Publication date: December 19, 2025
This supervisory policy sets out the Bank’s approach to online marketplaces and explains when their activities fall within the scope of the Retail Payment Activities Act.
Background
Online marketplaces are two-sided platforms that, at their core, connect buyers and third-party sellers. This e-commerce model has been applied to a wide range of products and services, including physical goods, digital goods (i.e., software) and a wide range of on-demand services, such as ridesharing, short-term accommodation and home repairs. Marketplaces often also provide supporting services such as customer service, logistics and payments. A marketplace’s participation in payments can, in some instances, come into the scope of the Retail Payment Activities Act (RPAA).
Under the RPAA, a business is a payment service provider (PSP) if it performs one or more of the payment functions defined in the RPAA in a manner that is not incidental to a non-payments business. As described in the case scenarios about marketplaces, the Bank considers marketplaces to be PSPs within the scope of the RPAA if they play a role in the flow of funds when proceeds from sales are transmitted between buyers and third-party sellers. Meanwhile, marketplaces that use third-party PSPs to facilitate payments from end to end are generally not themselves considered PSPs, as they either do not perform payment functions or only do so incidentally to their marketplace activities.
In this policy, the Bank seeks to provide further clarity on its approach to online marketplaces and to provide additional information to help marketplaces understand whether their activities fall within the scope of the RPAA.
The Bank’s approach to marketplaces
Marketplaces often participate in payments to enable purchases on their platforms. This may involve developing their own systems or integrating with one or more third-party PSPs. A marketplace’s participation in the flow of funds between buyers and third-party sellers is the key factor in the Bank’s assessment of whether it is a PSP.
Marketplaces that are PSPs within the scope of the RPAA
As stated above, the Bank consider a marketplace to perform retail payment activities within the scope of the RPAA if it receives funds in a bank account it owns or controls as part of its payment flow between buyers and third-party sellers on its platform. This is the case even if a marketplace contracts with another PSP to conduct certain parts of the payment process. For example, a marketplace may contract with a PSP for acquiring services or to handle the remittance of payouts to sellers but still receive funds as part of the payment flow from a buyer to a third-party seller.
Payment functions performed by marketplaces
When a marketplace receives funds into a bank account it controls or owns, the marketplace typically plays a proactive role in determining which funds are owed to which seller and transferring them onward. It may also send and receive instructions—in addition to the funds themselves—to enable those transfers. In doing so, the marketplace performs payment functions that may include the provision or maintenance of an account; the initiation of an electronic funds transfer (EFT); the authorization of an EFT or the transmission, reception or facilitation of an instruction in relation to an EFT; and/or the provision of clearing or settlement services.
If a marketplace receives funds and they come to rest, the marketplace is not only performing the previously noted payment functions but is also performing the payment function of holding funds on behalf of an end user. In this case, the marketplace holds funds (specifically, the proceeds of sales awaiting distribution) on behalf of its third-party sellers. The Bank considers funds to be at rest even if they are subject to a predetermined payout schedule, such as once a week or once every two weeks, as these funds are not in transit and are the subject of an instruction for a future EFT. A marketplace that holds funds is required to safeguard them in accordance with the RPAA’s requirements for safeguarding end-user funds, ensuring that merchant funds held by the marketplace are available to the merchants in the event the marketplace becomes insolvent.
Regardless of the specific payment functions performed, marketplaces that are PSPs are expected to mitigate operational risks associated with these payment activities to ensure the safe and efficient movement of funds.
Payment functions are not performed incidentally
A marketplace is a PSP if it performs a payment function as a distinct service that does not exclusively support a non-payment business activity. When a marketplace is directly involved in the flow of funds on its platform, it performs a distinct payment service that facilitates transactions taking place between its customers, even if the marketplace also engages third-party PSPs to facilitate other parts of the payment process. Although these payment functions are performed for transactions that arise from the marketplace, they result in the marketplace providing a payment service that would need to be provided by a PSP if that service was not already embedded in the platform.
The Bank is aware that marketplaces may participate in the flow of funds to support, at least in part, operational aspects of running their marketplace, such as to simplify conflict resolution between users, manage fraudulent transactions or collect fees. However, this does not render a marketplace’s payment functions incidental to its marketplace business, because, from the third-party seller’s perspective, the marketplace also provides a payment service through its direct involvement in the flow of funds. Put another way, the marketplace offers a service (or part of a service) that, without the marketplace’s participation, the third-party seller would obtain from a PSP. For example, merchants can choose between selling on their own website, selling through an online marketplace as a third-party seller, or both, but all entities involved directly in processing and remitting payout funds to merchants provide a payment service.
In a case where a marketplace operator also sells its own products and services on the platform (e.g., a traditional retailer that integrates third-party sellers), the RPAA only applies to those payment functions performed in relation to transactions on the marketplace that involve third-party sellers.
Marketplaces that may not be PSPs within the scope of the RPAA
The Bank understands that marketplaces employ diverse approaches to embedding payments in their platforms. In some instances, marketplaces do not meet the definition of a PSP under the RPAA. This is typically the case when a marketplace uses third-party PSPs to handle payments from end to end. For example, a marketplace may require both buyers and third-party sellers to have an account with a specific PSP that is responsible for moving funds from the buyers to the sellers (i.e., through an “on-us” transaction handled by the PSP). See Case scenario: Marketplace that relies on both buyers and sellers having a wallet account at a payment service provider (PSP).
Other marketplaces may have a more complex payment structure where they contract with more than one PSP, but where funds still never transit through a bank account controlled or owned by the marketplace. For example, a marketplace could use one PSP as an acquirer so that payment methods such as debit and credit cards can be accepted on the marketplace, while a second PSP is used to receive funds from the acquirer and make payout to the third-party sellers. In this type of arrangement, the acquiring PSP would remit settled funds immediately to the payout PSP, which would then disburse the funds owed to sellers on a schedule that had been determined with the marketplace. As part of this arrangement, the marketplace’s role would be limited to making the necessary data available to one or both PSPs so that funds can be made available to sellers and fees are paid to the marketplace. The data would also enable the payout PSP to know which funds must be held on behalf of sellers and the identity of the sellers for whom it is holding funds.
Where the marketplace has structured its activities such that the payment chain is carried out by third-party PSPs, it is possible that the marketplace nevertheless conducts activities that involve performance of payment functions (for example, storing personal information of its end users or calculating balances for the PSP that supports payouts). In these circumstances, however, the performance of payment functions would likely be incidental to the operation of the marketplace. This is because the marketplace has structured its activities such that it does not take custody of the funds of end users and limits its involvement in the payment process to what is strictly necessary to support its marketplace service. Importantly, in these circumstances the proceeds of sales owed to merchants are held exclusively by third-party PSPs, who are responsible for safeguarding those funds as required under the RPAA, as well as mitigating their operational risks. See Case scenario: Marketplace that relies on merchant accounts with PSPs to take in and pay out funds.
RPAA requirements for marketplaces that are PSPs
As set out in this policy, marketplaces may be PSPs within the scope of the RPAA depending on how payment processing for their platform is structured. If they are, the Bank expects them to meet the requirements under the RPAA, including to apply to the Bank for registration. As such, operators of marketplaces should assess whether they are a PSP that must register in light of this policy, associated case scenarios, and other information on the Bank’s website. Marketplace operators that are uncertain whether they need to register as a PSP are encouraged to apply for registration with the Bank and describe their operations in detail through the application process. The Bank will review the marketplace’s payment activities and determine if it should be registered.
Going forward, the Bank intends to monitor this market segment for compliance with RPAA requirements and may take enforcement action against PSPs that fail to apply for registration.
In addition to registration with the Bank, all PSPs, including marketplaces that perform retail payment activities, are legally required to comply with the ongoing requirements of the RPAA, including managing operational risks and safeguarding the funds of end users (if applicable). For further information on the RPAA and its requirements, please see the retail payment supervision area of the Bank’s website.