Safeguarding end-user funds in Canada
A payment provider that holds your money must keep it apart from its own and record each day what is yours, so it can be returned to you if the provider fails.
Updated November 4, 2026
Your money is kept apart
These rules apply when a provider holds your money until you withdraw it or have it sent on.1
The Act gives a payment service provider three ways to hold that money. It can hold it in trust in an account used only for that purpose, use an account or method prescribed by the Regulations, or use another dedicated account protected by insurance or a guarantee for at least the full amount held.2
Your money must stay separate from all other funds. The provider cannot spend it on its own operations, including salaries, operating expenses or legal expenses.3
The bank or institution that keeps the account cannot take the money in it to cover a debt.2
From the day it arrives
The Bank of Canada expects your money to be placed in a safeguarding account as soon as the provider receives it. If processing makes that impossible despite the provider's best efforts, the Bank expects it there by the next Bank of Canada business day at the latest. In the meantime, the money is used for nothing else.4
If the provider fails
A provider that holds your money must maintain a written safeguarding framework. It must support reliable access to your balance without delay and provide for the money, or proceeds from insurance or a guarantee, to be paid to you as soon as feasible if the provider becomes insolvent.5
The framework must include a record with your name and contact details and the amount held for you at the end of each day.5
It must also explain how an insolvency administrator or insurer would obtain the relevant records, contact you, identify errors in the record and any shortfall, and return your money.5 Any proceeds from insurance or a guarantee remain outside the provider's estate.6
At least every three years, someone with the necessary skills and no role in running the safeguarding arrangement must review it independently.7
What to ask a provider
Ask which of the three arrangements the provider uses and at which institution, and whether it keeps the daily record of what it holds for you.
Related reading covers payment regulation in Canada, the Retail Payment Activities Act and Bank of Canada registration for payment service providers.
Questions
What does safeguarding end-user funds mean?
It applies when a provider holds money for you until you withdraw it or have it transferred to someone else.1 The provider must keep it in a dedicated trust account, in a prescribed account or manner, or in another dedicated account backed by insurance or a guarantee for at least the amount held.2
What happens to my money if a payment provider goes out of business?
The provider's safeguarding framework must provide for your money, or proceeds from insurance or a guarantee, to be paid to you as soon as feasible after insolvency. Its daily record identifies you and your balance, and its procedures explain how an administrator or insurer would obtain the records, contact you, address errors or shortfalls and return the money.3 Insurance or guarantee proceeds remain outside the provider's estate.4
Can a provider use my money for its own expenses?
No. Your money must be kept apart from all other funds and cannot pay for the provider's operations, including salaries, operating expenses or legal expenses.5
What should I ask a payment provider about my money?
Ask which of the three permitted arrangements it uses and at which institution. Also ask whether it keeps a daily record of your name, contact details and balance.