The Bank of Canada began supervising payment service providers on September 8, launching the country’s new retail payments regime after a 10-month transition.
Firms on the applicant list must comply with the Retail Payment Activities Act, respond to information requests, and keep registration details current while Ottawa completes national-security screening. The central bank will publish a public registry as screenings are cleared.
At its core, the rule requires any provider that holds customer funds to either place those funds in a segregated trust account at a prudentially regulated institution or back them with insurance or a guarantee in an amount at least equal to the funds held.
What changes for fund safeguarding
The Bank’s final safeguarding guideline tightens how trust coverage works. Trust arrangements must satisfy legal tests, fund must be ring-fenced and not subject to set-off, and firms must document how customers would be repaid in an insolvency.
Providers using insurance or guarantees must monitor coverage so it remains at or above the book value of end-user funds, and obtain an independent review at least every three years.
Scope, exemptions, and penalties
The regime covers providers with a place of business in Canada and foreign firms that direct services to Canadians.
It excludes banks, provincially regulated credit unions and trust companies, among others, and carves out certain activities such as closed-loop merchant instruments, ATM cash withdrawals, internal affiliate transfers, and payments on designated clearing systems.
A narrow exception allows members of provincial deposit-insurance schemes to rely on that coverage for insured deposits; any uninsured or excess amounts must still be safeguarded under the federal rule.
Enforcement escalates from information demands and special audits to administrative monetary penalties. Serious violations carry penalties up to $1 million per breach and very serious violations up to $10 million.
Failure to register is treated as a very serious violation under the Bank’s supervisory materials.
The timetable is staged, registration opened on November 1, 2024, the transition period ended September 7, 2025, and supervision took effect September 8, with the registry to be posted on a rolling basis as screenings finish.
