Canada’s move toward supervising payment service providers

The COVID-19 pandemic accelerated digital payment use in Canada, leading to peaks in contactless and e-commerce transactions. Payment service providers (PSPs) are now challenging traditional payment facilitators—playing an increasingly important role in responding to consumer and merchant demands for more intuitive, straightforward money transfer experiences.

The growth and innovation within the Canadian payment ecosystem has exposed customers to new risks and as a result, require more regulatory attention. To mitigate operational and financial risks, the Bank of Canada (BoC) is introducing the Retail Payment Activities Act (RPAA). The aim is to build confidence in the safety, reliability, and efficiency of Canada's payment ecosystem while protecting end users from risks.

Exploring the RPAA

Rolling out in 2024, the RPAA will enforce new regulatory requirements for PSPs. These regulations provide specific guidelines for PSPs to register with the BoC to ensure a secure, stable, and seamless payment ecosystem for Canadians.

What does this mean for your organization?

With the new RPAA regulations coming into effect, PSPs may be required to strengthen compliance and regulatory reporting practices to operate at the heightened standard. To achieve long-term success, your organization must be proactive and may require to remodel your risk management and compliance frameworks according to these new requirements.

Our report outlines our insights and provides readers with five key considerations to help PSPs effectively prepare for regulatory change.

PSPs are expected to register with the BoC in 2024, hence, the time to start preparing is now. To make sure your organization is ready for these new regulations, we've developed the following roadmap for a smooth compliance journey:

• Determine if your organization is considered a PSP through its services—any electronic payment function—such as payment processing, money transfer services, digital wallet platforms , and any other retail payment or payment technology service.
• Prepare your organization to register for the BoC and assess whether your current practices align with the requirements of the draft RPAA regulations. This gap assessment will allow your organization to determine the efforts and resources needed to meet these new obligations and continue strengthening a relationship with BoC stakeholders.
• Establish a structural roadmap and take a risk-based approach to address any gaps identified.
• Define key roles and responsibilities in your organization and develop plans for stakeholder engagement and communication.

Download the report to learn more about the foundational pillars and key provisions of the RPAA.