U.S. and Canadian Bank Payments

Similarities and differences between common payment schemes in Canada and the US

If you are looking for a deep dive into bank payments in Canada or the U.S.:

While a lot of differences between U.S. and Canadian bank payments come down to terminology, it is important to mention some key functional differences. Let's start with the similarities:

  • Use of routing and account numbers - this is common to both countries, the marginal difference being that Canada uses an explicit institution number whereas the routing number holds all the institution and branch details for U.S. accounts
  • When debiting bank accounts, you must have a debit authority in place with the counterparty. In Canada, this is generally known as a PAD agreement. In the US, this construct is known as a CCD (corporate accounts) or PPD (consumer accounts)

Now, on to the key differences:

  • Transactions are processed in batches but clearing windows are different in both countries. Canada has three clearing windows on business days and one modality of EFT. ACH (U.S.) rails have several clearing windows, split in to standard and same-day ACH
  • Same-day ACH is an option that is provided in the U.S. only, not in Canada. This option allows you to expedite a transaction, at a cost and with some constraints (such as maximum transaction amount). To expedite a bank payment in Canada, you will have to use options like VoPay Instant which run on an entirely separate rail
  • Risk management principles are similar but the specific error codes and error tolerance vary. For instance, NACHA (ACH/US) has established very clear rules on return rates, whether administrative or unauthorized returns. In Canada, this construct is less
  • Multi-currency transactions - in Canada, EFT rail supports USD transactions that are within Canada. In the US, ACH has a variation known as international ACH that can facilitate transactions to and from the U.S. and other countries. Implementation is bank-dependent and transactions go through NACHA clearing as well as the clearing of the receiving country's payment system

Implementing US and Canadian bank payments

If you are looking to implement both ACH and EFT payments, you will be required to onboard your Canadian and U.S. entities to ensure we are compliant with the standards and regulations of each jurisdiction. This can be done together, or separately.

Technical implementation through VoPay

We've made every effort possible to make ACH and EFT endpoints behave similarly while normalizing differences and reducing expected development time. There are some attributes (such as IdentificationNumber) - these differences pertain to requirements from underlying bank processors for ACH and EFT transactions.