The Canada Retail Payment Activities Act (RPAA) is legislation aimed at improving the security, oversight, and efficiency of retail payment systems in Canada. It will have a major impact on Canada’s financial sector by improving the security and dependability of payment systems. All payment service providers (PSPs), both local and international, will need to register with the Bank of Canada as the first step in meeting the new regulatory requirements.
It’s important to note that this is not a substitute for the MSB (Money Services Business) registration. For most MSBs, this will be an additional requirement. While FINTRAC handles MSB registration and oversees anti-money laundering (AML) and counter-terrorist financing (CTF) efforts, registering with the Bank of Canada is designed to ensure that PSPs have the necessary framework to manage operational risks and effectively respond to incidents. It regulates how retail payment activities are conducted by payment service providers (PSPs), with a focus on ensuring consumers and businesses are protected. Here are the key aspects:
-
Regulation of Payment Service Providers (PSPs): The Act defines and regulates entities involved in processing retail payments, such as mobile payment apps, payment gateways, and other third-party services.
-
Licensing and Oversight: Payment service providers must be registered with the Bank of Canada. The Act gives the Bank of Canada the authority to oversee these entities and monitor compliance with regulations.
-
Consumer Protection: The Act includes measures to ensure consumer protection in retail payment activities, such as transparency in terms of fees, terms of service, and dispute resolution mechanisms.
-
Security Requirements: PSPs are required to implement security measures to safeguard consumer data and funds from fraud, theft, or misuse.
-
Data Handling and Privacy: The Act includes guidelines for how payment-related data should be handled, ensuring privacy and protection of personal information.
-
Risk Management: The Act addresses the management of risks in payment systems, including financial stability and contingency plans in case of system failures.
-
Enforcement and Penalties: The Bank of Canada has the authority to enforce compliance with the Act and can impose penalties or sanctions on non-compliant PSPs.
In summary, the RPAA aims to enhance the safety, security, and transparency of retail payment activities, while ensuring effective regulation of the payment ecosystem in Canada.
