With the clock ticking down to the Nov. 15, 2024 deadline for payment service providers (PSPs) to register with the Bank of Canada, Canada's financial services landscape is on the cusp of a major transformation. At the heart of this shift is the Retail Payments Activities Act (RPAA), a key pillar in Canada's drive to modernize payments and create a more competitive, secure ecosystem.
In a recent discussion with Parna Sabet-Stephenson, leader of Gowling WLG's FSxT Group, Ron Morrow, Executive Director of Payments, Supervision and Oversight at the Bank of Canada, pulled back the curtain on what the RPAA means for PSPs and the broader financial industry. His message was clear: payments regulation is entering a bold new era, and PSPs must be ready to meet the challenge—or face the consequences.
Transforming the competitive landscape
Morrow described the RPAA as key to propelling Canadian financial services toward a brighter, more inclusive future—one that will allow PSPs to participate directly in the country's payments infrastructure without requiring a bank to act on their behalves. "We believe this will bring new entrants to the payments space, creating a more competitive financial landscape," he said, emphasizing the growing potential for innovation.
To be sure, the RPAA isn't the only development fueling ingenuity in financial services. Industry watchers are waiting anxiously for Ottawa to release its open banking regulations later this year, as well as for the introduction of Canada's first real-time payment system, the Real Time Rail (RTR). When launched, the RTR will enable faster and more efficient payments. Together, these changes signal a major overhaul of Canada's financial infrastructure.
A "firm but fair" regulatory approach
When asked about the Bank's stance toward regulation, Morrow was unambiguous: compliance is non-negotiable. "We're aiming for a firm but fair approach," he stated, signalling flexibility would be afforded to those PSPs who have identified, and are actively working to plug, compliance gaps.
"The 'firm' aspect applies to people who don't think they're subject to the act or people who believe their approach to business is fine, even if there are gaps with the legislation," he said. "That's where we have a suite of enforcement tools that we won't hesitate to use when and if required."
According to Morrow, the Nov. 15, 2024 registration deadline stands as a critical milestone for PSPs operating in Canada. "If you don't register, we'll find you. We know who you are," he cautioned, noting that non-registrants could face penalties upwards of $10 million.
Looking ahead: Supervisory regime in focus
Once the registration period concludes, Morrow said the Bank of Canada is ready to pivot its focus and communications toward the implementation of the RPAA's supervisory regime. The Bank just recently published its final supervisory guidelines on operational risk and incident response, with the final guidelines on the safeguarding of end-user funds expected to follow shortly.
With the requirements to establish risk management and funds safeguarding frameworks coming into force on Sept. 8, 2025, the Bank will be working diligently over the coming months to ensure that PSPs have the information they need to carefully audit their current compliance protocols against the coming requirements.
As Canada's payments landscape evolves, Morrow's remarks made it clear that while innovation and competition are critical to Canada's future, they must be balanced with strong regulatory oversight to ensure safety and trust across the entire ecosystem. For more information on the RPAA regime, see our article "Canada's Retail Payment Activities Act launches Nov. 1: What Payment Service Providers need to prepare."
Watch the in-depth Q&A with Ron Morrow
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