On November 1, 2024, the Bank of Canada began requiring payment service providers (PSPs) register under the Retail Payments Activities Act (RPAA). While credit unions are explicitly exempt from this requirement, this regulatory shift signals significant changes in Canada’s financial landscape—changes credit unions shouldn’t ignore.
What the RPAA means for payments in Canada
The RPAA establishes oversight for non-bank entities that handle electronic payments, such as digital wallets, payment processors, and money transfer services. It’s designed to make payments safer and more reliable by requiring these PSPs to meet similar high standards for risk management and fund protection already in place for credit unions and banks.
These standards include managing risks associated with cybersecurity, business continuity and operations.
Credit unions: Exempt but not unaffected
Although credit unions are not required to register as PSPs, they are still impacted by the broader changes the RPAA brings. Here’s why this matters:
1. Increased competition
The RPAA aims to modernize Canada’s payment system, opening the door for new players like fintechs to compete in areas traditionally dominated by financial institutions. Credit unions may see increased competition as these PSPs introduce innovative payment solutions that appeal to members looking for fast, digital-first options.
Some fintech PSPs, for example, have started competing with banks by offering real-time lending services to their customers (e.g., Buy Now Pay Later); meanwhile Software as a Service (SaaS) companies will continue to encroach on services historically offered by financial institutions (think of a Pay Now button on a digital invoice).
2. Partnering with PSPs
On the flip side, many credit unions already collaborate with PSPs to offer services like online payments or money transfers. Ensuring these partners are registered and compliant with the new standards protects both the credit union and its members from potential risks. Awareness of these standards may be a starting point for credit unions who don’t have a playbook on how to support or evaluate their current or potential fintech partners.
3. Keeping up with member expectations
Members expect their financial institutions to offer convenient and secure digital services. Staying informed about changes in the payment landscape allows credit unions to anticipate what members might want next and make proactive improvements in their own technologies and systems and/or through strategic partnerships.
There are fintechs in jurisdictions outside Canada, for example, who have succeeded gaining market share by targeting younger, digital-savvy demographics with integrated, feature-rich and easy-to-use payment solutions; lower fees; and round-the-clock financial services.
What credit unions can do now
Even though credit unions are not required to register under the RPAA, there are steps they can take to stay ahead in response to this change:
- Review vendor relationships: Work with PSPs that are compliant with the new rules to ensure your operations remain secure and reliable.
- Plan for innovation: Explore how real-time payments or other emerging technologies can enhance your services.
- Stay informed: Monitor updates from the Bank of Canada and industry leaders to understand how payment trends and regulations could affect your operations.
The bottom line
The RPAA is changing the rules of the game for payments in Canada. While credit unions are exempt from registering, the ripple effects of this regulation will impact the entire financial ecosystem. By staying informed and proactive, credit unions can continue to meet member needs, strengthen their competitive position, and take advantage of the opportunities these changes present.
What’s the difference between the RPAA and Payments Canada
Not to be confused, the Retail Payments Activity Act (RPAA) and Payments Canada are two distinct elements in Canada’s financial ecosystem, each with its own role and responsibilities. The RPAA ensures individual payment providers are operating securely and transparently, whereas Payments Canada ensures the underlying infrastructure for transactions is modern, fast, and reliable.
| Aspect | RPAA | Payments Canada |
| Focus | Regulation of non-bank PSPs | Operation and modernization of payment systems |
| In Scope | Applies to individual PSPs | Covers entire payment systems infrastructure |
| Participants | Fintech, non-bank PSPs | Banks, credit unions, and other FIs |
| Key Deliverable | Compliance with risk and security standards | Payment system modernization |