XTM said in court documents that there were 3,612 merchants and 120,000 employees using the tipping platform as of Nov. 30 last year.Nam Y. Huh/The Associated Press
XTM Inc., the Toronto-based company at the centre of complaints about millions of dollars’ worth of missing restaurant tips, has been “financially strained” since its inception and used restricted cash to cover its operating expenses, its chief executive said in creditor protection filings.
The fintech is planning to seek a buyer or investor “to maximize value for all stakeholders including the merchants that suffered a shortfall in their wallets,” CEO Marilyn Schaffer said in an Ontario court document.
XTM, which co-owns a tip-pooling platform called Everyday Payments with Edmonton-based Everyday People Financial Corp., was granted creditor protection last week after complaints from clients that money had gone missing from their digital wallets. Restaurants in British Columbia, Alberta, Ontario and Nova Scotia were affected, and the BC Restaurant and Foodservices Association estimated at least $10-million in losses.
Toronto fintech linked to missing tips permitted to resume payments under court oversight
Hospitality businesses such as restaurants use the platform to distribute gratuities to their staff. Employers prefund their digital wallets by sending money to the platform, where it is to be held in a custodial account at Digital Commerce Bank as restricted cash. Employees can cash out the tips they’ve earned by transferring the money onto prepaid cards.
There were 3,612 merchants and 120,000 employees using the platform as of Nov. 30 last year, XTM said in court documents.
Last month, the Bank of Canada temporarily barred XTM from performing payment activities, saying it had “serious concerns” that the firm had failed to safeguard its clients’ funds.
The bank, which took on oversight of payment service providers last September, has since permitted XTM to resume those operations under the supervision of a court-appointed monitor, the Fuller Landau Group Inc.
Missing $10-million in restaurant tips exposes gaps in rules for payment platforms
Despite strong uptake from hospitality businesses and large amounts of money moving through its tip-pooling platform, XTM has not been able to reach profitability because of high operating costs, Ms. Schaffer said in court documents. Its expenses include processing fees, banking charges, customer support, fraud losses and technology expenses.
“The applicants have been operating in a financially strained position since inception and depleted their resources as they attempted to reach profitability. This resulted in restricted cash being used for operating expenses and resulted in an accumulated trust deficit of approximately $18.75-million as at Sept. 30, 2025,” Ms. Schaffer wrote.
XTM relied on a credit facility from Calgary-based Pateno Payments Inc. to ensure that its customers had access to the amount of money identified as being in their digital wallet, Ms. Schaffer said.
Last October, XTM announced it had entered into an agreement for Everyday People Financial to take over managing and administering the gratuity platform.
On Jan. 27, the platform’s new manager adjusted wallet balances “to more accurately reflect the balances actually held in trust accounts” and “stopped using XTM’s Pateno Credit Facility as it had previously been utilized,” according to Ms. Schaffer.
“When this occurred, many Merchants suddenly saw lower wallet balances posted in the EveryDay Platform than they expected, and in some cases accounts were displayed as being wiped entirely,” she wrote.
Ms. Schaffer also alleged that on Jan. 28, Everyday People Financial initiated “multiple batches” of withdrawals from customers, in some cases two or three times the amount the restaurants normally transferred to the platform. She said both changes were made without her knowledge or input.
Everyday People Financial and Ms. Schaffer did not respond to requests for comment.
The Ontario court filings depict chaos at XTM in recent weeks. The fintech said it missed two payroll cycles and the February rent payment for its Toronto office, and that the Bank of Montreal froze the accounts XTM uses for operations. The company said it intends to lay off all but two of its employees.
One of XTM’s largest customers, Northland Restaurant Group, and its related entities, including Moxies, sued XTM and Ms. Schaffer in B.C. court, claiming it is owed more than $2-million. That case has been stayed by the Ontario court order issued Feb. 27, under the Companies’ Creditors Arrangement Act.