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Retail Payment Activities Act (S.C. 2021, c. 23, s. 177)

Act current to 2022-05-02

Retail Payment Activities Act

S.C. 2021, c. 23, s. 177

Assented to 2021-06-29

An Act Respecting Retail Payment Activities

[Enacted by section 177 of chapter 23 of the Statutes of Canada, 2021, the provisions, other than sections 1 to 10, 12 to 16 and 61, subsections 62(1), (3) and (4) and section 63, not in force.]
Preamble

Whereas the safe and efficient movement of funds is essential to the health and strength of the national economy;

Whereas evolving technologies permit retail payment activities to be performed in new and increasingly complex ways by a larger variety of payment service providers across Canada;

Whereas Parliament considers that it is desirable and in the national interest to address risks related to national security that could be posed by payment service providers;

Whereas Parliament considers that it is desirable and in the national interest to supervise and regulate retail payment activities performed by payment service providers in order to mitigate operational risks and to safeguard end-user funds;

And whereas Parliament considers that it is desirable and in the national interest to supervise and regulate retail payment activities performed by payment service providers in order to foster competition and innovation in payment services by building confidence in the retail payment sector;

Now therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

Short Title

Marginal note:Short title

 This Act may be cited as the Retail Payment Activities Act.

Interpretation

Marginal note:Definitions

 The following definitions apply in this Act.

Bank

Bank means the Bank of Canada. (Banque)

Centre

Centre means the Financial Transactions and Reports Analysis Centre of Canada. (Centre)

electronic funds transfer

electronic funds transfer means a placement, transfer or withdrawal of funds by electronic means that is initiated by or on behalf of an individual or entity. (transfert électronique de fonds)

end user

end user means an individual or entity that uses a payment service as a payer or payee. (utilisateur final)

entity

entity means a corporation, trust, partnership, fund, an unincorporated association or organization, the government of a foreign country or of a political subdivision of a foreign country, or an agency of a foreign country or of a subdivision of a foreign country. (entité)

government authority

government authority includes the Royal Canadian Mounted Police, the Communications Security Establishment and the Canadian Security Intelligence Service. (autorité administrative)

Governor

Governor has the same meaning as in section 2 of the Bank of Canada Act. (gouverneur)

incident

incident means an event or series of related events that is unplanned by a payment service provider and that results in or could reasonably be expected to result in the reduction, deterioration or breakdown of any retail payment activity that is performed by the payment service provider. (incident)

Minister

Minister means the Minister of Finance. (ministre)

operational risk

operational risk means a risk that any of the following will result in the reduction, deterioration or breakdown of retail payment activities that are performed by a payment service provider:

  • (a) a deficiency in the payment service provider’s information system or internal process;

  • (b) a human error;

  • (c) a management failure; or

  • (d) a disruption caused by an external event. (risque opérationnel)

payment function

payment function means

  • (a) 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;

  • (b) 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;

  • (c) the initiation of an electronic funds transfer at the request of an end user;

  • (d) the authorization of an electronic funds transfer or the transmission, reception or facilitation of an instruction in relation to an electronic funds transfer; or

  • (e) the provision of clearing or settlement services. (fonction de paiement)

payment service provider

payment service provider means an individual or entity that performs payment functions as a service or business activity that is not incidental to another service or business activity.  (fournisseur de services de paiement)

prescribed

prescribed means prescribed by regulation. (Version anglaise seulement)

registered

registered means registered under section 25. (enregistré)

retail payment activity

retail payment activity means a payment function that is performed in relation to an electronic funds transfer that is made in the currency of Canada or another country or using a unit that meets prescribed criteria. (activité associée aux paiements de détail)

third-party service provider

third-party service provider means an individual or entity that, under a contract, provides a payment service provider with a service related to a payment function and that is not an employee or agent or mandatary of the payment service provider. (tiers fournisseur de services)

Marginal note:Affiliation

  •  (1) For the purposes of section 8 and paragraph 29(1)(d),

    • (a) one entity is affiliated with another entity if one of them is the subsidiary of the other or both are subsidiaries of the same entity or each of them is controlled by the same individual or entity;

    • (b) two entities are deemed to be affiliated with each other if they are affiliated with the same entity at the same time; and

    • (c) an individual is affiliated with an entity if the individual controls the entity.

  • Marginal note:Subsidiary entity

    (2) For the purposes of subsection (1), an entity is a subsidiary of another entity if it is controlled by that other entity.

  • Marginal note:Control

    (3) For the purposes of this section,

    • (a) a corporation is controlled by an individual or entity if

      • (i) securities of the corporation to which are attached more than 50% of the votes that may be cast to elect directors of the corporation are held, directly or indirectly, whether through one or more subsidiaries or otherwise, otherwise than by way of security only, by or for the benefit of that individual or entity, and

      • (ii) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the corporation;

    • (b) a limited partnership is controlled by its general partner; and

    • (c) an entity other than a corporation or a limited partnership is controlled by an individual or entity if the individual or entity, directly or indirectly, whether through one or more subsidiaries or otherwise, holds an interest in the entity that is not a corporation that entitles them to receive more than 50% of the profits of that entity or more than 50% of its assets on dissolution.

Application

General

Marginal note:Payment service providers in Canada

 Subject to sections 6 to 10, this Act applies in respect of any retail payment activity that is performed by a payment service provider that has a place of business in Canada.

Marginal note:Payment service providers outside of Canada

 Subject to sections 6 to 10, this Act also applies in respect of any retail payment activity that is performed for an end user in Canada by a payment service provider that does not have a place of business in Canada but directs retail payment activities at individuals or entities that are in Canada.

Non-application

Marginal note:Retail payment activities

 This Act does not apply in respect of the following retail payment activities:

  • (a) 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;

  • (b) a payment function that is performed in relation to an electronic funds transfer that is made for the purpose of giving effect to an eligible financial contract as defined in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act or for the purpose of giving effect to a prescribed transaction in relation to securities;

  • (c) a payment function that is performed in relation to an electronic funds transfer that is made for the purpose of a cash withdrawal at an automatic teller machine; and

  • (d) a prescribed retail payment activity.

Marginal note:Designated systems

 This Act does not apply in respect of a payment function that is performed in relation to an electronic funds transfer if the payment function is performed using a system that is designated under section 4 of the Payment Clearing and Settlement Act.

Marginal note:Internal transactions

 This Act does not apply in respect of a retail payment activity that is performed by a payment service provider if

  • (a) the payment function in question is performed in relation to an electronic funds transfer that is made between affiliated entities;

  • (b) the payment service provider is one of the affiliated entities; and

  • (c) no other payment service provider performs payment functions in relation to that electronic funds transfer.

Marginal note:Payment service providers

 This Act does not apply to a payment service provider that performs retail payment activities if the payment service provider is one of the following:

  • (a) a bank;

  • (b) an authorized foreign bank as defined in section 2 of the Bank Act in respect of its business in Canada;

  • (c) a cooperative credit society, savings and credit union, caisse populaire or central cooperative credit society that is regulated by a provincial Act or an association regulated by the Cooperative Credit Associations Act;

  • (d) Her Majesty in right of a province or an agent or mandatary of Her Majesty in right of a province, if Her Majesty in right of a province or the agent or mandatary accepts deposits transferable by order;

  • (e) a company to which the Insurance Companies Act applies or an insurance company regulated by a provincial Act;

  • (f) a company to which the Trust and Loan Companies Act applies;

  • (g) a trust company that is regulated by a provincial Act;

  • (h) a loan company that accepts deposits transferable by order and is regulated by a provincial Act;

  • (i) the Canadian Payments Association;

  • (j) the Bank; or

  • (k) a prescribed individual or entity or an individual or entity of a prescribed class.

Marginal note:Agents and mandataries

 This Act does not apply to an agent or mandatary of a registered payment service provider if the agent or mandatary is performing retail payment activities in the scope of their authority as agent or mandatary and is included on the list of agents or mandataries that was provided by the payment service provider under paragraph 29(1)(e) and is updated in accordance with subsection 59(1).

The following provision is not in force.

Marginal note:Governor’s orders

  • The following provision is not in force.

     (1) If a provision of a federal or provincial Act or regulation applies to or in respect of a payment service provider that performs retail payment activities or a class of payment service providers that perform retail payment activities and the Governor is of the opinion that the provision is substantially similar to any of the following provisions of this Act or its regulations, then the Governor may, by order, specify the provision of this Act or its regulations and the payment service provider or class of payment service provider:

    • The following provision is not in force.

      (a) sections 17 to 22;

    • The following provision is not in force.

      (b) subsection 29(2);

    • The following provision is not in force.

      (c) paragraphs 48(1)(a) to (e) and (g) and 52(a) to (d) and (g);

    • The following provision is not in force.

      (d) sections 59, 94, 95 and 99; and

    • The following provision is not in force.

      (e) a provision of the regulations that is made for the purposes of any of the provisions referred to in paragraphs (a) to (d).

  • The following provision is not in force.

    Marginal note:Effect of order

    (2) A provision that is specified in an order made under subsection (1) does not apply to or in respect of the payment service provider or class of payment service provider specified in the order.

PART 1Bank and Minister

Marginal note:Objects

  •  (1) The Bank’s objects under this Act are to

    • (a) supervise payment service providers that perform retail payment activities in order to determine whether those payment service providers are in compliance with this Act;

    • (b) promote the adoption by those payment service providers of policies and procedures that are designed to implement their obligations under this Act; and

    • (c) monitor and evaluate trends and issues related to retail payment activities.

  • Marginal note:Duty of Bank

    (2) In pursuing these objects, the Bank must consider the efficiency of payment services and the interests of end users.

Marginal note:Agreements and arrangements

 The Bank may, for the purpose of exercising its powers or performing its duties and functions under this Act, enter into an agreement or arrangement with any government authority or regulatory body.

Marginal note:Guidelines — Bank

  •  (1) The Bank may issue guidelines respecting the manner in which this Act, with the exception of the provisions referred to in subsection (2), is to be applied.

  • Marginal note:Guidelines — Minister

    (2) The Minister may issue guidelines respecting the manner in which sections 32 to 47, 72 to 75, 96 and 98 are to be applied.

Marginal note:Delegation of Governor’s powers, duties and functions

  •  (1) The Governor may delegate to an officer of the Bank any of the Governor’s powers, duties or functions under this Act.

  • Marginal note:Notice of delegation

    (2) If a power, duty or function is delegated, the Bank must cause to be published in the Canada Gazette a notice that includes

    • (a) the title of the officer to whom the power, duty or function is delegated;

    • (b) the power, duty or function that is delegated; and

    • (c) the day on which the delegation takes effect.

  • Marginal note:Notice of revocation of delegation

    (3) If the Governor revokes a delegation, the Bank must cause to be published in the Canada Gazette a notice that includes the day on which the delegation ceases to have effect.

  • Marginal note:Timing

    (4) The notice referred to in subsection (2) or (3) must be published before the day on which the delegation takes effect or ceases to have effect, as the case may be.

 
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