Point-of-sale software providers, payment apps and other fintech firms in the largely unregulated sector will need to register with the central bank starting Nov. 1
is urging thousands of digital payment companies to get on board with a new regulatory regime that starts rolling out this week, warning that it could take a tough line with businesses that fail to sign up.
“It’s entirely possible that you could see public enforcement action from the bank relatively early in the new year for those who don’t register. I would like to think we’re not going to have to take enforcement action. But again, it feels a little naive to think that everything is just going to go swimmingly. We’ll see.”
“There could also be consolidation between smaller players, just to get some scale so that they can survive,” he said, adding that venture capital backers may force the issue. Large companies with legal teams and experience operating in other regulated markets shouldn’t have a problem adapting to the new rules, Mr. Vronces said. But for many smaller companies, “this is going to be very new, and this is something they’re probably not paying attention to. And so I think this is going to be a pretty big pill to swallow.”
companies manage client funds so they are recoverable in the event of a bankruptcy. The Canada Deposit Insurance Corp. and its provincial counterparts insure deposits for banks and credit unions, but not for fintech firms. “If you’re three people who developed an app out of a garage in Markham … They know the risks they face in their business. They’re taking actions to mitigate those risks. What they’re going to have to do, though, is actually write that down,” Mr. Morrow said.
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