Register for RPAA Regulations in Canada
Requirements and Registration with
Bank of Canada

The Retail Payment Activities Act (RPAA) is a significant legislative framework introduced in Canada to oversee payment service providers (PSPs). Its main goal is to create a secure, reliable, and efficient retail payment system. PSPs must adhere to the regulatory standards set forth by the act, which cover requirements for risk management, operational resilience, and transparency.

Registration with the Bank of Canada
Key Points about the RPAA

Effective Registration Date

Starting November 1, 2024, all entities classified as Payment Service Providers (PSPs) under the Retail Payment Activities Act (RPAA), including Money Service Businesses (MSBs), must register with the Bank of Canada. This marks the mandatory start date for registration as part of Canada’s initiative to strengthen oversight of retail payment systems.

Who Must Register

The RPAA applies to a broad range of businesses and institutions offering retail payment services in Canada, such as:

– Payment processors: Companies that facilitate fund transfers from payers to payees.
– Digital wallets: Firms providing electronic wallets for payments.
– Money transfer services: Including services offered by MSBs.
– Virtual currency exchanges offering payment services.
– Any business involved in payment account services, fund transfers, or payment processing.
– MSBs providing payment services (such as fund transfers, payment handling, or digital wallet operations) are required to comply with the act.

Key Obligations under the RPAA

PSPs must meet several key obligations:

– Registration with the Bank of Canada: Mandatory for all PSPs operating in Canada’s retail payment sector.
– Operational Risk Management: PSPs must implement policies to address risks related to cybersecurity, operational disruptions, fraud, and data breaches, ensuring secure and resilient payment systems.
– End-User Fund Protection: PSPs are required to safeguard users’ funds by holding them in trust or using other appropriate mechanisms.
– Compliance with Anti-Money Laundering (AML) Regulations: MSBs, in particular, must continue to follow the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
– Transaction Transparency: PSPs must ensure clear communication of fees and terms related to payment services, providing users with full transparency.

Penalties and Enforcement

Non-compliance with the November 2024 registration deadline or failure to meet RPAA requirements may result in penalties. The Bank of Canada will oversee enforcement, which could include administrative penalties or other measures for non-compliance.

Exemptions – Certain PSPs may be exempt from registration under the RPAA. For example, payment services exclusively between affiliates or those related to closed-loop gift cards may not require registration.

Registration Process – The Bank of Canada will outline the registration process for PSPs, which will likely require submission of:

– Details on business operations
– Financial statements
– Risk management policies
– Evidence of AML and consumer protection compliance.

Implementation Timeline

2023-2024: The Bank of Canada will continue to develop regulations and guidelines for PSPs to comply with the RPAA. November 1, 2024: All PSPs, including MSBs providing payment services, must be registered with the Bank of Canada.

PSPs and MSBs operating in Canada should take immediate action to ensure compliance with the RPAA, including reviewing operational risks, safeguarding mechanisms, AML obligations, and preparing for registration ahead of the November 2024 deadline.

Overseas Transactions

If a Payment Service Provider (PSP) or Money Service Business (MSB) does not operate within the Canadian retail sector but exclusively offers services internationally, they typically would not be required to register with the Bank of Canada under the Retail Payment Activities Act (RPAA).

The RPAA aims to regulate payment services within Canada’s retail payment environment, primarily focusing on PSPs that facilitate or process retail payments involving:

– End-users (either payers or payees) located in Canada, or
– Payment services offered within Canada’s domestic market.

Important Considerations:

Geographical Scope

The RPAA applies to PSPs that provide retail payment services to Canadian residents, regardless of the PSP’s physical location. Therefore, if a PSP services Canadian users or handles retail transactions with payers or payees in Canada, they will likely need to register.

Exclusively Overseas Operations

If the PSP or MSB exclusively serves non-Canadian clients (i.e., their customers are entirely based outside Canada and no aspect of the retail transaction involves Canada), they generally fall outside the scope of the RPAA. Such PSPs would not need to register with the Bank of Canada.

Cross-border Payments Involving Canada

If the PSP facilitates cross-border retail payments involving either the payer or payee located in Canada, they would be subject to the RPAA and required to register.

Examples:

A PSP Serving Only European Customers: If a PSP, whether based in Canada or elsewhere, solely serves clients located in Europe or other regions outside Canada and does not provide services to Canadian consumers or businesses, they would not be required to register under the RPAA.

A PSP Facilitating Cross-border Payments: If a PSP facilitates payments between Canadian consumers or businesses and foreign entities (even if the majority of their operations occur outside Canada), the PSP will need to comply with the RPAA and register accordingly.

Summary:

To ascertain if registration is necessary, the key factor is whether the PSP or MSB provides services involving Canadian retail payment users (either payers or payees). If none of the PSP’s activities engage with Canadian customers or the Canadian market, the registration and compliance obligations under the RPAA would not apply. However, if there is any indirect connection to Canadian users or payments, registration may be required.

Services offered by TBA & Associates

– TBA & Associates is happy to assist you in applying for registration with the Bank of Canada.
– Our services include preparation of documentation and information required for submission, submitting the application to Bank of Canada, addressing any queries that the authorities have, etc.
– Once engaged, we will assist you in preparing all the documentation and information and we expect this will take around 2 to 3 weeks.
– Once the documents are finalized, we will monitor closely with the Bank of Canada and as soon as the web application (PSP Connect) is online, we will immediately proceed with the registration process.

Next Steps

– Kindly confirm if you meet all four criteria above.
– Kindly confirm if you require our assistance in applying for registration with the Bank of Canada.
– When you are ready to proceed, kindly advise to whom we should address the appointment letter and invoice.
– Thereafter, we will send you a simple appointment letter and a tailored invoice.
– Once we get this paperwork, our team will immediately start working on your engagement.

Feel free to let us know if you have any questions.
Our Business Development Team will be ready to guide and assist you.