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Do I Need to Register As A Payment Service Providers (PSP) With Bank of Canada Under RPAA?

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The Bank of Canada published a document on December 12, 2023 on its website to help organizations determine if they need to register with them. It provides guidelines to help individuals and entities determine if they fall under the Retail Payment Activities Act (RPAA) and need to register as a Payment Service Provider (PSP) with the Bank.

For each function, the document provides detailed explanations and examples to help entities determine if they perform these functions and therefore fall under the RPAA.

The document provides guidance on determining whether a potential payment service provider (PSP) falls under the Retail Payment Activities Act (RPAA) and should register with the Bank of Canada.

The RPAA requires a PSP to register with the Bank before performing any retail payment activities.

There are four criteria for registration under the RPAA:

  1. The PSP must perform one or more of the five payment functions identified in the RPAA as a service that is not incidental to any non-payment service or business activity.
  2. The PSP must perform retail payment activities, specifically related to electronic funds transfers (EFTs) made in a fiat currency or prescribed unit.
  3. The PSP’s payment activities must fall under the geographic scope of the RPAA, either by having a place of business in Canada or by directing services at and performing services for individuals or entities in Canada.
  4. The PSP or its payment activities must not be excluded from the application of the RPAA. Certain individuals or entities (such as banks and authorized foreign banks) and activities (such as incidental activities and securities-related transactions) are excluded from the RPAA.
    The document provides further details on each of the criteria:
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The RPAA defines a PSP as an individual or entity that performs payment functions as a service or business activity that is not incidental to another service or business activity.

The five payment functions defined in the RPAA are the provision or maintenance of an account, holding funds on behalf of an end user, initiation of an electronic funds transfer at the request of an end user, authorization of an electronic funds transfer or transmission, reception, or facilitation of an instruction in relation to an electronic funds transfer, and provision of clearing or settlement services.

The provision or maintenance of an account, holding funds, and initiation of an electronic funds transfer must be performed at the request of or on behalf of an end user.

The document explains how the storage of end-user information and the holding of funds on behalf of an end user are assessed for registration under the RPAA.

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It emphasizes the importance of assessing whether any activities fall under another payment function even if the PSP does not provide or maintain an account or hold funds on behalf of end users.

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