Explanatory Note for the Order in Council to bring into force amendments to the Canadian Payments Act
(This note is not part of the Order)
Proposal
The Order in Council, made pursuant to section 230 of An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, fixes the day on which sections 219 to 228 of that Actcome into force as the day the Order is made.
Objective
The objective of the Order in Council is to bring into force amendments to the Canadian Payments Act to expand membership eligibility in the Canadian Payments Association (Payments Canada) to additional regulated entities and clarify the composition of Payments Canada's Stakeholder Advisory Council.
Background
Payments Canada owns and operates Canada's core clearing and settlement payment systems. Access to these systems is limited to members of Payments Canada, as set out in the Canadian Payments Act. Banks are required to be members of Payments Canada and other regulated financial institutions, such as centrals, cooperative credit associations, securities dealers, and trust companies, are eligible for membership and can voluntarily join. To participate in a system, members must meet the relevant operational, technical, security, and other requirements set out in Payments Canada's standards, rules and by-laws.
On June 20, 2024, the Canadian Payments Act was amended to expand membership eligibility to:
- Payment service providers (PSPs) supervised by the Bank of Canada under the Retail Payment Activities Act (RPAA) regime;
- Credit union locals that are part of a credit union central; and
- Operators of clearing and settlement systems designated under the Payment Clearing and Settlement Act and overseen by the Bank of Canada.
These amendments included a delayed coming into force provision to ensure the RPAA regime would be operational before PSPs became eligible for membership. With the substantive elements of the RPAA regime coming into effect as of September 8, 2025, it is now appropriate to bring these amendments into force.
The amendments also clarify that members of Payments Canada are not eligible to serve on its Stakeholder Advisory Council. While this was already the case in practice, this legislative change clarifies that PSPs who become eligible for membership but choose not to join Payments Canada may still participate on the Stakeholder Advisory Council.
Finally, the Order brings into force new definitions for "entity" and "person" to reflect the expanded class of eligible members, and related amendments to distinguish between "individuals" (i.e., natural persons) and "legal persons" such as corporations and other organizations.
Implications
Expanding membership eligibility in Payments Canada to include credit union locals, PSPs and operators of designated clearing and settlement systems will enable these entities to directly access Payments Canada's systems, provided they meet the relevant operational, technical, and security requirements.
Expanding Payments Canada membership will allow new entities to apply to participate directly in the national payment systems, enhancing competition and innovation in the payments ecosystem.
Consultation
The Department of Finance has consulted extensively with consumer groups, banks, credit unions, merchant associations, and PSPs on expanding membership eligibility in Payments Canada. There is broad support for bringing these amendments into force.