Canadian payments association
Encyclopedia
The Canadian Payments Association (CPA) is a not-for-profit organization
that:
. These systems allow financial institution
s to calculate how much is owed to each other as a result of their customer's transactions and to transfer those funds to settle those balances.
The CPA operates three main clearing and settlement systems:
, which was amended and renamed the Canadian Payments Act (CP Act) in 2001. The Association has 135 members including the Bank of Canada, chartered banks, trust and loan companies, credit union centrals, federations of caisses populaires and other financial institutions. The Minister of Finance
has oversight responsibilities for the CPA. The Governor of the Bank of Canada has oversight responsibility for the LVTS under the Payment Clearing and Settlement Act. The Minister of Finance makes three appointments to the Board of Directors and the Bank of Canada appoints the chair, while members elect the remaining 12 directors.
A 20-person Stakeholder Advisory Council (SAC) provides advice and input to represent the diverse interests of users of the payments system. The SAC was established by the Canadian Payments Association in 1996 on a voluntary basis and was formalized in the Canadian Payments Act in 2001. The SAC provides advice to the CPA Board of Directors on payment, clearing, and settlement matters, and contributes input on proposed initiatives, including by-laws, policy statements, and rules that affect third parties. It also identifies issues that might concern payment system users and third-party service providers, and suggests how they could be addressed.
The CPA is administered by a full-time staff of approximately 80 and is headquartered in Ottawa
.
process to seek input from key user groups. As an example of this consultation, in 2010 the CPA facilitated industry-wide innovation with frameworks for contactless debit payments
.
Arising from these objectives, in 2010 the CPA:
Non-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
that:
- operates and maintains national systems for the clearing and settlement of paymentPaymentA payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....
s and other arrangements for the making or exchange of payments; - facilitates the interaction of the CPA’s systems with others involved in the exchange, clearing and settlement of payments; and
- facilitates the development of new payment methods and technologies.
Clearing and Settlement Systems
Clearing and Settlement Systems are essential to the smooth functioning of the economyEconomy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
. These systems allow financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
s to calculate how much is owed to each other as a result of their customer's transactions and to transfer those funds to settle those balances.
The CPA operates three main clearing and settlement systems:
- The Large Value Transfer SystemLarge Value Transfer SystemThe Large Value Transfer System, or LVTS, is a system in Canada for electronic wire transfers of large sums of money; it permits the participating institutions and their clients to send large sums of money securely in real-time with complete certainty that the payment will settle...
(LVTS) is Canada's primary system for clearing and settling large value, time critical Canadian dollarCanadian dollarThe Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...
transactions. It provides participants and their customers with the certainty that, once a payment has passed the system's risk-control tests, the transactions are final and will settle on the books of the Bank of CanadaBank of CanadaThe Bank of Canada is Canada's central bank and "lender of last resort". The Bank was created by an Act of Parliament on July 3, 1934 as a privately owned corporation. In 1938, the Bank became a Crown corporation belonging to the Government of Canada...
the same day. - The Automated Clearing Settlement System (ACSS) is a system through which Canadian dollar cheques and electronic payment items, such as direct deposits, ATM withdrawals, point of sale transactions, online payments and pre-authorized debit and bill payments are cleared and settled. The system tracks the exchange of payment items and the resulting balances due to and from direct participants.
- The CPA also operates the U.S. Dollar Bulk Exchange (USBE), a parallel system to the ACSS used for payment items in US dollars in Canada.
Statistics
The CPA's ACSS and LVTS systems cleared and settled on average over $170 billion every business day in 2010. On average, 24 million payments cleared each day through CPA systems, representing over 6 billion payments over the year in 2010 CPA Annual Review 2010.History and Governance
The CPA was established in 1980 by an Act of ParliamentAct of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
, which was amended and renamed the Canadian Payments Act (CP Act) in 2001. The Association has 135 members including the Bank of Canada, chartered banks, trust and loan companies, credit union centrals, federations of caisses populaires and other financial institutions. The Minister of Finance
Minister of Finance (Canada)
The Minister of Finance is the Minister of the Crown in the Canadian Cabinet who is responsible each year for presenting the federal government's budget...
has oversight responsibilities for the CPA. The Governor of the Bank of Canada has oversight responsibility for the LVTS under the Payment Clearing and Settlement Act. The Minister of Finance makes three appointments to the Board of Directors and the Bank of Canada appoints the chair, while members elect the remaining 12 directors.
A 20-person Stakeholder Advisory Council (SAC) provides advice and input to represent the diverse interests of users of the payments system. The SAC was established by the Canadian Payments Association in 1996 on a voluntary basis and was formalized in the Canadian Payments Act in 2001. The SAC provides advice to the CPA Board of Directors on payment, clearing, and settlement matters, and contributes input on proposed initiatives, including by-laws, policy statements, and rules that affect third parties. It also identifies issues that might concern payment system users and third-party service providers, and suggests how they could be addressed.
The CPA is administered by a full-time staff of approximately 80 and is headquartered in Ottawa
Ottawa
Ottawa is the capital of Canada, the second largest city in the Province of Ontario, and the fourth largest city in the country. The city is located on the south bank of the Ottawa River in the eastern portion of Southern Ontario...
.
Consultation
The Canadian Payments Act also provides that the CPA must “promote the efficiency, safety and soundness of its clearing and settlement systems and take into account the interests of users”. Consumers, corporations, merchants, governments and payment service providers represent significant groups of system users, and as such, their interests are taken into account by the CPA in pursuing its objectives. Uniquely positioned as a consensus broker within the payments industry, the CPA ensures that significant rule changes follow an established public consultationPublic consultation
Public consultation, or simply consultation, is a regulatory process by which the public's input on matters affecting them is sought. Its main goals are in improving the efficiency, transparency and public involvement in large-scale projects or laws and policies...
process to seek input from key user groups. As an example of this consultation, in 2010 the CPA facilitated industry-wide innovation with frameworks for contactless debit payments
Contactless payment
Contactless payment systems are credit cards and debit cards, key fobs, smartcards or other devices which use RFID for making secure payments. The embedded chip and antenna enable consumers to wave their card or fob over a reader at the point of sale. Some suppliers claim that transactions can be...
.
Activities
In March 2010, the CPA released its long-term Payments Strategy: Vision 2020, a roadmap for personal, corporate and wholesale payments which ensures that the systems for payments, clearing and settlement continue to evolve to meet the needs of Canadians until the year 2020, and beyond. Vision 2020 focuses on five pillars:- Promotion of electronic payments;
- Driving efficiencies in payments;
- Modernizing the CPA legal framework;
- Enhancing the robustness of CPA Exchange, Clearing and Settlement IT Systems; and
- Enhancing services that promote knowledge and information sharing to better meet the needs of CPA clearing and settlement system participants and users.
Arising from these objectives, in 2010 the CPA:
- supported the Government of Canada's Task Force for the Payment System Review with its submission Building a Strong Foundation for Canada's Digital Economy;
- undertook a rigorous review of its clearing and settlement framework to ensure it continues to be efficient and sound, while meeting the needs of its members, stakeholders and the marketplace;
- developed a Long Term Technology Strategy and Transition Roadmap to modernize the CPA's core clearing and settlement systems; and,
- hosted the International Council of Payment Association Chief Executives (ICPACE), which includes representatives from the United Kingdom, Ireland, South Africa, Australia, the United States, New Zealand and Canada.