Interac EFT Lynx payment rails: settlement and uses

What to take away

The three rails: Interac e-Transfer, EFT and Lynx

Payments Canada operates the systems that clear and settle most Canadian dollars. Three rails matter to an Alberta energy or construction firm: Interac e-Transfer, EFT and Lynx. They differ in who can send, how much can move and how the money is finally settled.

Interac e-Transfer is a retail push payment. A sender moves money from a Canadian account to a recipient by email or mobile number, and the recipient deposits it into an account at a participating institution. Businesses use it for small supplier invoices, expense reimbursements and deposits.

EFT, the electronic funds transfer format, is the batch rail. Payments Canada's Automated Clearing Settlement System (ACSS) clears the debit and credit items behind it. EFT is the format Canadian banks use for direct deposit payroll, supplier payments and pre-authorized debits. A Calgary firm can send many payments in one file, each with remittance information attached.

Lynx is the large-value transfer system. It replaced the Large Value Transfer System and settles payments between financial institutions with finality. Lynx messages follow the ISO 20022 standard. Lynx carries wire transfers, interbank funding and large commercial payments, and a settled Lynx payment cannot be recalled by the sender.

Card acceptance sits alongside these rails. Where a firm also takes cards, the card-processing terms are a separate contract, and they should be compared on their own.

Where each rail sits

Payments Canada operates ACSS and Lynx. The Bank of Canada oversees Lynx as a systemically important payment system. Interac e-Transfer runs on the Interac network. A chartered bank, a provincial credit union or a trust company connects to these systems through its own processing arrangements.

Timing and settlement windows for each rail

Interac e-Transfer is close to immediate. Once the sender confirms, the recipient is notified within minutes, and the deposit lands when the recipient accepts it. If the recipient does not deposit, the sender can usually cancel and recover the funds.

EFT runs on a batch cycle. A file submitted before your institution's cut-off is processed in the next clearing cycle, and funds are typically available the next business day. A file submitted after cut-off waits for the following cycle, so a Friday afternoon file may not land until Monday.

Lynx settles during the operating day, and payments are final when settled. A wire sent in the morning can be credited the same day, which matters when a holdback release or a large equipment payment has a contractual deadline.

Exact cut-off times differ by institution, and Payments Canada publishes the operating hours of its systems. Get your bank's written cut-off schedule for EFT and for wires, and put those times in your payables calendar.

Cut-off discipline

Every rail has a cut-off, and each institution sets and publishes the cut-off times for the rails it offers. Missing the cut-off pushes the payment to the next window. For construction progress draws tied to a certificate date, copy those times into the accounts payable calendar and work back from the contractual payment date.

Where fees and limits come from

Fees are a contract term, not a rail feature, so they differ by institution and by account package. Interac e-Transfer business pricing is usually a flat charge per send or a monthly plan that bundles a set number of transfers. The schedule of fees in your account agreement decides the rest.

EFT is the cheapest rail per item, because one file carries many payments instead of pricing every send on its own. Many business accounts include a monthly bundle of EFT items, with an overage charge per item beyond the bundle. A payroll run of 40 employees costs far less through one EFT file than as 40 separate e-Transfers, and the file carries the pay period detail.

Lynx is the most expensive per payment. Wire fees are set by each bank and are often charged per wire, with extra charges for foreign currency, amendments or trace requests. The trade-off is speed and finality for large amounts.

Limits matter as much as fees, and every limit comes from an account agreement rather than from the rail itself. The Interac network sets no single national cap. Banks set their own per-transfer and daily limits for sends, and some business accounts allow up to $25,000 per transfer, so check your bank's published limits. EFT files run against a daily file limit and often an item count per batch. Lynx participants apply their own minimum and maximum thresholds, so confirm the thresholds in writing.

The cost column describes the shape of the charge rather than a rate, because the rate itself is set by the institution and appears in the schedule of fees attached to your account agreement.

For a wider view of pricing across rails, this money transfers cost article sets out the lessons firms keep relearning.

What drives the fee

Volume, account package and whether the payment crosses a border all move the price. A Calgary firm with a steady EFT file can negotiate a bundle. Occasional Lynx wires are priced per item.

Holdbacks, progress payments and multi-signatory controls

Alberta construction work runs on progress payments and holdbacks. Under the Prompt Payment and Construction Lien Act, a holdback is money withheld from a progress payment and kept in a lien fund for a minimum period after the contract is completed. Moving that money needs a rail that carries a reference, so the recipient can match the payment to the certificate.

EFT carries remittance detail in the payment file. That makes it the default for progress draws and holdback releases, because the receiving firm's accounts receivable team can apply the cash without a phone call. Lynx wires carry a reference field too, but the fee is high for routine draws.

Multi-signatory controls are the other constraint. A project account often needs two authorized signers before a payment leaves. Banks implement this through account mandates and online banking entitlements. Dual approval may be available on EFT files and not on Interac e-Transfer sends, so firms often keep e-Transfer for small items only.

A payment account built for project money can separate holdback funds from operating cash, which makes the control easier to evidence at audit.

Pre-authorized debits

If the firm collects recurring payments from customers, it is pulling funds by pre-authorized debit, an EFT debit governed by Payments Canada Rule H1. That rule covers authorization, cancellation and recrediting. The Financial Consumer Agency of Canada guidance on pre-authorized debits explains what a payer can demand when a pull is disputed.

Illustrative example

A Calgary mechanical contractor releases a holdback of $180,000 to a subcontractor. The firm uses Lynx because the subcontractor's bank requires same-day final settlement and the contract names a payment date. Two signers approve the wire in online banking, and the reference field carries the holdback certificate number.

The wire fee is set by the bank, and the subcontractor confirms receipt the same afternoon. Had the amount been $18,000, EFT would have cost less and landed the next business day, which the contract would still accept.

Choosing a rail for payroll, supplier payments and client receipts

Payroll is an EFT job. Direct deposit puts net pay into employee accounts on a fixed date, and the file carries the pay period, so payroll reconciliation is straightforward. A Calgary firm with field crews across Alberta can run one EFT file for the whole province.

Supplier payments split by size and urgency. Routine invoices go by EFT. Urgent or large payments, such as a drilling contractor's mobilization fee, may justify Lynx. Small one-off purchases can go by Interac e-Transfer if the supplier accepts it.

Client receipts are the other direction. If customers pay by Interac e-Transfer, the firm needs a business deposit account that accepts them and a process for matching each incoming transfer to an invoice. If customers pay by EFT credit, the firm gets a remittance file. If they pay by cheque, the deposit still clears through the same retail system.

The mix shifts as a firm wins larger work, so revisit the rail choice whenever the payment profile changes.

When a rail fails

A payment can be sent to the wrong account, or an account can be used without authority. The Financial Consumer Agency of Canada sets out the steps for resolving an unauthorized transaction. Report quickly, because timing affects recovery.

Who oversees the rails and the deposits

The Bank of Canada is not a retail bank. It oversees the financial system, including the payment systems that move money between institutions, and Lynx is one of them. That oversight is separate from the account terms a Calgary firm signs with its own bank. The Bank of Canada does not set the fees a business pays.

Regulation is split. The Bank Act governs chartered banks, and the Office of the Superintendent of Financial Institutions supervises them. The Financial Consumer Agency of Canada handles consumer provisions and complaints about federally regulated entities. FINTRAC collects financial transaction reports.

Deposit insurance is also split. The Canada Deposit Insurance Corporation (CDIC) covers eligible deposits at its member institutions up to $100,000 per eligible category, and the limit should be confirmed on CDIC's site. Provincial credit unions sit under provincial rules. In Alberta, eligible credit union deposits are guaranteed by the Credit Union Deposit Guarantee Corporation of Alberta, so check which regime covers your institution.

A firm incorporated federally must register extra-provincially in Alberta before it carries on business there. Federal incorporation produces the articles and certificate. Business numbers and GST/HST registration come from the Canada Revenue Agency.

For a corporation opening a business account, the bank will ask for incorporation documents, beneficial ownership information and signer identification.

Why the distinction matters

A payment rail is infrastructure. The account is a contract. Confusing the two leads firms to blame the wrong party when a payment is late or a fee changes.

Common questions