Pay Attention: A New Wave of Changes to Canada’s Payments Industry

Canada’s financial services and payments sector is experiencing a surge of regulatory updates, impacting the Code of Conduct for the Payment Card Industry (Code), criminal interest rate laws, open banking, consumer protection in Quebec and anti-money laundering (AML) compliance. 

This article outlines critical regulatory changes that in-house counsel, compliance officers and financial services professionals need to understand and implement in the coming months.

1. Code of Conduct. The Code of Conduct provides certain rights to merchants and is relevant for all entities that issue payment cards or facilitate payment card acceptance in Canada. Significant changes to disclosure requirements, notification periods and complaints-handling procedures are being introduced in a two-phase rollout: October 30, 2024, and April 30, 2025.
2. Criminal Interest Rate. Effective January 1, 2025, Canada’s criminal interest rate will be lowered from an effective annual rate of 60% (approximately 48% APR) to 35% APR. Some exemptions will apply, including a 48% APR for commercial loans between C$10,000 and C$500,000 and no cap for commercial loans over C$500,000. Also, there are two new offences, not yet in force, for offering or advertising an offer to enter into an agreement or arrangement that provides interest at a criminal rate.
3. Open Banking Initiative. Canada’s open banking initiative, now termed “consumer-driven banking” (CDB), has progressed under the Consumer Driven Banking Act, allowing secure third-party data sharing for retail banks. The FCC will oversee CDB in phases, with the largest retail banks first in line to comply. Payments Canada’s real-time payment system, delayed until 2026 for industry testing, represents Canada’s broader modernization efforts.
4. Quebec Consumer Protections. Quebec’s Bill 72 introduces new consumer protections to prevent credit abuse, refund consumers for unauthorized or fraudulent transfers, and limit consumer liability to C$50. Additional measures that target open credit, introduce a new licensing requirement and clarify suggested tips on payment terminals, further tighten consumer rights in the province.
5. AML Requirements. Recent amendments to AML legislation will require financial institutions and other regulated entities to file reports on suspected sanctions evasions and property owned or controlled by sanctioned persons. White-label ATM operators, title insurers, mortgage brokers, lenders and administrators will also be subject to the AML regime.

Have more than five minutes? Watch our webinar on this topic or contact any member of our Financial Services Regulatory group.