Bank of Canada issues immediate compliance order under the Retail Payment Activities Act

In the first ever order made under the Retail Payment Activities Act (RPAA), the Bank of Canada issued a temporary order against a tip manager for failing to comply with the RPAA. This signals a serious regulatory concern and underscores the implications of ensuring businesses are in compliance with the provisions of the RPAA.

The facts that gave rise to the Bank of Canada’s order are the following:

XTM Inc. (XTM) is a restaurant tip management system that allows restaurant owners to collect and distribute employee tips through prepaid cards using its Everyday platform.

The Bank of Canada issued a temporary order on February 17, 2026, to XTM to stop all retail payment activities. The Bank of Canada cited serious concerns about XTM’s handling of client funds, including its failure to properly safeguard money held for users of its Everyday platform, leading to a significant shortfall in end-user funds. This order followed on various individuals in the hospitality industry in British Columbia raising issues of tips disappearing from the platform.

The Bank of Canada has barred XTM from withdrawing money from accounts associated with the platform and from representing itself as a payment service provider. This order was issued under section 94(4) of RPAA. Temporary orders under section 94(4) of the RPAA cease to have effect 30 days after the day the order is made or after the expiration of a shorter period specified in the order.

The temporary order

A review of the Bank of Canada’s order disclosed the following requirements under the order:

• XTM must immediately stop all retail payment activities, including through the Everyday platform;
• XTM must not direct transactions or withdrawals from any accounts tied to the platform;
• XTM must stop holding itself out as a payment service provider in any public communication;
• Within seven days, XTM must submit a plan for complying with RPAA obligations or transitioning its retail payments activities to another registered payment service provider;
• XTM must preserve all records and related documents; and
• XTM has 14 days to make representations arguing why the order should be revoked; otherwise, the order may remain in effect beyond the initial 30-day period.

The Bank of Canada’s temporary order signals a serious regulatory concern about XTM’s handling of end-user funds and is intended to prevent further harm. XTM must now either demonstrate compliance with the RPAA or transition its services, with its future operations dependent on the outcome of that process.

Conclusion

This development underscores the importance of strong regulatory oversight to protect the public and ensure that funds entrusted to payment service providers are properly safeguarded. If you are concerned that your business may be impacted, contact a member of our Financial Services or Compliance team for assistance