The Retail Payment Activities Act and what it means for retail payments

At The 2022 Payments Canada SUMMIT, the Honourable Randy Boissonnault, Minister of Tourism and Associate Minister of Finance, spoke about plans to increase innovation, competition and diversity in Canada’s payment systems by expanding membership eligibility to include entities such as payment service providers (PSP). Minister Boissonnault also stated the Department of Finance’s plans to consult on the regulations under the Retail Payment Activities Act (RPAA) in the coming fall. This is very good news as the regulation of retail payment activities through the RPAA is a critical step for Payments Canada with respect to PSP access to our payment systems.

What is the Retail Payment Activities Act?

Parliament approved the Retail Payment Activities Act (RPAA) as a new legislative framework in June 2021 to regulate retail payment activities in 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.

Under the RPAA, the Bank of Canada will regulate payment service providers doing business in Canada, enhancing safety and security for consumers and businesses where PSPs compete against established financial institutions.

The Department of Finance is working with the Department of Justice to draft the regulations with advice from the Bank of Canada. The Bank of Canada has established the Retail Payments Advisory Committee composed of industry representatives to provide advice on the implementation of the Retail Payments Supervision Framework. To build confidence and ensure reliable services, assurances will be instituted, such as requiring every PSP regulated under RPAA to register with the Bank of Canada and meet specific criteria outlined in regulations on operational risk and safeguarding of end-user funds. To stay up to date on all things Retail Payments Supervision sign-up to the Bank of Canada RPS newsletter.

The regulation of retail payment activities is an essential step to mitigate risks in the retail payments arena and to enable membership eligibility for registered payment service providers. However, in order to allow these new players to join and participate in Payments Canada’s systems, the Canadian Payments Act must in turn be amended to include this new member type.

What does this mean for Canadians?

Having regulated PSPs eligible to become Payments Canada members and participants in our systems will enable greater competition and innovation in the Canadian payment sector. As a result, Canadians will have more payment options to choose from with greater peace of mind about the safety and security of their transactions.

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