The Department of Finance recently introduced new legislation that will require payment service providers that operate in Canada to register with the Bank of Canada and comply with certain operational requirements. The short title of this draft legislation is the Retail Payment Activities Act (the "RPAA"). Subject to certain exemptions, the RPAA captures the following activities:

  • the provision or maintenance of an account that, in relation to an "electronic funds transfer", is held on behalf of one or more end users;
  • the holding of funds on behalf of an end user until they are withdrawn by the end user or transferred to another individual or entity;
  • the initiation of an "electronic funds transfer" at the request of an end user;
  • the authorization of an "electronic funds transfer" or the transmission, reception or facilitation of an instruction in relation to an "electronic funds transfer"; or
  • the provision of clearing or settlement services.

Notably, the RPAA will not apply to "a payment function that is performed in relation to an electronic funds transfer" that is made with an instrument that is issued by a merchant — or by an issuer that is not a payment service provider and has an agreement with a group of merchants — and that allows the holder of the instrument to purchase goods or services only from the issuing merchant or any merchant in the group." Our recent legal update provides further detail.

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