Wealthsimple has long sought to become the go-to company for all its customers’ financial needs. With a series of recent wins in its efforts to gain greater access to Canada’s payment systems, the Toronto-based fintech believes it has taken a big step toward realizing that vision.

“Our clients deserve a seamless payments experience that helps them make smart decisions and support financial goals,” Wealthsimple’s co-founder and CEO Michael Katchen told The Logic. The company is now closer to offering customers an ecosystem where everything from investing to everyday spending works together, he said, to “support clients in their financial lives, in the form of faster service, better transparency and lower fees.”

Founded by Katchen, Rudy Adler and Brett Huneycutt, the Toronto-based fintech launched in 2014 as a robo-advisory service with four people working out of Katchen’s apartment. Now with around 1,000 employees, Wealthsimple has built on its robo roots to offer services such as  stock, ETF and crypto trading; tax filing; and a chequing account. It counts over three million Canadians as customers and has over $30 billion in assets under administration. Wealthsimple’s investors include domestic players such as the Desmarais family-controlled Power Corp and Inovia Capital, international giants like Germany’s Allianz X and Silicon Valley venture firms TCV and Meritech, and Canadian celebrities Ryan Reynolds, Drake and Michael J. Fox. Despite earlier attempts to expand in the U.S. and the U.K., its sole focus is now on growth in Canada.  

The company wants to be its customers’ “primary financial relationship,” said Hanna Zaidi, Wealthsimple’s vice-president of payments strategy and chief compliance officer. A relationship like that involves handling money to let customers make purchases, pay bills, get paid and invest in a way that’s easy and convenient. To make that possible, the company needs direct access to payments infrastructure, Zaidi said.

Wealthsimple has achieved a series of firsts among fintechs in gaining access to the country’s payment systems. For years, companies that provided payment services have been rankled over their inability to join Payments Canada, a non-profit organization in charge of the national systems for clearing and settling payments. Its membership has traditionally skewed to the country’s established banks and credit unions, but Payments Canada itself has argued of late that expanding its membership will help create competition and innovation in the financial system, under regulatory oversight. 

In December 2021, Wealthsimple became the first fintech to secure a Payments Canada membership, thanks to its status as a securities dealer, which means it is regulated as a financial institution. (Online brokerage firm Questrade, also a securities dealer, became the only other fintech member in September 2023.) 

Fintechs have gunned for membership in the organization because it’s a preliminary step to accessing the Real-Time Rail, a new, modernized system that will replace Canada’s existing payments infrastructure, letting money move instantly between parties. Wealthsimple wants to be ready when it launches, and in October 2022, became the first securities dealer, and first non-bank or credit union, to win the Bank of Canada’s approval for a direct settlement account with the Real-Time Rail. 

In September, it made another big move in the payments space by becoming the first securities dealer, and first non-bank or credit union, to gain direct access to Interac’s e-Transfer network.  That means it no longer needs to use the system indirectly through a banking partner, and can offer customers higher transfer limits and faster settlement times, ”which are important factors when making investment decisions,” Zaidi said at the time. 

Zaidi credits Wealthsimple’s accomplishments to the company’s decision since its inception to work closely with regulators as it developed new products rather than try to innovate first and seek approval later—an approach that has sometimes set it apart from some of its peers, notably in the contentious world of cryptocurrency. “We believe in responsible innovation,” Zaidi said. “Broadly in the tech ecosystem, you have this motto of, ‘Go fast and break things.’ That’s definitely not the case in … how we treat financial services.” Wealthsimple also advocated directly with the Bank of Canada in its push for a settlement account, she said.

The access the company has won on the payments front has been critical for Wealthsimple’s ability to “innovate their product suite so they can build a set of services that look and act like a customer being in any bank in the country,” said Som Seif, founder and CEO of Purpose Financial. Seif was Wealthsimple’s first angel investor and sits on its board of directors. 

“The ability to move money for customers is actually one of the most important components of what a bank facilitates,” Seif said. Wealthsimple is now able to handle a large part of those functions without becoming a regulated bank, he added. 

Wealthsimple’s Payments Canada membership unlocked the opportunity to offer customers banking capabilities typically reserved for banks and credit unions, including direct deposit, bill payments, pre-authorized payments and, eventually, cheque processing. 

According to Zaidi, Payments Canada members can either directly open a settlement account that plugs them into the Bank of Canada, or rely on a direct clearing partner—typically a bank—to sit in the middle and move money upon instruction. Wealthsimple currently falls into the latter category.

It’s “why our direct settlement account with the Bank of Canada is so exciting because we’ll be able to access the pending Real-Time Rail payment system directly, rather than through an intermediary,” Zaidi said. It will level the playing field between Wealthsimple and the banks, and help them avoid higher fees and lagging service for its customers.

Wealthsimple likely wants to avoid going through legacy financial institutions for payments because of the friction it can cause, said Michael Liquornik, founder and president of Toronto-based Fin-Serv Advisors, which advises the payments industry. Banking partners, for instance, could delay processing payments, particularly if they’re suspicious about certain transactions. They might also place limitations on the types of activities or types of clients they can take on, he added. 

“The challenges I’m sure that [Wealthsimple faces] is that their incumbents don’t want to empower them because they’re actually a broker-dealer if you look at the way they’re structured and regulated,” he said. “That competes with all of the large banks who have broker-dealer operations.” 

Canada is still in the early days of opening up network systems to new participants, such as fintechs, in the industry, he said. In November, Financial Minister Chrystia Freeland promised to amend the Canadian Payments Act so that regulated fintechs can become members and ultimately access the Real-Time Rail, but a date has not yet been set.

Near-instant settlement through both Interac e-Transfer and the forthcoming Real-Time Rail “allows us to be even more nimble and efficient as we continue improving the client experience based on their needs, and explore new features,” she said. “And makes our operations more economical overall.”

The company now plans to enter another crucial arena of its customers’ financial lives. “Mortgages is our next frontier,” Zaidi said in a December LinkedIn post promoting two new positions to help “build the foundations.” The Globe and Mail reported last week that Wealthsimple is experimenting with mortgages, partnering with a few mortgage brokers. It might also develop a mortgage product that gives a lower rate to customers who do significant business with the company, the report said.

Wealthsimple spokesperson Juanita Leon declined to offer more details in December, saying only that the company continues “to explore how we might be able to help our clients in this space.”

Update: Wealthsimple currently has over $30 billion in assets under administration. This story has been updated.