The Bank of Canada says it has issued a temporary order to Toronto-based payment service provider XTM Inc. to immediately halt all retail payment activities for failing to safeguard clients’ money.
The Feb. 17 order says the central bank has “serious concerns” that third-party payment service XTM has failed to protect client funds and has grounds to suspect that permitting it to maintain operations may pose a risk to the public’s interest.
XTM’s Everyday platform—formerly known as AnyDay—allows restaurant proprietors to collect and distribute tips to employees via pre-paid cards.
The Bank of Canada (BoC) says the company’s financial reports demonstrate a failure to secure the tip money entrusted to its platform.
“XTM failed to safeguard end-user funds in its possession, and caused a significant shortfall in end-user funds to accrue,” the order signed by BoC supervision department managing director Anne Butler reads. “The Managing Director is concerned that a shortfall of this magnitude has caused harm to end users.”
The bank’s directive was made under the Retail Payment Activities Act in response to individuals in the hospitality sector across British Columbia reporting missing tips from the XTM payment program. Restaurants throughout the province have said millions in tips are missing.
Butler’s order forbids XTM from withdrawing funds from any accounts associated with the platform, and says the company must stop representing itself as a payment service provider.
The Bank of Canada said in a statement that Butler’s order applies to both XTM and its affiliated entities. It “prohibits XTM or its affiliates from conducting any transactions or withdrawals from accounts associated with the AnyDay platform,” the bank said.
The Epoch Time contacted XTM for comment on the Bank of Canada order but did not receive a response as of publication time.
XTM’s website says it is “trusted by 1,000+ global brands” and has award-winning localization software. It received the “AI Localization Software Company of the Year 2024” by Enterprise Technology Magazine CIOReview.
The company, which was founded in 2002, said in a Feb. 5 press release that XTM has remained a money services business and is registered with the Bank of Canada under the Retail Payment Activities Act.
“Transactions are conducted through XTM accounts,” the statement said. “All cardholder funds associated with the platform are held in trust in accordance with applicable legal and safeguarding requirements and are segregated from operating funds.”
The statement said XTM “remains committed to transparent disclosure” as well as to supporting a “secure, reliable, and regulatorily aligned payments ecosystem for Canadian businesses and workers.”
