Open Banking in Canada: What It Means for Merchants

What Is Open Banking?

Open banking requires banks to share customer financial data (with the customer's consent) through secure APIs. Third-party fintech companies can then build services on top of that data: payment initiation, account verification, lending decisions, and more.

The UK launched open banking in 2018. Australia followed in 2020. The EU has had PSD2 since 2018.

Canada is late — the framework legislation (the Consumer-Driven Banking Framework) passed in 2024 as part of the Fall Economic Statement, but full implementation is still rolling out.

Canada's Timeline

Reality check: The data-sharing piece (Phase 1) is close. Payment initiation (Phase 2) — where a customer can pay you directly from their bank account at checkout — is still 1–2 years away for most merchants. Don't rip out your payment terminal yet.

How Open Banking Payments Would Work

Here's the future checkout flow for a Canadian e-commerce store:

1. Customer clicks "Pay with bank transfer" at checkout
2. They select their bank (TD, RBC, Scotiabank, etc.) from a list
3. They authenticate with their bank (biometrics, password, or banking app)
4. The bank confirms the payment and transfers funds directly to your account
5. You receive confirmation in real-time. The payment is final — no chargebacks.

This is how it already works in the UK (via services like TrueLayer and GoCardless), the EU (via SEPA instant), and the Netherlands (iDEAL handles 70% of e-commerce payments this way). The technology is proven. Canada just hasn't built the rails yet.

Why Merchants Should Care

1. Dramatically Lower Fees

Credit card processing costs Canadian merchants 1.5%–3% per transaction. Open banking payments in the UK and EU typically cost $0.20–$1.00 flat per transaction, regardless of the purchase amount.

For a business processing $50,000/month at an average ticket of $100:

That's a potential savings of $7,800–$12,600/year. The fee difference is enormous on high-ticket items — $0.50 on a $2,000 purchase vs. $52 on a credit card.

2. No Chargebacks

Open banking payments are bank-to-bank transfers authorized by the customer's own bank authentication. There's no card network dispute process — once the customer authorizes the payment, it's final.

For merchants dealing with chargeback headaches, this is transformative.

Refunds are still possible — you'd process them as a return transfer. But the customer can't call Visa and reverse the charge months later. That dispute mechanism doesn't exist for bank transfers.

3. Instant Settlement

Credit card processors typically hold your funds for 1–3 business days before depositing them. Open banking payments can settle in real-time or same-day through Canada's Real-Time Rail (RTR) payment system, which launched in 2023. Cash flow improves immediately.

4. Better Conversion for High-Ticket Items

Credit cards have limits. A customer trying to buy a $5,000 appliance might hit their credit limit. Bank-to-bank payment lets them pay from their chequing account balance — no credit limit issues, no declined transactions.

What's Available Now (Pre-Open Banking)

You don't have to wait for open banking to accept bank-to-bank payments in Canada. These options exist today:

Interac e-Transfer for Business

Interac e-Transfer already lets customers send money directly from their bank account. Interac for Business adds features like payment requests (you send an invoice, customer pays via e-Transfer), auto-deposit, and reconciliation tools.

Cost: Free to receive for most business accounts; some banks charge $0.50–$1.50 per incoming transfer on certain plans. Far cheaper than credit card processing.

Limitation: Not integrated into standard e-commerce checkout flows. The customer has to manually initiate the transfer. This works for invoicing and B2B, but it's clunky for retail checkout.

Pre-Authorized Debit (PAD)

If you bill customers on a recurring basis (subscriptions, memberships, rent), pre-authorized debit pulls funds directly from their bank account. Helcim, Stripe (via Stripe ACSS), and Rotessa all support PAD in Canada.

Cost: Typically $0.50–$1.00 per transaction. Much cheaper than credit card recurring billing.

Limitation: Takes 3–5 business days to process. Customer can dispute within 90 days (personal accounts) or 10 days (business accounts) under the Canadian Payments Association rules. Not instant, but cheap.

PaySimply / Other Pay-by-Bank Services

A few Canadian fintechs already offer "pay by bank" checkout integrations using screen-scraping (logging into the customer's bank on their behalf). This predates official open banking and is less secure — the customer enters their banking credentials into a third-party app.

Our take: Wait for official open banking APIs. Screen-scraping is a hack. The official framework will be more secure, more reliable, and backed by regulatory oversight from the FCAC.

How to Prepare Your Business

If You Sell Online

• Choose a processor that's likely to support open banking early. Stripe already offers bank payment methods in other countries (UK, EU) and will almost certainly be first to market in Canada. Helcim already supports PAD and is likely to add open banking quickly.
• Start accepting PAD for recurring billing now. It's the closest thing to open banking payments currently available and saves significant fees on subscriptions.
• Build your checkout to support multiple payment methods. Open banking will be an additional option alongside credit cards, not a replacement (at least initially).

If You Sell In-Person

Open banking's impact on in-person retail is less clear. Tap-to-pay with credit and debit cards is already fast and convenient. A bank-transfer checkout would require the customer to authenticate via their banking app — potentially slower than tapping a card.

The in-person opportunity is more about cost savings than checkout speed. If open banking in-person payments become as seamless as Interac tap, the fee savings would be substantial. But that's a 3–5 year horizon.

If You Send Invoices / Do B2B

This is where open banking helps right now. Adding "Pay by bank transfer" to your invoices (via Interac e-Transfer or PAD) saves 2%+ on every payment vs. credit card.

For a $10,000 invoice, that's $200 saved per payment.

Helcim's invoicing already supports PAD alongside credit card payment. Use it.

The Risks and Unknowns

• Consumer adoption: Canadians love tapping their credit cards. Convincing them to authenticate via their banking app at checkout is a behaviour change. The UK has seen 10%+ adoption of open banking payments — decent but not dominant.
• Credit card rewards: Many Canadians use credit cards specifically for rewards points. Bank-to-bank payment offers no points. Merchants may need to incentivize bank payments with a small discount (legal in Canada — unlike surcharging, offering discounts for preferred payment methods has no restrictions).
• Regulatory delays: Canada's open banking timeline has already slipped multiple times. Phase 2 (payment initiation) may take longer than projected.
• Fraud in a new system: Open banking payments are authenticated, but new payment systems always attract new fraud vectors. The first year or two will involve learning.