According to Payments Canada:
Canadians engage in retail payment activities every day – ordering coffee, shopping online, and purchasing groceries. A retail payment activity is a payment function performed by a payment service provider that results in an electronic transfer of funds. There are more than 2,000 payment service providers in Canada, such as PayPal, Apple Pay, and Square.Source
In June 2021, Canada’s Parliament approved the Retail Payment Activities Act – legislative framework that will regulate retail payment activities in Canada. This includes regulating payment service providers operating in Canada, and enhancing safety and security for consumers and businesses where PSPs compete against established financial institutions.
The Bank of Canada has established an advisory committee of industry representatives to provide advice on implementing the Retail Payments Supervision Framework. Requirements for PSPs regulated under the RPAA include:
- Registering with the Bank of Canada,
- Proving it has a framework in place to manage risk and respond to incidents,
- Keep end-user funds separate from money used in business operations,
- Submitting an annual report,
- Notifying the Bank of Canada before making a significant change to the way it performs retail payment activities, and
- Providing other regulatory information, as required.
The advisory committee has held a series of meetings over the past two years to address topics including registration, fees, and operational risk. Consultation is expected this fall. Once the regulations have been drafted, they will be submitted to the Treasury Board for approval, and published in Part 1 of the Canada Gazette.
Regulating PSPs in Canada will enable greater competition and innovation in this sector, while offering Canadians peace of mind about the safety and security of their transactions. PSPs interested in the Canadian market can get updates on this topic by subscribing to Payments Canada’s newsletters, the Bank of Canada’s retail payments newsletter, and following this blog.