Annual reporting of retail payment activity metrics

Publication date: October 16, 2024

This supervisory policy outlines the retail payment activity metrics that payment service providers must report as part of the annual reporting form.

Introduction

Under the Retail Payment Activities Act (RPAA), payment service providers (PSPs) are required to report quantitative metrics of their retail payment activities—first at registration and then as part of annual reporting. The metrics required as part of the annual reporting form are detailed in section 19 of the Retail Payment Activities Regulations (RPAR) and in section 21 of the RPAA.

This policy helps PSPs understand the reporting requirements for retail payment activity metrics, found in section 4 of the annual reporting form in PSP Connect. It offers guidance on each required metric. PSPs should take all reasonable steps to report their metrics according to this policy given their circumstances, including how much information they have and the steps they took to obtain it. Providing false or misleading information is a designated violation under the RPAA.

The reportable metrics capture information on a PSP’s ubiquity and interconnectedness, as demonstrated by the

• value of end-user funds it holds
• number and value of electronic fund transfers (EFTs) it facilitates
• number of end users it serves
• number of other PSPs it serves

More specifically, the reportable metrics may be used to

• supervise a PSP using a risk-based approach
• take proportionate enforcement actions, including issuance of administrative monetary penalties
• monitor trends and issues

1.0 Reporting retail payment activities

This section provides general guidance applicable to all metrics listed in section 2.0 Reporting required metrics. A PSP must report these metrics as part of the annual reporting form.

1.1 Scope of reporting

A PSP must report all retail payment activities that it performed and that are within the scope of the RPAA.1 Reporting should not include retail payment activities that are excluded from the RPAA.2

1.2 Reporting for PSPs in and outside of Canada

A PSP that has a place of business in Canada3 must provide details of all retail payment activities within the scope of the RPAA, i.e.:

• all end users (both in and outside of Canada)
• end users in Canada only (reported separately)

A PSP that does not have a place of business in Canada4 must provide information for retail payment activities performed within the scope of the RPAA for end users in Canada only.

1.3 Agents and mandataries

Any retail payment activities performed by an agent or mandatary on behalf of the PSP (i.e., the legal entity that has registered with the Bank) should be included in the PSP’s report.5^,6

1.4 Affiliates

Retail payment activities performed between an affiliated entity and the PSP (i.e., the legal entity that has registered with the Bank) should not be included in the PSP’s report.7

1.5 Canadian-dollar equivalent calculations

PSPs are required to express certain metrics in Canadian dollars (CAD). To do so, the PSP should calculate the Canadian-dollar equivalent by using either the current monthly exchange rates published by the Bank or the exchange rates it uses during the normal course of business.

2.0 Reporting required metrics

This section provides general guidance on individual metrics that must be reported by the PSP as part of the annual reporting form.

Specific guidance is outlined under each metric for PSPs that:

• have a place of business in Canada
• do not have a place of business in Canada

2.1 Value of end-user funds held

2.1.1 Maximum value of end-user funds held

2.1.1 Maximum value of end-user funds held8

(Annual reporting form, questions 73 and 80)

The PSP must report the maximum value, expressed in Canadian dollars (see section 1.5 Canadian-dollar equivalent calculations), of the end-user funds that it held at any time during the reporting year.

End-user funds held refers to the total amount of funds that a PSP holds on behalf of its end users.

PSPs with a place of business in Canada must report separately the maximum value of end-user funds held for end users in Canada and for all end users (annual reporting form question 73).

PSPs without a place of business in Canada must report only the maximum value of end-user funds held for end users in Canada (annual reporting form question 80).

2.1.2 Average value of end-user funds held

2.1.2 Average value of end-user funds held9

(Annual reporting form questions 74 and 81)

For each month of the reporting period, the PSP must report the average value of the end-user funds that it held at the end of each day for all currencies combined, expressed in Canadian dollars and also broken down by the currency in which the funds were held and expressed in that currency.

• If the PSP was not in operation for the full reporting period, it should provide the information for the time it was in operation.
• See section 1.5 Canadian-dollar equivalent calculations.

The average daily value of end-user funds that the PSP held during the month should be calculated by taking the total value of end-user funds held at the end of each day in the month and dividing by the number of days in the month.

PSPs with a place of business in Canada must report separately the monthly average value of end-user funds held for end users in Canada and for all end users (annual reporting form question 74).

PSPs without a place of business in Canada must report only the monthly average value of end-user funds held for end users in Canada (annual reporting form question 81).

2.2 Number and value of electronic funds transfers

2.2.1 Number and total value of electronic funds transfers (EFTs ) for which the PSP performed a retail payment activity

2.2.1 Number and total value of electronic funds transfers (EFTs) for which the PSP performed a retail payment activity10

(Annual reporting form questions 75, 76, 82 and 83)

PSPs must report the number and total value of EFTs for each month of the reporting year.

• The total value of EFTs must be reported for all currencies, combined and expressed in Canadian dollars (see section 1.5 Canadian-dollar equivalent calculations), and also broken down by the currency in which the EFT was made and expressed in that currency.
• The number of EFTs must be reported for all currencies combined, and also broken down by currency.
• If the PSP was not in operation for the full reporting period, it should provide the information based on the time it was in operation.

PSPs with a place of business in Canada should report the number and total value of EFTs for end users in Canada, and also report, separately, the number and total value of EFTs for all end users (annual reporting form questions 75 and 76).

PSPs without a place of business in Canada must report the number and total value of EFTs for end users in Canada only (annual reporting form questions 82 and 83).

If the PSP has a place of business in Canada, its report should include all EFTs for which the PSP performed a retail payment activity, regardless of whether the PSP interacted directly with the end user or with another PSP.

If the PSP does not have a place of business in Canada, its report should include all EFTs for which the PSP performed a retail payment activity on behalf of an end user in Canada, regardless of whether the PSP interacted directly with the end user in Canada or with another PSP.

• If the PSP does not know an end user’s location, it should provide an estimate based on best efforts and available information.

PSPs are not required to report EFTs associated with activities that are excluded from the RPAA. These include:

• payment functions performed in relation to an EFT made with an instrument issued by a merchant or group of merchants, such as shopping mall gift cards, coffee cards or transit cards (paragraph 6(a) of the RPAA)
• payment functions performed in relation to an EFT made for the purpose of giving effect to an eligible financial contract or to prescribed transactions in relation to securities (paragraph 6(b) of the RPAA)
• payment functions performed in relation to an EFT made for the purpose of a cash withdrawal at an automated teller machine (paragraph 6(c) of the RPAA)
• payment functions performed in relation to an EFT using a system designated under the Payment Clearing and Settlement Act (section 7 of the RPAA), subject to the following conditions.
  • Participating in or merely using a designated system does not exclude a PSP from having to report. As noted in the Bank’s registration criteria, an individual or entity is subject to the RPAA if it performs any payment function outside of a designated system. The Bank expects that likely only an operator of a designated system could perform all of its payment functions entirely within a designated system. Accordingly, the Bank expects that all payment functions performed in relation to a single EFT would have to be performed by the system operator using a designated system (e.g., Interac e-Transfer) for that EFT to be excluded from the reporting obligation. If one payment function for an EFT is performed outside of a designated system (e.g., on a PSP’s web interface), that EFT would be reportable by the PSP.
• internal transactions among affiliated entities (section 8 of the RPAA)
• orders by the Governor of the Bank of Canada under section 11 of the RPAA
• payment functions that are incidental to another non-payment service or business activity (section 3 of the RPAR).

The Bank expects the PSP to consider the following items when reporting on the number and value of EFTs:

• The number and value of EFTs can generally be determined by how many retail payment transactions a PSP facilitates (i.e., for which it performs one or more payment functions, regardless of whether the PSP interacts directly with end users or with another PSP).
• Section 2 of the RPAA defines an EFT as “a placement, transfer or withdrawal of funds by electronic means that is initiated by or on behalf of an individual or entity.”11 In simpler terms, an EFT is a way of moving money between a payer and a payee through any electronic means—in other words, not in cash. Some common examples include debit, credit or prepaid card transactions made online or at the point of sale, direct deposits, bill payments, payment disbursements, electronic peer-to-peer payments and various types of money transfers into or out of customer accounts. The Bank considers any of these transactions to be a single reportable transaction regardless of the number of steps or intermediary flows that take place to allow for the ultimate settlement of the funds.
• The number of EFTs to be reported consists of the number of retail transactions described above involving an EFT between a payer and a payee for which a PSP performs at least one payment function of the RPAA. The value of EFTs to be reported consists of the total dollar value of those transactions.
• Do not count one transaction multiple times; report a transaction only once. We recognize that in a single transaction, a PSP might perform multiple RPAA functions (e.g., authorization and settlement), provide multiple services, handle multiple instructions, handle multiple steps in the payment chain, or handle both sides of the transaction (e.g., send–receive, credit–debit, inflows–outflows, push–pull, purchase–settle).
• Please note that multiple PSPs involved in the payment chain of a single transaction will likely report the same transaction.
• For batch transactions (when multiple transactions are handled at once), include the total number and value of underlying transactions included in the batch.
• Only completed transactions should be included in the PSP’s reporting.
• For example, if a transaction was first authorized for an amount that was different from the final amount, a PSP does not need to report this transaction twice and should report only the final amount that was paid by the payer.
• PSPs should report the dollar value of completed transactions exclusive of any transaction fee(s).
• Where relevant to a PSP’s operations, transactions for refund purposes and unclaimed transactions should also be included in reporting.

Some illustrative reporting examples:

• PSP A receives $100 from a payer to send to a payee via a transfer that involves an EFT. The PSP should report one EFT for its number and $100 for the total value of the EFT.
• PSP B helped process (i.e., performed payment functions for) 10 electronic peer-to-peer funds transfers between various payers and payees that added up to a total value of $500. The PSP should report 10 EFTs for its number of EFTs and $500 for the total value of those EFTs.
• PSP C helped process (i.e., performed payment functions for) eight credit card transactions between various payers and payees that added up to a total value of $1,000. Even if those transactions were cleared and settled in one batch payment for a netted amount of $50, PSP C should report eight EFTs for a total EFT value of $1,000. This is because reporting needs to be based on the number and total value of retail transactions between the payers and payees that involve an electronic movement of funds.
• PSP D helped process (i.e., performed payment functions for) one credit card transaction. The transaction was a payment at a gas station; PSP D sought an authorization for a total amount of $100 but only $55 worth of gas was ultimately purchased. PSP D should report one EFT and an EFT value of $55, because that is the amount that was exchanged between the payer and the payee in that specific transaction.
• PSP E helped process (i.e., performed payment functions for) three debit card payments for a combined amount of $100. It also helped process five payroll transactions between an employer and its employees for a combined total of $6,000. As a result, it should report eight EFTs for the number of EFTs and $6,100 for the total value of those EFTs.

2.2.2 Value of EFTs by payment type

(Annual reporting form questions 79 and 86)

Provide an estimate of the total value of EFTs for which the PSP performed at least one payment function, broken down by payment type and expressed as a share of the total over the reporting period.

Payment types include:

• card issuance: electronic funds transfers using debit, credit or prepaid cards issued by the PSP
• card acceptance: processing, facilitating or acquiring a card transaction for a merchant or other end user (e.g., merchant acquiring)
• direct credit or direct debit: electronic funds transfers debited from or credited to an end-user’s account using a payment system (e.g., direct deposit, electronic remittances, automated funds transfer, Interac e-transfer, bill payments)
• electronic wallet: electronic funds transfers sent or received using a proprietary system or method other than the major card networks or centralized payment systems
• international remittance: the transfer of funds electronically between one country and another
• other

For PSPs with a place of business in Canada, the estimated total value of EFTs by payment type for end users in Canada and for all end users are reported separately (annual reporting for question 79).

For PSPs without a place of business in Canada, only the estimated total value of EFTs by payment type for end users in Canada should be reported (annual reporting form question 86).

Please see section 2.2.1 for more details on how to report the value of EFTs.

In the free text box provided, please state any assumptions made in providing this information as well as a description of items reported in “Other payment types,” if applicable. 

2.3 Number of end users

2.3.1 The number of end users for which the PSP performed a retail payment activity

2.3.1 The number of end users for which the PSP performed a retail payment activity12

(Annual reporting form question 77 and 84)

PSPs must indicate the number of end users for which they performed a retail payment activity during the reporting year.

• If the PSP was not in operation for the full reporting period, it should provide the information based on the time it was in operation.

The PSP should include the number of all its end users or an estimated number of all its end users.

• The PSP could estimate the number of end users based on available information such as number of accounts, merchant identification numbers, etc.
• The PSP should not distinguish between end users who are payers and payees when reporting this metric. When the PSP provides services to payers and payees, both are considered end-users and should be included in the total number reported for the year.
• PSPs should report the total number of distinct end users to whom services were provided during the reporting year. For example, if the PSP conducted multiple retail payment activities for a single end user multiple times in a year, only one end user should be counted for the reporting year.
• If the PSP does not have information regarding how many payers and payees it has served because it has not interacted directly with them (i.e., it indirectly provided services to those end users because it interacted only with other PSPs), it should report zero for this metric.
• The number of PSPs to which services are provided should be reported for that specific metric, following the guidance in section 2.4 Number of other payment service providers.

For a PSP with a place of business in Canada, the total number of end users, both in and outside of Canada, must be included in reporting (annual reporting form question 77).

For a PSP without a place of business in Canada, only the total number of end users in Canada must be included in reporting (annual reporting form question 84).

2.4 Number of other payment service providers

2.4.1 The number of other PSPs for which the PSP performed a retail payment activity

2.4.1 The number of other PSPs for which the PSP performed a retail payment activity13

(Annual reporting form question 78 and 85)

PSPs must provide the number of other payment service providers for which they performed retail payment activities during the reporting year.

For example, if the reporting PSP clears and settles transactions for another PSP, that PSP should be included in the reported number of other PSPs.

This reporting metric should not capture other PSPs that access the reporting PSP’s services as end users (e.g., PSPs that purchase goods or services for their own operations, when the reporting PSP performs payment functions in relation to those purchases).

PSPs should report the number of other PSPs for which they provided services (regardless of whether the RPAA applies to those other PSPs). Such PSPs include:

• a bank
• an authorized foreign bank, as defined in section 2 of the Bank Act in terms of its business in Canada
• a cooperative credit society, savings and credit union, caisse populaire or central cooperative credit society that is regulated by a provincial act, or an association regulated by the Cooperative Credit Associations Act
• His Majesty in right of a province, or an agent or mandatary of His Majesty in right of a province, that accepts deposits transferable by order
• a company to which the Insurance Companies Act applies, or an insurance company regulated by a provincial act
• a company to which the Trust and Loan Companies Act applies
• a trust company that is regulated by a provincial act
• a loan company that accepts deposits transferable by order and is regulated by a provincial act
• the Canadian Payments Association (Payments Canada)
• the Bank of Canada
• a prescribed individual or entity
• the SWIFT (Society for Worldwide Interbank Financial Telecommunication) messaging network

A PSP with a place of business in Canada must report the number of other PSPs with and without a place of business in Canada for which it performed retail payment activities during the reporting period (annual reporting form question 78).

A PSP without a place of business in Canada must report the number of other PSPs with a place of business in Canada for which it performed retail payment activities over the reporting period (annual reporting form question 85).

Endnotes