PSP Registration and Safeguards Start Dates

Summary#

This Order fixes the dates when parts of the Retail Payment Activities Act and the Budget Implementation Act, 2021, No. 1 start to apply. Key dates set are November 1, 2024, November 16, 2024, and September 8, 2025, which together phase in registration, supervision, and rules for safeguarding customer funds and managing operational risk.

What it does#

• On November 1, 2024:
  • The Bank of Canada can start taking and processing applications from firms that want to register as payment service providers (PSPs).
  • Authorities for enforcement and for the Minister of Finance to start national security reviews of applicants also come into force.
• On November 16, 2024:
  • A requirement in the Retail Payment Activities Act that PSPs must be registered before they perform retail payment activities comes into effect. Firms that have not applied by this date may face delays or penalties.
• On September 8, 2025:
  • The remaining main rules take effect, including the requirement for the Bank of Canada to publish a public registry of registered PSPs.
  • PSPs must meet rules on safeguarding end‑user funds and on operational risk management.
• Costs and fees noted in the Order:
  • A registration application fee of $2,500 is set for applicants.
  • The Bank of Canada is estimated to cover up to $44 million of supervisory costs annually until fee rules are finalized.
  • The Order cites a context of $1.19 trillion in payment transaction value (2021) to show the size of the payments system.
• Estimates and timing:
  • Early estimates suggest about 2,500 PSPs could be in scope, with 96.4% of them being small businesses. The actual number will only be known after November 1, 2024 when applications begin.

Who's affected#

• Payment service providers (PSPs) such as card networks, payment processors, and digital wallet operators.
• Small firms that provide payment services: most in-scope PSPs are expected to be small businesses.
• The Bank of Canada, which will run the registration and supervision regime and publish the PSP registry.
• The Minister of Finance, which gains national‑security review powers over applicants or registered PSPs.
• Canadian customers and businesses that use electronic payment services, who stand to be protected by the new rules.
• It is unclear exactly how many firms will be captured until applications start on November 1, 2024.

Why it matters#

• Consumer protection: the rules require PSPs to safeguard customers’ money and manage operational risks so people are less likely to lose funds or lose access to payment services if a provider fails.
• Supervision and transparency: a public registry and registration process make it clearer which firms are supervised and trusted.
• National security: the government can screen applicants for risks that might affect national security.
• Costs and compliance: firms that perform payment activities face new costs, reporting and operational requirements. Small providers may see a proportionate (smaller) regulatory burden, but many will still need to prepare.
• Timing matters: there is a short window for existing providers to apply before the registration-before-service rule kicks in on November 16, 2024, and more demanding rules arrive on September 8, 2025.