ASIC Corporations (Non-cash Payment Facilities) Instrument 2026/167

Explanatory Statement

ASIC Corporations (Non-cash Payment Facilities) Instrument 2026/167

This is the Explanatory Statement for ASIC Corporations (Non-cash Payment Facilities) Instrument 2026/167.

The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).

Summary

1.              ASIC Corporations (Non-cash Payment Facilities) Instrument 2026/167 (Instrument 2026/167) provides relief for seven types of non-cash payment facilities from different aspects of the Corporations Act 2001 (the Act).

Purpose of the instrument

1.              The Act provides that a facility through which, or through the acquisition of which, a person makes payments otherwise than through the delivery of notes or coins – a non-cash payment facility – is a financial product.
2.              These products are subject to the financial services regulatory regime, which requires persons to:

• hold an Australian financial services (AFS) licence in order to provide financial services in relation to a financial product;
• comply with the conduct obligations in Part 7.8 of the Act; and
• provide Product Disclosure Statements and confirmations of transactions to retail clients.

1.              Shortly after the commencement of the financial services regulatory regime, it became apparent that the scope of some of these rules was unintentionally broad. ASIC addressed these issues by making seven legislative instruments relating to non-cash payments products. Those seven legislative instruments were subsequently merged into a single instrument, ASIC Corporations (Non-Cash Payment Facilities) Instrument 2016/211 (Instrument 2016/211).
2.              Instrument 2026/167 remakes Instrument 2016/211. Instrument 2026/167 provides relief for certain low risk non-cash payment facilities.

Consultation

1.              On 12 September 2025, ASIC announced its intention to remake the relief instrument for non-cash payment facility exemptions. ASIC received five formal submissions in response to this public consultation. Where possible, ASIC has reflected their comments in the remaking of this instrument. Given the ongoing nature of payments licensing reforms to modernise the regulatory framework for payment service providers, ASIC considered that it was appropriate to only make technical updates and not make any updates changing the operation of the relief.

Operation of the instrument

Preliminary

1.              Section 2 provides that Instrument 2026/167 commences on the day after it is registered on the Federal Register of Legislation.
2.              Section 4 provides that each instrument specified in the Schedule is amended as set out in the applicable items in the Schedule. Item 1 in Schedule 1 repeals Instrument 2016/211.
3.              Section 5 provides a simplified outline of Instrument 2026/167. Its purpose is to assist readers in understanding the substantive provisions. However, the outline is not intended to be comprehensive, and readers should rely on the substantive provisions when considering the instrument’s effect.
4.          Section 6 provides the definitions used in Instrument 2026/167. This includes definitions for the various types of non-cash payment facilities. For example, a gift facility, a loyalty scheme, or a prepaid mobile facility.

Loyalty schemes

1.          Section 7 provides that a loyalty scheme is not a financial product and does not need to be registered as a managed investment scheme. As a result, the financial services regime in the Act does not apply to these products.
2.          This relief applies to loyalty schemes where:

• the dominant purpose of the scheme is to promote the purchase of goods from, or the use of services of, the issuer or another person;
• clients are allocated credits (however described) as a result of the purchase of goods from, or the use of the services of, the issuer the other person;
• the credits can be used to make a payment or part payment for goods or services or to obtain some other benefit; and
• the scheme is not part of another financial product.

Road toll facilities

1.          Section 8 provides that a non-cash payment facility used to make payments for road tolls, but no other kinds of payments, is not a financial product. As a result, the financial services regime in the Act does not apply to these products.

Licensing exemption for payments to third parties

1.          Section 9 provides that an AFS licensee does not need to hold a licence authorisation relating to payments products in order to do the following if done in the ordinary course of the licensee’s business:

• advise a person in relation to a non-cash payment facility that the person may use, or has used, to pay a third party for goods or services; or
• arrange for a person to deal (other than by way of issue) in a non-cash payment facility that the person may use to pay a third party for goods or services.

1.          This exemption applies to licensees who do not themselves issue payments products nor hold a licence covering the provision of financial services detailed in paragraph 14 above. Additionally, the exemption is limited to services provided in relation to conventional payment products issued by licensed persons or over designated payment systems.
2.          The Corporations Regulations 2001 contain AFS licensing exemptions for persons who:

• do not generally carry on a financial services business but advise their customers about forms of payment or deal (by arranging) in a non-cash payment facility that a customer may use to pay for the person’s services (such as a gym advising clients on paying their membership by direct debit) (regulation 7.6.01(1)(l));
• advise their customers about forms of payment or deal in (by arranging) a non-cash payment facility that a customer may use to pay them for financial services they provide (such as an insurer who advises their clients about paying for their insurance by BPAY) (regulation 7.6.01(la)).

1.          However, these exemptions do not apply to payments to third parties that are related to the person’s business. For instance, a financial planner could rely on reg 7.6.01(la) in order to advise their clients on how to pay a fee for service, but would require a non-cash payments AFS licence authorisation in order to suggest that the same client use a certain facility to pay for an investment they had recommended.

Exemptions in relation to certain other facilities

1.          Subsections 10(1), 11(1) and 12(1) provide exemptions for persons providing financial services in relation to low value non-cash payment facilities, gift facilities or prepaid mobile facilities respectively.
2.          These provisions exempt these persons, in relation to those services, from the requirements to:

• hold an AFS licence in subsection 911A(1);
• comply with hawking prohibitions in section 992A; and
• comply with financial product disclosure and other provisions relating to the issue, sale and purchase of financial products as contained in Part 7.9 of the Act.

Exemptions for an AFS licensee providing financial services

1.          Subsections 10(2), 11(2) and 12(2) provide exemptions for an AFS licensee providing financial services seeking to rely on the low value non-cash payment facilities, gift facilities or prepaid mobile facilities exemptions respectively.
2.          These provisions exempt these AFS licensees from the requirement to:

• comply with the licensing requirements in Part 7.6 of the Act, other than the requirement to hold an Australian financial services licence in subsection 911A(1) and Division 4, and the banning or disqualification provisions in Division 8.
• comply with the financial services disclosure requirements in Division 2, 3 and 4 of Part 7.7 of the Act.
• comply with obligations when dealing with client money in Division 2, dealing with other property of clients in Division 3, reporting obligations in Division 5, and record-keeping provisions in Division 6 of Part 7.8 of the Act, in relation to those services.

Exemptions for an authorised representative of an AFS licensee providing financial services

1.          Subsections 10(3), 11(3) and 12(3) provide exemptions for an authorised representative of a financial services licensee providing financial services seeking to rely on the low value non-cash payment facilities, gift facilities, and prepaid mobile facilities exemptions respectively.
2.          These provisions exempt these authorised representatives from the requirement to comply with the financial services disclosure requirements in Division 2, 3 and 4 of Part 7.7 of the Act, in relation to those services.

Low value non-cash payment facilities

1.          Subsections 10(1)-(3) provide conditional exemption to persons to provide financial services in relation to ‘low value non-cash payment facilities’. A facility is ‘low value’ if:

• the total amount available for making non-cash payments under all facilities of the same class held by any person at any one time does not exceed $1,000;
• the total amount available for making non-cash payments under all facilities of the same class does not exceed $10,000,000; and
• it is not a component of another financial product.

1.          Subsections 10(4) and (5) contain conditions that issuers of low-value facilities and other persons must comply with in order to rely on the exemption.
2.          Subsection 10(4) sets out that issuers are required to take reasonable steps to ensure that retail clients are provided with a clear, concise and effective disclosure document, which includes the terms and conditions of the facility and separate information about:

• Unilateral variations to the terms and conditions;
• expiry dates (including where those dates can be found);
• the procedures for dealing with unauthorised or mistaken transactions, as well as the loss or theft of the device (if any) through which the facility is used; and
• the fees associated with the facility (and, if those fees are varied, how updated information can be obtained).

1.          Subsection 10(4) also sets out that issuers are subject to obligations relating to:

• how expiry dates are disclosed, including on any device that is used to access the facility;
• the provision of a convenient and cost-free way for consumers to check the amount of value standing to the credit of the facility, the expiry date and a record of the last 10 transactions (at reasonable intervals);
• disclosure of unilateral changes to terms, conditions or fees; and
• the maintenance of an appropriate internal dispute resolution system.

1.          Subsection 10(5) sets out that persons who provide financial services in relation to low value non-cash payment facilities but do not issue those facilities may also rely on the exemptions in subsections 10(1)-(3) where they take reasonable steps to ensure:

• retail clients are provided with a disclosure document; and
• any expiry date associated with the facility is disclosed on the device (or, if no device is provided to access the facility, in the disclosure document or another written statement).

1.          Subsection 10(6) sets out that, if the conditions in 10(4) and 10(5) above are not met, then the low-value non-cash payment facilities exemption will cease to apply.
2.          ASIC does not have any exemption or modification powers in relation to Division 2 of Part 7.7A of the Act. Regulation 9.12.03A of the Corporations Regulations 2001 provides relief from the operation of Division 2 of Part 7.7A for persons who rely on exemptions provided through ASIC class orders including ASIC Class Order [CO 05/736]. This class order provided relief to low value non-cash payment facilities and was consolidated into Instrument 2016/211, which Instrument 2026/167 now remakes. ASIC will administer the law on the basis that the exemption in regulation 9.12.03A applies in relation to persons who rely on the exemptions in section 10 of the Instrument 2026/167.

Gift facilities to which the exemptions apply

1.          The relief applies to gift facilities only if:

• the product is non-reloadable;
• the funds standing to the credit of the facility cannot be withdrawn as cash unless the facility has been used to make one or more payments and the withdrawal is of the full amount standing to the credit of the facility (which is an amount that unlikely to be able to be conveniently used);
• the facility may be used to make non-cash payments on more than one occasion;
• the facility is only promoted or marketed as a gift product;
• any expiry date is prominently and clearly disclosed (including on the device used to access the facility if such a device is provided); and
• the facility is not a component of another financial product.

Prepaid mobile facilities to which the exemptions apply

1.          The relief applies to prepaid mobile facilities only where:

• the facility is a part of an arrangement for the supply of a public mobile telecommunications service under which the service may be used to the extent it is covered by an amount paid in advance which remains unused;
• the non-cash payments made under the facility are debited against the prepaid amount; and
• the facility is not a component of another financial product.

Travellers’ cheques and confirmation of transactions

1.          Section 13 provides that travellers’ cheques are exempt from the requirements of section 1017F of the Act to provide confirmation of transactions.

Duration of the instrument

1.          The duration of Instrument 2026/167 is 5 years.
2.          This period is appropriate as it will allow time for the Government to consider whether to amend the primary legislation or regulations to include the relief. A legislative reform process in relation to payments licensing in the Act is currently underway, and ASIC will revisit this instrument once that reform process concludes.

Legislative authority

1.          This instrument is made under subsections 765A(2) and 1020F(1) and paragraphs 601QA(1)(a), 926A(2)(a), 951B(1)(a) and 992B(1)(a) of the Act.
2.          Under subsection 33(3) of the Acts Interpretation Act 2001, where an Act confers a power to make any instrument, the power is to be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal or amend any such instrument.
3.          This Instrument 2026/167 is a disallowable legislative instrument.

Statement of Compatibility with Human Rights 

1.          The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.

Attachment

Statement of Compatibility with Human Rights

This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.  

ASIC Corporations (Non-cash Payment Facilities Instrument) 2026/167

Overview

1. This instrument provides relief for the following types of non-cash payment products from certain obligations in the Corporations Act 2001: 

• Traveller’s cheques, which are exempt from the requirement to provide confirmation of transaction; 
• loyalty schemes and road toll facilities, which are declared not subject to the financial services laws; 
• certain non-cash payment facilities used for third party payments;
• prepaid mobile facilities and some non-reloadable gift facilities, which are exempt from certain licensing, conduct, and disclosure obligations; and 
• low value payments products, which are exempt from certain licensing, conduct, and disclosure obligations but subject to alternative disclosure and dispute resolution obligations. 

Assessment of human rights implications

2. This instrument does not engage any of the applicable rights or freedoms.
 

Conclusion

3. This instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.