Group clearer
A member that, on its own behalf or on the behalf of the group's entitles, exchanges payment items and either effects clearing and settlement or makes entries into the ACSS.
HVPS
High Value Payment Systems; a set of instruments and procedures that facilitates typically large-value inter-FI transfers with finality)
Image
A digital representation of the front and back of a payment item.
Image printout
Any paper output of an Image, created by a CPA member.
Indirect participant
An entity that cannot meet the applicable eligibility criteria or for business reasons accesses the core payment system through an agency agreement (i.e., sponsorship) with a direct participant
Institution number
A three digit number, assigned by Payments Canada, which can be used on payment items to identify a member financial institution or other institution listed in Appendix I of Rule D4.
Interoperability
Ability for payments to be processed (exchanged, cleared and settled) across multiple systems or jurisdictions (e.g., cross-border) without manual assistance; generally facilitated by adoption of common standards and/or technical compatibility
KYC
Know Your Customer. It involves the process of verifying the identity of clients, mainly to detect the use of money for illicit activities.
Legible
Ability to be read or deciphered by a human viewer.
Liquidity Saving Mechanisms (LSM)
Queuing arrangements in a payment system, where queued payments are released as part of a bilateral or multilaterally off-setting of payments. The use of the queue and the off-sets reduces the liquidity required to meet the controls to enable the transactions to be sent to other participants.
LVPS
Large Value Payment System
LVTS
Large Value Transfer System; an electronic wire system that facilitates the transfer of funds between participating financial institutions in real time with finality of payment and certainty of settlement
Money order
A payment item issued by a member and drawn on itself for the purpose of ordering a payment to be made to a payee.
Multi-Use Core System
Core payment systems that serve both an LVPS and a retail payment system functions.
Multilateral netting
The net amount that represents the difference between what is owed by each participant to all others and what others owe that participant.
National retail payment systems
Payment structures that as a group are critical to the economy but a shock or disruption in one system would likely have limited impact on consumers and business, limited risk of contagion, and would be less likely to affect the Canadian financial system and economy.
Negotiating institution
See collecting financial institution.
Netting
The process of establishing the amount owed by one FI to another by adjusting the mutual claims of each on the other. It allows participants to minimize the amount of liquidity necessary for settlement. Netting may be bilateral or multilateral, by position or by novation.
Netting by novation
The underlying gross obligations are discharged by the netting process and replaced by a net obligation.
On-us
When a payment item is drawn on one financial institution and deposited to a different account within the same financial institution. On-Us payments do not result in a Payments Canada clearing entry (and do not appear in Payments Canada system data)
Online payments
Payments initiated by a customer online for the purchase of goods or services in accordance with CPA Rule E2 that result in a credit from the customer's account at a financial institution to a merchant. Online payments include online e-wallet and electronic Person-to-Person (P2P) transactions, initiated through online services and providers that are prefunded or linked to deposit accounts at financial institutions (e.g., PayPal).
Paper-based remittances
Payments accompanied by a paper remittance (bill stub), MICR-encoded with a CCIN, for credit to a business, generally initiated via an ABM or branch of a financial institution.
Payee
The end-user (person or organization) who receives funds when a payment item is credited to their account
Payee's financial institution (FI)
The financial Institution that holds the account of the payee (person receiving a payment).
Payment originator
A business, association, government or other entity which, with authorization from a payee or payor, initiates an AFT transaction.
Payment service providers
A person or an entity that provides services directly to end users such as consumers and businesses/corporates, banks or other entities to support exchange, clearing and settlement services
Payment system operator
An entity responsible for managing and operating a payment system
Payments
The transfer of value from a payor to a payee through the intermediary of a financial institutions. Payments can be debit transfers or credit transfers authorized by the payor
Payments Ecosystem
All payment structures within a country.
Payments infrastructure
The technology, rules, standards and procedures that underpin the transfer of monetary value between parties. The LVTS and ACSS are payments infrastructures owned and operated by Payments Canada and therefore governed by its by-laws, rules and/or standards.
Payments structures
The networks, processes, arrangements, rules, standards, protocols, conventions, and technologies that facilitate the transfer of monetary value.
Payments system
All payment structures that facilitate the transfer of monetary value between banks.
Payor
The end-user (person or organization) who authorizes their financial institution to debit their account for the amount of a payment item
Payor's financial institution (FI)
The financial institution that holds the account of the payor (person making a payment).
Personal pre-authorized debit (PAD)
A pre-authorized debit drawn on a personal account. Examples include charitable donations, mortgage installments, utility bills, insurance premiums, membership fees, property taxes, credit card billings, etc.
PFMI
Principles for Financial Market Infrastructures – the global risk standards established by the CPSS/CPMI and IOSCO for regulating payment and security clearing and settlement systems.
Position netting
Until the net amount is paid, each party remains legally obligated for the underlying gross amounts.
Postal money order
A payment item issued by and drawn on Canada Post Corporation to order a payment to be made to a payee.
Posting
The process of debiting or crediting an end user’s deposit account and making funds available (with possible restrictions).
PPO
Public Policy Objectives – The public policy objectives for Payments Canada are to promote the efficiency, safety and soundness of its clearing and settlement systems and take into account the interest of users (defined by Department of Finance)
Prominent payment systems
Payment structures for the clearing and settlement of payment obligations where a shock, disruption or failure of the system has the potential to affect, on a national scale, the ability of consumers and businesses to effect payments, thereby reducing confidence in the payments system more generally.
PSD
Payment Systems Directive, issued by the European Commission
Real-time payments (near Real-time)
Real-time refers to the exchange, clearing and settlement processes that take place instantaneously or no longer than one minute. Near-real time is used to describe processes that take place in under three minutes (but longer than one minute).
Regulator
An entity (typically a public or government entity) with authority to define policy and supervise a particular business activity through the making and enforcement of standards and rules.
Remittance
The portion of an invoice or the electronic data submitted to the payor's FI by the payor, along with payment, and which becomes a credit item representing value when exchanged by the payor's financial institution.
Retail payments
Retail payments are mainly consumer payments of relatively low value and urgency.
Return replacement document (RRD)
A form of an image printout that meets the specifications in Standard 013 and which may be used for the purpose of return in accordance with Rule A10.
Routing number
A routing number identifies the financial institution and the branch to which a payment item is directed. Along with the account number, it is essential for delivering payments through the clearing system. In Canada, there are two formats for routing numbers: one for electronic payment items and one for paper payment items.
RTGS (Basic)
In Real Time Gross Systems, each payment is settled individually as soon as the transfer order is submitted and accepted for settlement.
RTGS equivalent
A settlement system which couples final and irrevocable transactions with a DNS process, to emulate an RTGS experience for users. As a DNS system settlement is delayed to allow for netting of transactions across participants.
RTGS with LSM
An RTGS that utilizes a central queue to rapidly off-set transactions between participants, to lower the collateral required to settle each transaction, over what would be needed if each transactions were settled on a real-time basis.
SEPA
Single Euro Payments Area (SEPA) is a payment-integration initiative of the European Union for simplification of bank transfers denominated in euro.
Settlement
An act that discharges obligations in respect of funds between two or more parties. For ACSS, it means the payment of clearing balances.
Settlement account
An account which is established and maintained by each direct clearer, at the Bank of Canada, or by each indirect clearer with its clearing agent(s), for the purpose of settlement.
Settlement Before Exchange (SBE) Systems
Settlement Before Exchange systems use arrangements where participants must settle file batch totals before the files themselves may be exchanged
Stale-dated
An item dated more than six (6) months prior to presentment for payment.
STP
Straight-Through-Processing – the process of transmitting and reconciling a payment in an automated fashion, such that no human intervention is required.
System Operator
An entity that controls the functioning of a system including its operating rules, policies and infrastructure. The entity may perform some or all of the functions or rely on a third party to perform some functions.
System Owner
An entity that has the authority to assert certain rights and responsibilities in relation to a system, such as the right to develop, modify, operate and maintain the system or to introduce, modify, or discontinue a particular service or function.
System risk
A disruption to the payments ecosystem that has a material impact on ecosystem service providers or end users as a group.
System-wide risk
A disruption to the payments ecosystem large enough to have a noticeable impact on GDP.
Systemic risk
The failure of the payments ecosystem to ultimately settle on the books of the central bank.
Systemically important payments systems (SIPS)
Payment structures where a shock, disruption or failure could have serious and widespread impacts on the financial system and the economy.
Telecheque
A paper debit resembling a cheque that is not created or signed by the payor, but is drawn by a third party on behalf of the payor, purportedly with the payor's authorization given over the telephone or by other remote means.
Tiering
An arrangement in payment systems whereby participants in one category require the services of participants in another category to exchange and/or settle transactions on their behalf.
Timeliness of payment
The speed with which funds are initiated, processed, posted and made available to the recipient
Transaction code
A three digit code, as assigned by the CPA, used to identify the type of AFT payment. Transaction codes can be found in Appendix II, Section D of Standard 005.
Transit number
A three-digit financial institution number together with a five-digit branch number assigned by that institution.
Viewable
Ability to be seen without obstruction.