About retail payments supervision mandate

Learn what will be expected of payment service providers and how the Bank will supervise them under the Retail Payment Activities Act.

Overview

Under the Retail Payment Activities Act (RPAA), the Bank will be responsible for supervising payment service providers (PSPs). The aim is to build confidence in the safety and reliability of their services while protecting end users from specific risks.

The Department of Finance Canada led the development of regulations for the supervisory framework with support from the Bank. Regulations to help clarify details of the RPAA have been published in Part II of the Canada Gazette.

To fulfill our obligations under the RPAA, we developed a framework for retail payments supervision that explains how we will:

• supervise PSPs to determine if they comply with the RPAA
• promote compliance
• monitor and evaluate trends and issues in the payment system

What we won’t do

We will not supervise financial businesses or payment systems that are prudentially regulated by federal or provincial laws, such as commercial banks and credit unions.

We will not offer broader consumer protection, such as:

• dispute resolution between a PSP and its end users
• concerns about fees charged by PSPs
• privacy complaints

Our role is not geared toward preventing PSPs from failure or insolvency.

Unlike a licensing program, this supervisory framework will not enable us to authorize firms to operate as a particular type of entity.

Canada’s Minister of Finance will be responsible for conducting a national security review of PSPs.

About cost recovery

Under the RPAA, we are required to recover the costs of supervising PSPs through two types of fees.

Registration fee

As part of their application, all applicants will need to pay a fee when registering with us. We will only review an application once we have received this fee.

Annual assessment fee

Registered PSPs will need to pay an annual assessment fee.

This fee will recover the cost of the Bank’s supervisory activities under the RPAA that have not been recovered through the registration fee, using a set formula.

The cost of implementing the retail payments supervision (RPS) mandate depends on several factors, including the number of PSPs in scope of the RPAA and the efforts that will be required to assess whether PSPs are adequately meeting their regulatory requirements.

Get involved

Here is how we are engaging with industry and stakeholders to better understand the retail payment landscape.

Consultations

Between February and May 2024, we consulted with industry and stakeholders about four draft guidelines related to risk.

We have now published the following final supervisory guidelines:

• Operational risk and incident response
• Incident notification
• Notice of significant change or new activity

The final supervisory guideline related to safeguarding end-user funds will be published later in 2024. In the interim, refer to the draft safeguarding end-user funds guideline.

Retail Payments Advisory Committee

Established in 2020, the Retail Payments Advisory Committee (RPAC) provided industry expertise to the Bank until final regulations were published in Part II of the Canada Gazette.

Registration pilot

In the first half of 2024 we tested our registration process to ensure its effectiveness and find any areas that need to be improved before registration opens.

As part of this work, we asked volunteer participants to test the registration process. Participants were able to provide feedback on the overall process for registering, which we will use to improve our registration guidance and the web application for PSPs (PSP Connect).

Retail payments supervision and access to Real-Time Rail

Consumers and businesses benefit from innovation in the payment system when the right precautions are in place. Our retail payments supervisory framework will complement work led by Payments Canada to modernize Canada’s core payment systems. A new payment system, Real-Time Rail (RTR), is an important part of this modernization.

When launched, the RTR will allow Canadian consumers and businesses to exchange funds in real time. PSPs may have access to the RTR system if they:

• are eligible for membership with Payments Canada
• meet specific requirements

Under the Canadian Payments Act, entities eligible for Payments Canada membership include:

• domestic and authorized foreign banks
• other deposit-taking institutions, such as trust and loan companies

The Department of Finance Canada is working to expand the eligibility criteria to include PSPs supervised under the RPAA. When Finance Canada expands the eligibility requirements, PSPs who wish to connect to the RTR must register with us before they can apply to become a member of Payments Canada.

Within the RTR system, PSPs will be able to:

• exchange payments in real time
• settle and clear their own transactions
• rely on other participants to provide settlement service

Once registered, PSPs that wish to settle transactions will be required to apply to open a settlement account with us.

Stay informed

For updates, subscribe to the retail payments supervision newsletter.

If you have questions about retail payments supervision or have any comments on this topic, contact us.