If your business or organization provides payment functions as a service, whether as a core offering or as a standalone activity, not incidental to any other business function, the Retail Payment Activities Act (RPAA), which became effective on November 1, 2024, may apply to you. This landmark legislation introduces several novel requirements for Payment Service Providers (PSPs) operating in Canada, with one of the key provisions being mandatory registration with the Bank of Canada by November 15, 2024.
In this update, we will clarify who is required to register under the Retail Payment Activities Act (RPAA), outline the registration steps, and highlight key considerations to ensure a smooth registration process and compliance.
Who Needs to Register?
The registration requirements apply to PSPs involved in retail payment activities, specifically those that facilitate the transfer of funds between individuals or entities in exchange for goods or services. To be subject to the mandatory registration, a PSP must meet the following criteria:
- Perform payment functions that relate to electronic funds transfers in Canadian or foreign currencies (excluding digital currencies); and
- Have a place of business in Canada, regardless of where their end-users are located or where their services are directed; or
- Have a place of business outside of Canada but conduct retail payment activities directed at end-users in Canada.
Foreign PSPs that meet the above criteria would also be subject to the registration requirement, even if they are not incorporated in Canada or registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a foreign money services business. Such providers are treated in the same way as domestic PSPs and must comply with Canadian regulations. This includes being subject to enforcement actions by the Bank of Canada.
Steps to Complete Registration
The registration process involves several important steps. Following these steps will ensure that your PSP business is fully compliant with the RPAA registration requirements.
Step 1: Create an Online Account
The PSP must designate an administrator who will set up an account on the Retail Payments Supervision Portal (PSP Connect), which is operated by the Bank of Canada. The administrator must then complete the application form, which is presented as a detailed questionnaire.
Step 2: Provide required information and documents
Next, the PSP must respond to the questionnaire by providing all requested information and uploading documents to PSP Connect, including but not limited to:
- Business contact details
- A description of its retail payment activities
- The business structure and operations
- Risk management and compliance procedures
- Stakeholders, affiliates
- Provincial or territorial registrations in Canada
Step 3: Pay the registration fee and submit application
Once all information and documents have been uploaded, a non-refundable registration fee of $2,500 CAD is required for processing. This fee is tax-exempt and must be paid in full at the time of application.
Step 4: Review of application
The Bank of Canada will review, and process all submitted applications from November 2024 until September 7, 2025. During this review period, applicants may be contacted if additional information or documentation is required.
Step 5: Decision
After review, the Bank of Canada will issue a decision with any of the following possible outcomes:
- Approval: The PSP is registered and will be listed in a public registry.
- Refusal: If the application is incomplete or fails to meet regulatory standards, registration may be refused.
- Revocation: In cases where an existing registration is no longer valid, the Bank of Canada may revoke a registration.
Key To Do’s for PSPs under the RPAA
In the coming days, PSPs subject to the RPAA will need to take the following key actions to meet regulatory requirements and ensure full compliance:
- Ensure a complete registration application is submitted on or before the November 15, 2024 deadline.
- Comply with ongoing regulatory requirements starting September 8, 2025: After registration, PSPs must adhere to continuous regulatory obligations set by the Bank of Canada, including establishing a robust risk management and funds safeguarding framework; implementing incident response protocols and reporting; and mandatory annual reporting.
These actions are crucial for maintaining compliance and securing your position in the evolving regulatory landscape.
Conclusion
The RPAA introduces important registration and compliance obligations for PSPs operating or servicing end-users in Canada. It is essential for all PSPs, whether domestic or foreign, to act promptly to complete the registration process before the deadline and also ensure future compliance with ongoing obligations to avoid operational risks, and penalties.
FAQs on the RPAA registration requirements
Can the registration deadline be extended?
No, the Bank of Canada has confirmed that no extensions will be granted for the registration deadline. However, during the 10-month review/transition period (November 1, 2024 – September 7, 2025), PSPs that intend to begin operating after the 15-day registration window must submit their application at least 60 days before they plan to start offering retail payment services.
How can I increase the chances of registration approval?
Ensure that your application is complete and accurate, with all supporting documents attached. Be as detailed and transparent as possible in your responses to the questionnaire on the PSP Connect. Incomplete or unclear applications may result in delays or refusals.
Can a refusal or revocation of approval be appealed?
Yes, a refusal or revocation decision can be appealed. For specific details on the appeal process, you can consult with legal advisors or reach out to the Bank of Canada for guidance on how to proceed.
Stay tuned for further updates from the Bank of Canada, as they release supervisory policies and guidelines to clarify specific aspects of the RPAA.