadian merchant automatically receives every possible payment through RTR from launch day.
What Merchants Should Watch Next
The important development is not simply the arrival of another payment acronym.
It is the gradual creation of an ecosystem where Canadian businesses can accept and send real-time account-to-account payments with richer information and continuous availability.
Pay by Bank can make those capabilities understandable to customers.
RTR can help provide modern infrastructure underneath new payment services.
Together, they could make the simple instruction “pay directly from your bank” much more powerful than it has been in the past.
