Payments Canada announced recently that it implemented amendments to By-laws No. 1 and 3. These amendments now aim to reflect key changes to the Canadian Payments Act (CP Act) as well as the introduction of the Retail Payment Activities Act (RPAA). The stated objective of these updates is to support more broadened Payments Canada membership and participation eligibility and encourage competition in the payment sector, while ensuring alignment and consistency with the current regulatory environment.
By-law No. 1, which currently governs membership and advisory council criteria, has reportedly been updated in order to highlight and reflect the changes in membership eligibility as well as the composition of the Stakeholder Advisory Council (SAC).
Payments Canada further noted that the amendments introduce and expand existing requirements for membership with the aim to reflect new eligible members. In alignment and consistent with amendments to the CP Act and regulatory requirements under the RPAA, payment service providers (PSPs) applying for membership must be “registered under the RPAA and provide proof of registration.” This change confirms that only PSPs supervised by the Bank of Canada are “eligible for membership and harmonizes with existing application criteria.”
In addition to this, clearing houses will now have to demonstrate that their clearing and settlement system is “designated under the Payment Clearing and Settlement Act (PCSA), and credit union locals will be required to provide evidence that they accept deposits transferable by order.”
Amendments also clarify that the SAC will now maintain its representative character by continuing to “allow appointment of non-member PSPs.” This ensures the SAC broadly includes payment service providers and users, “as stipulated by the CP Act.”
By-law No. 3 details the requirements for “exchanging, clearing and settling payment items through the Automated Clearing Settlement System (ACSS), Canada‘s retail batch payment system.” Amendments aim to “clarify the roles of credit unions and support system participation eligibility.”
One change clarifies the roles and responsibilities for member and non-member credit union locals regarding “compliance with Payments Canada’s by-laws and rules.”
A credit union local that becomes a member must comply with Payments Canada’s “by-laws and rules.” A member that clears on behalf of a non-member local will remain “responsible for ensuring the non-member local complies as if it were a member.” This change is said to be a direct result of the “expansion of membership eligibility to credit union locals that are a member of a central.”
Amendments also intend to clarify that the composition of a group could include locals, regardless of whether or not they are currently Payments Canada members. This latest change aligns with the current group clearer structure in the ACSS for the credit union industry.
Technical amendments have now been made in order to harmonize terms used in the by-laws with those in the CP Act. This reportedly aims to ensure more consistent wording with the enabling legislation, adds clarity “to regulatory provisions and improves overall consistency.”