Starting on 1 November 2024, any business that is considered a Payment Services Provider will have to register with the Bank of Canada.
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The new Retail Payment Activities Act (RPAA) will significantly impact Canada’s financial sector by enhancing the safety and reliability of payment systems. All payment service providers (PSPs) operating in Canada, whether local or international, will be required to register with the Bank of Canada as the initial step towards complying with the new regulations.
Importantly, this is not a replacement for the MSB registration. Instead, for most MSBs this will be an additional registration that will be required. While FINTRAC, which registers MSBs and oversees the supervision of anti-money laundering and counter-terrorist financing, registration with Bank of Canada is to ensure that PSPs have a framework for managing their operational risks and responding to incidents.
Key Dates of the Retail Payment Activities Act
Stay informed about the key milestones of RPAA regulation and be prepared:
1 November 2024
Registration opens for existing payment service providers (PSPs).
15 November 2024
Registration for existing PSPs closes.
16 Nov 2024 – 7 Sep 2025
Transition period for compliance with the new regulations.
When to register under the RPAA with the Bank of Canada
The Bank of Canada is tasked with overseeing retail payment service providers to ensure their compliance with the Retail Payment Activities Act. A primary requirement under the RPAA is that PSPs must register with the Bank before conducting any retail payment activities. The RPAA requires you to register with the Bank if all four of the following statements are true.
01
You are a PSP
You may need to register with the Bank if you perform at least one of the following functions:
• provision or maintenance of an account that is held on behalf of one end user or more
• holding funds on behalf of an end user
• initiation of an EFT at the request of an end user
• authorization of an EFT or transmission, reception or facilitation of an instruction in relation to an EFT
• provision of clearing or settlement services
03
Your payment activities fall under the geographic scope of the RPAA
To meet the geographic scope requirements , you must satisfy one of the following criteria:
• You have a place of business in Canada.
• You do not have a place of business in Canada, but you provide retail payment services to end users in Canada and target these services at individuals or entities in Canada.
• You do not have a place of business in Canada but intend to expand your business into Canada.
02
You perform retail payment activities
You conduct a payment function involving an electronic funds transfer (EFT) in either fiat currency or a prescribed unit.
04
Your activities are not excluded from the RPAA
Entity-based exclusions apply to:
• banks and authorized foreign banks;
• insurance companies and fraternal benefit societies and trust and loan companies;
• provincially regulated financial institutions, the Provincial Crown and agents or mandataries of the Provincial Crown that accept deposits transferable by order;
• the Bank of Canada;
• the Canadian Payments Association;
• the SWIFT messaging network.
Activity-based exclusions
• certain types of retail payment activities posing limited risk to end users;
• activities that are prudentially regulated or not considered to be retail payments.
Under the Retail Payment Activities Act Regulation, PSPs are required to:
01
Register with the Bank of Canada (BOC)
02
Implement comprehensive risk management frameworks
03
Safeguard end-user funds to protect against losses
04
Report significant incidents affecting their services
How Advapay can help you
Advapay is at the forefront of the regulatory change, offering guidance and support for the registration process. Our services include:
01
Providing regulatory guidance and representation
• Representing clients with the Bank of Canada
• Providing regulatory guidance
• Creating a strategy for fulfilling new compliance requirements
02
Submitting PSP application with the Bank of Canada
• Developing documents that are mandatory for submitting the application with the Bank of Canada.
• Preparing and submitting the PSP application
• Answering clarification requests
03
Developing a risk management framework
• Developing a comprehensive risk management and incident response framework that meets Bank of Canada requirements under the RPAA regulations
