Canada: Report On The Review Of The Canadian Payments Act: A Summary

Last Updated: March 20 2019
Article by Tracy Molino

On February 27, 2019, the Department of Finance (Department) released its summary Report on the Review of the Canadian Payments Act (Report). As we summarized in our June 2018 insight, the 2018 review of the Canadian Payments Act (Review) focused on two general themes:

  • The impact of governance changes made in 2015, which were implemented to enable Payments Canada to more effectively achieve its public policy objectives (safety, soundness, efficiency, and taking into account the interests of its payments-system users); and
  • The creation of an associate member class of membership, to better reflect the changing make-up of the payments ecosystem and support Payments Canada's ongoing modernization initiatives.

The Report summarizes respondent feedback and provides some indication of the Department's next steps in the process of amending the Canadian Payments Act.1



With respect to governance, the Report notes that, while respondents found the 2015 changes to be beneficial overall (for both the payments ecosystem, as well as Payments Canada), they indicated that there is room for improvement moving forward.

The prominent governance themes covered in the Report are:

a) Payments Canada board structure

The Report notes that views on the shift to a majority-independent-board, and a move away from member-volume-based voting were largely positive. More independent decision-making is thought to have driven the board to consider a wider range of information and opinions, and given additional momentum to Payments Canada's ambitious modernization effort. On the other hand, some respondents were concerned that the governance changes have misaligned member and Payments Canada interests. By definition, an independent board means that members are no longer able to exercise significant oversight of Payments Canada initiatives or manage the development of the organization itself.

The disparity in responses is understandable given the wide-range of participants in Canada's payments ecosystem. This disparity has likely been magnified, as Payments Canada has undertaken large-scale changes to the Canadian payments infrastructure, which is funded by its members.

While the diverging views are unsurprising, they do mean that the Department has work to do to find common ground between the respondents, whose responses appeared supportive of either increased board independence or increased member input.

b) Transparency of board decision-making

Responses that addressed transparency recognized Payments Canada for fostering a collaborative environment and engaging in dialogue with the payments industry. However, the Report highlights that some respondents felt there was a lack of transparency around the board's consideration, and use of the advice it receives from the Member and Stakeholder Advisory Councils (MAC and SAC, respectively). Suggestions for improvement included publishing the board's decision-making process, and requesting the board provide more thorough explanations of its decision-making process to MAC and SAC.

c) Advisory Councils

The appropriate role of Advisory Councils proved to be quite polarizing for respondents. The Report described the relevant comments as "present[ing] contrasting perspectives and provid[ing] the view that the [C]ouncils have either too little or too much influence on the board..." Once again, these divergent industry views highlight the tension between taking into account the interests of users, while recognizing members' valid concerns around decision-making processes and overall governance of the organization.

In contrast, the Report notes convergence around the need to improve communication with, and the proper alignment between, the board and the Councils. It seems that while respondents don't agree on the appropriate role of each Council, they do agree that their current roles, and the weight given by the board to their input, aren't clearly defined.

This discomfort is unsurprising, given the more complex dynamic created by the interaction between a newly-independent board, a newly-created MAC and the longstanding SAC. Less formal lines of communication may have been sufficient before the 2015 governance changes took effect, when members made up the majority of the board and SAC input could be considered on its own. For the new governance structure to function effectively, the roles, responsibilities and expected deliverables for each of the three bodies, may have to be more prescriptively delineated.

d) Achievement of public policy objectives

Finally, while the Department requested feedback on whether the new governance structure has positively impacted Payments Canada's ability to achieve its policy objectives, respondents indicated that it was too soon to say. They also highlighted the organization's modernization efforts "as a litmus test for assessing the success of changes..."2


The Review also solicited feedback on amending the Canadian Payments Act3to add a new associate membership class. In its Report, the Department describes the new class as follows:

The proposed associate membership would create a separate and distinct class of members in Payments Canada. This would permit non-traditional payment service providers, regulated under the proposed Retail Payments Oversight Framework,4 to participate directly on the real-time rail.5

There was widespread respondent support for broadening Payments Canada membership. However, because membership is a proxy for access to Payments Canada's systems, it is closely related to the concept of system access; the Department's Review proposed an open, risk-based access model.

"Risk-based access" means that the more impactful the disruption of a given system would be to the financial system and economy, the more critical the safety and soundness considerations are to assessing participant access to that system. As mentioned above, there was widespread respondent support for this concept. However, membership also comes with obligations and other responsibilities. Expectedly, respondents agreed that oversight of associate members could be accomplished through regulation under the yet-to-be-released Retail Payments Oversight Framework, and compliance with applicable Payments Canada by-laws and rules.

In keeping with this risk-based access model, respondents supported different degrees of "open" access to the Real-time rail ("RTR") and the retail payments system (currently, the Automated Clearing and Settlement System "ACSS"). The Report notes most respondents that addressed the issue were in favour of broad access to the RTR, including extending access to non-traditional payment service providers (PSP) and the proposed associate membership class.

In contrast, respondents supported more limited ACSS participation. There was support for associate-member access solelyto the exchange of payments, providing that those members meet the same requirements of "full" members. This limited access to the retail payments system could be possible because Payments Canada has proposed "decoupling" the exchange of payments from their clearing and settlement.6 Because the exchange of payments is a lower-risk function than either clearing or settlement, "decoupling" it allows for access options to be matched with participant functions, ultimately broadening access to the payment system overall.

Notably, in its Review, the Department did not propose a particular access model for the retail payments system (either the ACSS or the new proposed model, the SOE). It is interesting that respondents appeared largely to agree on a limited access model, absent a specific proposal.


The Report is largely a summary document, taking a "wait-and-see" approach. Noting general support for the concept of an associate membership class, the ongoing development of the RTR and the overall lack of consensus on issues from respondents, the Department seems to suggest that amending the Canadian Payments Act would be premature, and that amendments would only follow the implementation of the Retail Oversight Framework in any event. Moreover, the diverse views received in response to the Review mean that additional consultation will be required, particularly with respect to the integration of associate members into Payments Canada's governance structures and liability model.

While further consultation is understandable, the payments ecosystem is undergoing rapid transformation, both in Canada and abroad. Legislative delays will not only increasingly hamper innovation in this space, but may result in the emergence of PSPs that deliver risky payment products in a regulatory vacuum, exposing end users to risks they otherwise wouldn't have to consider in an appropriately-regulated ecosystem.


  1. R.S.C., 1985, c. C-21.
  2. The Report at page 8.
  3. Membership is set out at section 4 of the Canadian Payments Act.
  4. For a detailed discussion of the proposed Retail Payments Oversight Framework, please see our earlier article here.
  5. The Report at page 9.
  6. For additional context, see at page 10.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions