Royal Bank of Canada is expanding its payments strategy by developing systems that allow consumers to pay directly from their bank accounts, reflecting a broader shift toward digital wallet functionality within traditional banking.
The initiative comes as Canada moves toward financial sector reforms aimed at modernising payment infrastructure. Rather than relying solely on traditional payment cards, the country’s largest lender is building partnerships with financial institutions and technology companies to develop domestic platforms capable of supporting new transaction models.
A central element of this transition is the rise of account-to-account payments, which allow consumers to complete purchases directly from their bank balances. Gabriel Woo, head of enterprise payments at Royal Bank of Canada, said this approach represents the next phase of digital payments, effectively transforming the standard bank account into a high-utility digital wallet. In Canada, the concept is taking shape through KONEK, a national payment platform designed to support both credit and account-based transactions.
Account-to-account payments enable consumers to spend funds already held in their accounts while offering merchants an alternative to traditional card payments. Credit card transactions often involve interchange fees that reduce retailer margins, while account-based systems can lower these costs while maintaining the speed and security expected from digital payments.
The development of such infrastructure relies on closer collaboration between banks and specialised technology firms. Woo described this environment as a “new bank stack”, where financial institutions partner with technology providers to build systems covering identity verification, payment processing and regulatory compliance. Royal Bank of Canada has pursued such partnerships for more than a decade as part of its payments modernisation strategy.
