The Retail Payment Activities Act (RPAA) has specific terms that one should be aware of to maintain RPAA compliance. Agency is one of the key concepts you must understand. Typically, the term ‘agency’ under RPAA has two distinct meanings.
If you want to learn about the meaning of agency under the RPAA, you’re in the right place. Let’s look at everything you must know about this term for RPAA Canada compliance.
What Is Agency Under the RPAA?
The RPAA has two agency types that one must understand clearly. A supervisory agency oversees the operations of service providers under the RPAA.
Meanwhile, a principal agency is the one for which agents work. Below are complete details about these two types.
Supervisory Agency Under the RPAA
The Bank of Canada is the supervisory agency under the RPAA. It is the primary agency that oversees the operations of Payment Service Providers (PSPs), Money Service Businesses (MSBs), and more under the RPAA.
This agency mainly monitors the frameworks created by PSPs and determines whether they adhere to RPAA compliance. The Bank of Canada also reviews and either approves or rejects applications from service providers seeking registration under the RPAA.
If any principal agency doesn’t adhere to RPAA compliance, the supervisory agency under the RPAA can hold it accountable for non-compliance. The Bank of Canada can also impose penalties or revoke registrations of non-compliant principal agencies.
For example, it may limit the volume of transactions that a PSP can perform in a day or month. Promoting RPAA compliance and informing consumers of financial trends upon analysis of PSP annual reports is also the duty of the supervisory agency.
Principal Agency Under the RPAA
A principal agency under the RPAA is the entity that is directly involved in performing retail payment activities in Canada.
It can also refer to an individual who performs payment functions as part of their service to consumers or overall business activities.
This means that a PSP is actually a principal agency under the RPAA. Every principal agency is required to complete their RPAA registration if they are performing the following functions:
● Maintaining an account for an end-user
● Holding money for an end-user
● Authorizing transmission or reception of electronic funds transfer (EFT)
● Facilitating instructions related to the processing of an EFT
● Settlement of transactions
So, a principal agency under the RPAA is mainly the one that performs transactions or manages funds under this act.
What Is an Agent Under the RPAA?
An agent under the RPAA is also called a mandatary. It is a person or entity that mainly works for the principal agency under the RPAA Canada.
The mandatary performs payment activities as the representative of a PSP. They can also conduct or offer other services that fall under a PSP’s scope.
In some cases, the presence of an agent can be troublesome for the principal agency under the RPAA. This is because the Bank of Canada may require an agent to register with it in certain cases.
Keep in mind that every RPAA regulation that a PSP follows must also be followed by agents under this act. Otherwise, your company will be violating the regulations of the Payment Activities Act.
What Does a Supervisory Agency Under the RPAA Not Do?
Many people know the role of the Bank of Canada in the context of RPAA. However, most don't know the things that this supervisory agency under the RPAA doesn't cover.
The Bank of Canada cannot supervise businesses that are regulated by provincial laws. Entities such as credit unions are also not subject to RPAA registration because their supervision is done under federal laws.
Other things that don't fall under the purview of the supervisory agency under the RPAA are:
● Resolving disputes between end-users and payment service providers
● Adjusting fees that PSP can charge its consumer for conducting the transaction
● Complaints about privacy against the PSP
The main purpose of the Bank of Canada is to supervise service providers to see whether they adhere to RPAA compliance. It is not required to prevent PSPs from failing in specific aspects.
Does the Supervisory Agency Under the RPAA Work For Free?
The supervisory agency under the RPAA recovers the cost of its supervision in two ways:
1. RPAA Registration Fee
Every principal agency under the RPAA must complete the RPAA registration form to begin operations in Canada. When filling out the form, these entities must pay a small fee during submission.
Some agents representing a PSP may have to complete RPAA registration. These individuals must also pay a charge to submit their application.
This is the first method by which the supervisory agency recovers its costs for reviewing applications. If a PSP submits their form but doesn't pay the fee, their application will not be checked.
2. Yearly Assessment Fee
Another way the Bank of Canada recovers its cost for overseeing a PSP is the yearly assessment fee. Registered entities have to submit a compiled report every year to the supervisory agency.
This enables the Bank to assess whether the entity continues to adhere RPAA compliance. It also helps the supervisory agency assess the impact of any new policy the PSP wants to implement for its business.
To review these reports, the Bank of Canada has a yearly assessment fee that all PSPs must pay. This charge will cover the gap that remains after acquiring the RPAA registration fee.
Meet With Renno & Co. Fintech Lawyers Today For Understanding Agency Under The RPAA Meaning
Under the RPAA, an agency can be classified as either supervisory or principal. The former includes the Bank of Canada, which oversees the transactions and response frameworks of retail payment businesses that come under the RPAA.
A principal agency, on the other hand, is a PSP that performs retail transactions, safeguards funds for end-users, and initiates EFTs.
If you want to learn more about these agencies under the RPAA Canada, contact us now to set up a meeting with our lawyers. They can help you understand the role and limitations of agencies under the RPAA.
