Retail Payments Activities Act
The Retail Payments Activities Act (RPAA) is an initiative by the Canadian federal government to regulate the retail payment services space in the country. Introduced on the 30th of April, 2021, as a part of the budget Bill C-30, this Act aims to create a framework that oversees retail payments activities going to and fro the Canadian market.
The intended initiation of this Act has been in the direction of creating a space that promotes innovation and competition while maintaining and complying with regulations and set standards.
In 2017, the Department of Finance published a consultation to the people of Canada, named “New Retail Payments Oversight Framework”. This consultation paper highlighted the evolution of fintech and retail payment services and how the daily actions of Canadians had also gravitated towards a fintech-enabled world. The purpose of this paper was to redress the existing regulatory system by bringing in better transparency and compliance.
The Department of Finance issued a consultation to the people of Canada seeking their opinions and perspectives on the oversight of retail payments. Since then the Finance Department has been working on creating a systematic policy framework to monitor the retail payments sector.
The Major Parties Affected by RPAA
The Canadian Federal Government has had clear intentions of regulating the Canadian retail payments space that complies with national and international standards while promoting innovation. The main parties that get affected by the issuance of this Act are:
– Retail Payment Servers that are housed in Canada, and provide retail payment services to the people of Canada.
– Retail Payment Servers located outside Canada but have their services extended to Canadian residents.
The Canadian Government’s Role
Payments are an integral part of an economy. For a smooth functioning economy, its participants must be presented with appropriate payment options. For individual consumers and businesses, retail payments play a significant role. All the payments conducted using various methods play a prominent role in the economy.
Here is where the Canadian government steps in. The Government believes in ensuring that their economy functions in smoothly. By overseeing the operations and activities of retail payment providers, that are functioning in the Canadian space, the Government can ensure the security and interests of consumers.
The Regulatory Body
The Bank of Canada (BoC) is the official regulatory body that monitors the activities of various entities that function as retail payment servers in the Canadian space. The BoC is responsible for overseeing whether the entities comply with the regulations laid out in the RPAA or not. The RPAA has also authorized the BoC to issue advanced guidelines to entities, entailing how the RPAA applies in various situations and activities.
Key Points in Regulating Retail Payment Servers
The RPAA is here to protect the interests of users and regulate payment activities across Canada. To achieve this, a holistic journal has been laid out defining procedures for registering with the BoC before performing any activities, providing adequate documentation, and creating a proper response framework where entities report any operational risks that occur during their operations.
Closing Notes
The emergence of RPAA in Canada is similar to many regulatory bodies in various economies like the Monetary Authority of Singapore (MAS). The issuance of such regulations and policies not only makes the environment safer but also helps provide a proper direction to the units that are relentlessly innovating to compete globally. With fintech disrupting the payment sector, government and other regulatory bodies must step up and become torch bearers. This act by the Canadian authorities has received tremendous appreciation from all over the world, and we only hope to witness similar progress globally.
