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Bank of Canada Speech: Ron Morrow, Executive Director at CIX Summit – Retail Payment Regulations

Bank of Canada | Ron Morrow | Nov 2, 2022

Ron Morrow Executive Director BoC - Bank of Canada Speech:  Ron Morrow, Executive Director at CIX Summit - Retail Payment Regulations

Image: Ron Morrow, Executive Director, BoC at CIX 2022

BoC Regulation:  New technology means new payment options—and new rules

  • Growth:  In recent years, we’ve seen a sharp rise in the use of mobile and digital payments.  Canadians place their trust in payment service providers (PSPs) every day. When money changes hands electronically in new and different ways, we at the Bank need to make sure that we protect both consumers and the payments system.  The federal government passed the Retail Payment Activities Act last summer, making the Bank responsible for supervising PSPs.

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  • Who will be affected:  Our new supervisory framework could apply to anyone in the business of helping people and companies make financial transactions (or transfer and store their money through electronic means). This includes: payment processers, digital wallets, and money transferers
  • Register with BoC:  Under the new rules, PSPs will be required to register with the Bank of Canada.
    • Banks and credit unions aren’t part of this new framework because they are already supervised at the federal and provincial levels.
    • BoC will maintain public lists of all PSPs that have signed up or had their registration refused or revoked
    • Enforcement: We have the power to take action if a PSP does not comply with the Act or its regulations.
    • Risk-based:  The new rules will apply to many entities, but we won’t adopt a one-size-fits-all approach because we recognize that not all PSPs are set up or operate in the same way. This means that the actions we take in our supervisory role will be guided by the level of risk each PSP may pose to consumers and the payments system.
      • We will require PSPs to ensure that they return funds to end users if the PSP becomes bankrupt, but we won’t prevent that bankruptcy from happening in the first place.
      • We will establish clear requirements and expectations so that PSPs can adjust their operations in line with the rules.
    • We also won’t handle customer complaints about fees or other issues they may have with the treatment they receive from a PSP.

See:  Bank of Canada: The Latest on Retail Payments Supervision and Survey

  • What's next?  The Department of Finance Canada will publish the draft regulations online in the near future so PSPs can provide comments. Once the regulations are finalized, we will publish our guidance and asking for more feedback.

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