Global fintech and funding innovation ecosystem

Category Archives: Payments, Transfers, Rewards

Borderless Banking: The Role of Fintech in Simplifying Cross-Border Money Transfers for Canadians

March 7, 2024

Cross border money transfers - Borderless Banking: The Role of Fintech in Simplifying Cross-Border Money Transfers for Canadians

Cross border money transfers

In the contemporary era of globalization, where individuals are increasingly engaged in international transactions and endeavors, the necessity for seamless cross-border financial services has become paramount. For Canadians, conducting transactions across borders has historically been associated with cumbersome processes, high fees and long waiting times. However, with the advent of financial technology (fintech) solutions, the landscape of cross-border money transfers is undergoing a transformative shift, offering Canadians newfound convenience and efficiency. This article explores the nuanced role of fintech in simplifying cross-border finance facilities for Canadians like this money transfer platform, shedding light on its various dimensions without bias.

Challenges of Traditional Cross-Border Transactions

Traditional methods of conducting cross-border transactions have long been plagued by various challenges; for example, banks and traditional financial institutions typically impose high fees and unfavorable exchange rates on international transfers, which can significantly diminish the value of the transferred amount. Moreover, the process is often time-consuming, requiring several business days for the funds to reach their destination. Additionally, stringent regulatory requirements and compliance procedures further exacerbate the complexity of cross-border transactions, leading to frustration among consumers.

Fintech Disruption: Revolutionizing Cross-Border Money Transfers

Fintech companies have emerged as disruptors in the financial services industry, introducing innovative solutions that address the pain points associated with traditional cross-border transactions. Leveraging advancements in technology, fintech platforms offer Canadians a more streamlined and cost-effective means of transferring money across borders. These platforms typically utilize digital channels and cutting-edge algorithms to facilitate swift and secure transactions at competitive exchange rates. Moreover, they empower individuals with greater control over their financial transactions, fostering financial inclusion and empowerment.

Real-Time Transfers and Competitive Exchange Rates

One of the most significant advantages offered by fintech platforms is the ability to conduct real-time cross-border transfers. Dissimilar to traditional banks which often take several days to process international transactions, fintech solutions enable instantaneous transfer of funds, providing users with greater flexibility and convenience. Furthermore, fintech companies often offer competitive exchange rates that are more favorable compared to traditional financial institutions, allowing Canadians to maximize the value of their transferred funds. Additionally, they leverage data analytics and machine learning to constantly optimize exchange rates and enhance user experience.

Transparency and Visibility

Fintech platforms prioritize transparency and visibility, providing users with comprehensive insights into the entire transfer process. Through intuitive user interfaces and mobile applications, Canadians can track the status of their transactions in real-time, ensuring peace of mind and confidence in the reliability of the service. Additionally, fintech companies disclose all associated fees upfront, eliminating hidden costs and surprises for consumers. They also provide detailed breakdowns of exchange rates and fees, empowering users to make informed decisions. Moreover, fintech platforms employ encryption and secure authentication protocols, safeguarding personal and financial data throughout the transfer process, further enhancing transparency and trust.

Compliance and Regulatory Compliance

While navigating the regulatory landscape can be daunting for traditional financial institutions, fintech companies excel in ensuring compliance with regulatory requirements. Through robust compliance frameworks and sophisticated risk management systems, fintech platforms uphold the highest standards of security and regulatory adherence. This commitment to compliance instills trust and credibility among users, further enhancing the appeal of fintech solutions for cross-border money transfers. Furthermore, fintech firms collaborate closely with regulators to adapt to evolving regulatory environments and ensure continued compliance.

Enhanced Accessibility and Convenience

Fintech platforms prioritize accessibility and convenience, catering to the diverse needs of Canadian consumers. Unlike traditional banks, which may impose restrictive eligibility criteria or require physical visits to physical branches, fintech solutions are typically accessible online or through mobile applications. This accessibility transcends geographical boundaries, allowing Canadians to initiate cross-border transfers from the comfort of home or on the go. Moreover, fintech companies offer multilingual support and intuitive interfaces, making the transfer process seamless and user-friendly for individuals of all backgrounds.

Conclusion

In conclusion, the advent of fintech has revolutionized the landscape of cross-border money transfers for Canadians, offering myriad benefits including real-time transfers, competitive exchange rates, transparency and enhanced accessibility. By harnessing the power of technology and innovation, fintech platforms have effectively addressed the challenges associated with traditional methods of conducting international transactions.

See:  Citi’s Top 10 Insights on Cross-Border Payments 2023

As fintech continues to evolve and proliferate, Canadians can look forward to further advancements that promise to make cross-border banking simpler, more efficient and additionally cost-effective.


NCFA Jan 2018 resize - Borderless Banking: The Role of Fintech in Simplifying Cross-Border Money Transfers for CanadiansThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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BRICS Announces Launch of Blockchain Payment System

BRICS | March 6, 2024

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BRICS Nations Announce Global Blockchain Payment System to De-Dollarize Global Finance

As reported on a Russian news agency, BRICS countries (Brazil, Russia, India, China, and South Africa) have announced the creation of a blockchain-based payment system to establish a more inclusive, efficient, and politically neutral global financial ecosystem, leveraging the latest in digital and blockchain technologies to facilitate trade settlements independent of the US dollar (de-dollarization).

  • The BRICS nations are working on developing an independent payment system that utilizes digital currencies and blockchain technology. This system is designed to be convenient for governments, businesses, and the general public, ensuring cost-effectiveness and freedom from political influence.
  • The BRICS payment system is part of a broader strategy to enhance the role of BRICS nations in the international monetary and financial system. The focus is on increasing settlements in national currencies and strengthening correspondent banking networks to ensure secure international transactions.  Also likely to include CBDCs.
  • The initiative has garnered attention worldwide, with additional countries expressing interest in joining the BRICS payment platform. This expansion indicates a growing trend towards diversification in global financial systems and the potential for a shift in how international trade and transactions are conducted.

See:  The 15th BRICS Summit: A New Chapter in Global Dynamics

Yury Ushakov, Kremlin aide:

"We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain. The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics."

Why It Matters

By embracing digital currencies and blockchain technology, BRICS nations are challenging the dominance of the US dollar potentially transforming the global economic landscape.


NCFA Jan 2018 resize - BRICS Announces Launch of Blockchain Payment SystemThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Klarna’s AI Handles 700 Jobs, Targets $20B IPO

AI News | Feb 29, 2024

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Klarna's AI-Chatbot Does the Work of 700 Humans, Eyes $20B IPO

Klarna has embraced AI in a significant way, leveraging OpenAI's technologies to enhance its customer service operations. The company's AI-powered chatbot is reported to do the work of 700 human employees, handling inquiries for its 150 million customers. This adoption of AI has fundamentally altered Klarna's hiring strategy, focusing more on engineering roles while reducing the need for traditional customer service positions.

  • The chatbot has improved efficiency, reducing repeat inquiries by 25% and shortening average conversation times from 11 minutes to just two minutes.
  • Despite the reduction in human customer service roles, Klarna's CEO Sebastian Siemiatkowski emphasized the benefits of AI in providing superior customer experiences, more interesting challenges for employees, and better returns for investors.
  • Klarna's workforce was reduced to 4,201 by the end of 2023, from 5,441 a year earlier, partly due to these technological advancements.

See:  Klarna’s New $7.99 Monthly Subscription Plan Pre-IPO

  • Klarna's AI initiatives have positioned the company as a leader in adopting and applying AI technologies in the fintech sector. The company's partnership with OpenAI has been particularly fruitful, making Klarna a "favorite guinea pig" for testing new AI applications.
  • Klarna's focus on AI and technology has not only impacted its workforce composition but also its operational efficiency and customer service quality, setting a precedent for other companies in the industry.

Chatbot Challenges

Not all AI chatbot cases work out perfectly when first deployed.  In a notable legal case, Air Canada faced repercussions when its AI-powered chatbot provided misleading information about bereavement fares, leading to a small claims court ruling in favor of a passenger who was misinformed. The chatbot inaccurately suggested that passengers could apply for reduced fares retroactively, contrary to the airline's actual policy. The court awarded the passenger $812.02 in damages and fees, highlighting the issue of "negligent misrepresentation" and underscoring the legal and operational risks associated with deploying AI in customer service without ensuring the accuracy and reliability of the information provided.

See:  PayPal Ventures Co-Leads $30 Million in AI Pioneer Rasa

In another virtal example, McDonald's experimentation with AI-powered voice bots for drive-thru ordering has led to a mix of frustration and humor among customers, as documented by TikTokers. Despite the technology's promise to streamline orders, numerous instances have surfaced where the bots failed to accurately process orders. One TikToker's attempt to order a cup of vanilla ice cream and a large water resulted in the bot adding two butters and four ketchup packets to her order instead. Another customer was bewildered when her order for one sweet tea was interpreted as nine. A particularly striking error involved a bot adding an excessive amount of McNugget meals to an order, totaling over $250. These mishaps highlight the challenges and limitations of integrating AI into customer service, underscoring the technology's current inability to fully understand and accurately process customer requests, leading to both amusement and frustration among users.

Financial Performance and IPO Plans

Klarna is actively preparing for an Initial Public Offering (IPO) after reporting its fifth consecutive annual net loss, signaling a strategic move towards public listing within the current financial landscape.  The company's strategic shift towards AI and technology-driven operations is seen as a move to make itself more nimble and competitive, especially as it eyes a potential IPO in the near future.

  • Klarna reported a fifth consecutive annual loss, with a net loss of SKr2.5 billion ($241 million) for 2023, which is narrower than its SKr10.4 billion loss in 2022.
  • The company saw a 22% increase in revenues, reaching SKr23.5 billion. This financial performance comes as Klarna continues its expansion plans and considers a potential initial public offering (IPO) this year.
  • The company's valuation has seen fluctuations, with a significant drop from $46 billion in June 2021 to $6.7 billion a little over 12 months later, largely due to higher interest rates impacting the fintech sector.

See:  Klarna’s Meteoric Rise in the Canadian Financial Ecosystem

  • Despite these challenges, Klarna is reportedly in talks with several U.S. banks about listing through an IPO as early as the third quarter of 2024, seeking a valuation of $20 billion.
  • Klarna's U.S. headquarters in Columbus has been a significant part of its operations since 2015, indicating the importance of the U.S. market in its global strategy and potentially influencing its decision to pursue a U.S. IPO.
  • Factors such as potential interest rate declines and the U.S. Presidential Election in November could influence the IPO landscape.

Outlook

Klarna's outlook is one of cautious optimism.  The company's AI-driven efficiencies are not just about cost savings; they represent a significant shift in how customer service and operational tasks are managed, setting a new standard for the industry. Klarna's ability to streamline operations and reduce human error through AI, improving customer experience while lowering operational costs, could serve as a model for other fintech companies.

See:  Amazon & Affirm’s BNPL Service Aids Small Business Growth

The fintech sector is highly competitive, with regulatory pressures and market dynamics constantly changing. Klarna's reliance on AI and its ambitious IPO plans will be closely watched by investors and industry observers alike, serving as a barometer for the company's long-term viability and the broader acceptance of AI in financial services.


NCFA Jan 2018 resize - Klarna's AI Handles 700 Jobs, Targets $20B IPOThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Calgary-based Helcim Secures $27 Million Series B

Funding | Feb 27, 2024

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Helcim secures $27 million CAD in Series B to expand payment processing for underserved SMBs

Calgary-based FinTech startup Helcim has recently closed $27 million CAD ($20 million USD) in Series B financing to address the complex and often expensive landscape of payment processing for SMBs.  The Series B financing was led by Headline, with participation from new investors Clocktower Ventures, Vesey Ventures, and SilverCircle, alongside returning investors Information Venture Partners and Aquiline Technology Growth.

  • The Series B funding will be used to accelerate product development, focusing on enhancing omnichannel distribution channels and adding new payment, software, and financing capabilities.  The funding round was not just about securing capital but also about finding partners who believe in Helcim's vision, team, and the culture they are building.

See:  BoC Consultation: Draft Supervisory Guidelines for PSPs

  • Founded in 2008, Helcim provides a comprehensive suite of payment solutions targeting traditional SMBs, including retail merchants, auto-repair shops, and healthcare clinics.  The company aims to fill a crucial gap for Main Street businesses by offering digital-first tools, more affordable payments, and exceptional customer support.
  • This investment follows a $16 million Series A funding round in March 2022, showcasing Helcim's continued growth and investor confidence.  Helcim's growth has been nearly fivefold since their Series A, now servicing merchants in every U.S. state and 12 of Canada's 13 provinces and territories across more than 800 industries.

Outlook

By focusing on underserved segments characterized by higher Average Order Values (AOVs), lower digital payment penetration, and tighter working capital needs, Helcim is positioned to significantly disrupt the market and support small businesses.

See:  McKinsey Global Payments On Cusp of ‘Decoupled Era’

Helcim's efforts to serve the underserved promise to redefine how Main Street businesses operate, making digital payment solutions more accessible and tailored to their specific needs.


NCFA Jan 2018 resize - Calgary-based Helcim Secures $27 Million Series BThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Züm Rails’ $10.5M Boost for North American Expansion

Funding | Feb 23, 2024

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Züm Rails Secures $10.5M Series A Funding to Expand Across North America

Züm Rails, a Canadian fintech startup, is transforming the payment processing landscape by securing $10.5 million in Series A funding , led by American-based VC Arthur Ventures, funding to expand its innovative banking-as-a-service and instant payment solutions in the U.S. and beyond.

Founded in Montreal in 2019 by Marc Milewski and Miles Schwartz, Züm Rails has quickly risen to prominence by addressing the fragmented nature of payment experiences for businesses. By developing an all-in-one payments gateway that integrates open banking with instant payments, Züm Rails is enabling companies to streamline their financial transactions without needing to become payment experts. With this recent infusion of venture capital, Züm Rails is poised to accelerate its growth, expand its offerings, and solidify its position as a leader in the fintech space.

See:  Autonomous IoT Transactions and Micropayments

  • The company's "omni rails" technology supports a wide range of payment methods, including traditional and real-time options, through partnerships with major financial networks including Visa Direct, Mastercard, MX and Canada’s Interac network.  Züm Rails' solutions are designed to reduce fraud, verify customer identities, and facilitate seamless payments, addressing critical needs in the fintech industry.
  • Processing over $1 billion in payments monthly for more than 500 companies including Questrade, Coinsquare and Desjardins, Züm Rails has seen a 200% growth in the past year and recently expanded into the U.S. market.  The $10.5 million funding round, led by Arthur Ventures, will be used to grow Züm Rails' presence in the U.S. and introduce new banking-as-a-service features and a FedNow offering.

Marc Milewski, co-founder of Züm Rails:

"You learn about all the problems everyone has moving money. Open banking was discussed, but I thought it was more about payments. Miles and I talked about building a whole new gateway that unified these experiences. Companies don’t want to be payment experts — that’s our job."

See:  How Permissioned DeFi Will Transform Global Payments

Why It Matters

In a world where digital transactions are becoming increasingly complex and security concerns are paramount, Züm Rails offers a streamlined, secure, and efficient solution. Their solutions enhance the operational efficiency of businesses and also contribute to the broader adoption of open banking and instant payment technologies, setting new standards for the fintech industry.


NCFA Jan 2018 resize - Züm Rails' $10.5M Boost for North American ExpansionThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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BoC Consultation: Draft Supervisory Guidelines for PSPs

BoC Payments Consultation | Feb 21, 2024

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Seeking Feedback: Bank of Canada Drafts Supervisory Guidelines for Payment Service Providers (PSPs)

The Bank of Canada has recently announced a consultation phase for its draft supervisory guidelines under the Retail Payment Activities Act and its regulations. This legislative framework requires PSPs registered with the Bank of Canada to adhere to specific operational standards, including the management of operational risks, incident response protocols, safeguarding of end-user funds, and mandatory reporting of certain incidents and significant changes to the Bank.  These requirements are set to take effect on September 8, 2025.

See:  Canada’s New Retail Payment Regulations: Registration and Compliance

The draft supervisory guidelines prepared by the Bank of Canada delineate the Bank's expectations for PSPs in meeting these obligations. The guidelines are designed to ensure that PSPs operate in a manner that is safe, efficient, and in the best interest of their end-users. They cover a broad spectrum of operational and risk management practices that PSPs are expected to implement.

Your Input Is Required

This consultation represents a critical opportunity for stakeholders within the fintech and payment sectors to review the proposed guidelines and provide feedback. The Bank of Canada is seeking input on how these guidelines can be refined and improved to better serve both the industry and the consumers who rely on these services.

We encourage all NCFA members and stakeholders to participate in this consultation process. Your insights and expertise are invaluable in shaping a regulatory environment that supports innovation while ensuring the safety and integrity of payment services in Canada.

See:  BoC Update for PSPs: New Registration Guide and Supervisory Policies Available

To participate, please visit the Bank of Canada's website to read the draft guidelines and share your feedback and contribute to a dialogue that will help shape the future of payment services regulation in Canada.

This is an important moment for the fintech community to come together and ensure that the regulatory framework aligns with the realities of modern payment services and the needs of consumers. Let's make our voices heard and contribute to the development of guidelines that promote a secure, competitive, and innovative financial services sector.  For more information, please visit the website and learn more about the Retail Payments Supervision Consultation.


NCFA Jan 2018 resize - BoC Consultation: Draft Supervisory Guidelines for PSPsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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BoC Update for PSPs: New Registration Guide and Supervisory Policies Available

Payments Regulation | Feb 14, 2024

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Important Update for Payment Service Providers: New Registration Guide and Supervisory Policies Now Available

The National Crowdfunding & Fintech Association of Canada (NCFA) is committed to keeping its members informed about significant regulatory changes affecting the fintech sector. In line with this commitment, we are sharing an important update from the Bank of Canada regarding the registration process for payment service providers (PSPs) under the Retail Payment Activities Act (RPAA).

Registration Window Opens November 1, 2024

The Bank of Canada has announced that PSPs must register under the RPAA and its regulations starting November 1, 2024. The deadline for submitting a registration application is November 15, 2024. This registration is a critical step for PSPs operating in Canada, ensuring compliance with the latest regulatory standards and contributing to the integrity and security of the retail payments ecosystem.

New Registration Guide Released

To assist applicants in navigating the registration process, the Bank of Canada has released a comprehensive step-by-step guide. This guide is designed to help PSPs gather the necessary documents and information required to complete the application form accurately and efficiently.

Reporting Requirements

A key component of the registration process involves the reporting of quantitative metrics related to retail payment activities. PSPs are required to report these metrics at the time of registration and subsequently as part of their annual reporting. The Bank of Canada's newly released policy provides detailed guidance on these reporting obligations, ensuring PSPs understand how to comply effectively.

Amendments to Registration Applications

The Bank of Canada emphasizes the importance of maintaining accurate and up-to-date information throughout the registration process. Applicants are responsible for notifying the Bank of any changes to the information provided in their application. The latest policy update outlines the procedure for notifying the Bank of any such changes, ensuring transparency and compliance.

Resources and Further Information

For PSPs preparing for registration, the Bank of Canada's website offers a wealth of resources and information to guide you through the process. We encourage all our members and stakeholders in the payment services sector to review these materials carefully to ensure a smooth and successful registration experience.  Visit the Bank of Canada's website on Retail Payments Supervision for more information.

Other links you may be interested in:

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

BoC Speech: Essence of the New Retail Payment Activities Act

Final Retail Payment Regulations Released Paving Way For Implementation

Canada’s New Retail Payment Regulations: Registration and Compliance


NCFA Jan 2018 resize - BoC Update for PSPs:  New Registration Guide and Supervisory Policies AvailableThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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