On May 1, 2014, Canada's Prepaid Payment Products Regulations came into force. The new regulations apply to all prepaid payment products and promotional products, whether physical or electronic, issued in Canada by federally regulated financial institutions (domestic or foreign) under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act. Prepaid cards are typically used to make purchases of goods or services, or withdraw funds, via a payment network such as American Express, MasterCard or Visa, and are widely purchased by consumers through financial institutions and at retail commercial outlets. Prepaid payment products include promotional products which have been purchased by an entity and distributed as part of a promotional, loyalty or award program.

The regulations ban maintenance fees for at least one year after a prepaid card is activated (subject to a couple of exceptions), and will ensure that funds for a prepaid card (other than a promotional product) never expire. The regulations require key information for consumers, such as fees, restrictions, contact information and other statements and terms prescribed in the regulations, be clearly and prominently disclosed on the packaging, if any, and in the documentation (or orally if the prepaid product is applied for by telephone), both prior to issuing the prepaid product and also in writing upon issuance of the product. The regulations also require certain information to be set out directly on the card, or if it is electronic, upon the cardholder's request.  Furthermore, the regulations require express consent be obtained from the product holder where certain fees or interest will be charged. The Financial Consumer Agency of Canada (FCAC) will be responsible for overseeing and enforcing compliance with these regulations.

Answers to frequently asked questions about the regulations can be found in the Bennett Jones Update, FAQ on the Proposed Canadian Regulations for Prepaid Payment Products, from November 2012.

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