Payment Systems (Regulation) Act 1998
Declaration No 1 of 2012 regarding Purchased Payment Facilities
The Reserve Bank of Australia, pursuant to section 9(3) of the Payment Systems (Regulation) Act 1998 (‘Act’), declares that the Act does not apply to the insurance card facility described below, having determined that it is not appropriate for the Act to apply to that facility.
The Westfield insurance card facility (the ‘Insurance Card Facility’) is the purchased payment facility that is operated by Westfield Gift Cards Pty Limited (ACN 113 171 663) (the ‘Issuer’) under which a card, certificate, voucher, token, coin or other object, or a code (each a ‘Device’) may be purchased by or on behalf of a general insurer (‘Insurer’) to be provided by the Insurer to a person (‘Insured’) who is entitled to receive an amount from the Insurer following a claim (‘Claim’) on a policy of general insurance of the Insurer in satisfaction of some or all of the entitlement of the Insured to that amount, and that has the following characteristics:
- The Issuer is the holder of stored value in relation to the Insurance Card Facility.
- The amount that is available to an Insured, in relation to a Claim, for the making of non-cash payments through the use of the Insurance Card Facility:
(a) does not exceed $5 000; and
(b) is determined at the time of issue of a Device under the Insurance Card Facility and cannot be increased after that time unless it is because of the reversal of a non-cash payment in the case of refund or because of a correction of an error; and
(c) cannot be withdrawn or accessed in whole or in part by means of a cash payment (except for the withdrawal of the full amount standing to the credit of a Device after one or more non-cash payments have been made using the Device being an amount that in the reasonable opinion of the Issuer is unlikely to be able to be conveniently used for a non-cash payment under the Insurance Card Facility by means of the Device).
3. A Device issued under the Insurance Card Facility is capable of being used to make non-cash payments on more than one occasion.
4. The Insurance Card Facility and any Device issued under the Insurance Card Facility are only promoted or marketed as an insurance card facility, or an insurance card or device.
5. The date (‘Expiry Date’) after which the Insurance Card Facility cannot be used for the making of non-cash payments using a Device (regardless of whether there is an amount standing to the credit of the Device at the end of that date) is:
(a) in the case where the presentation of a Device which is an object is the means by which a person uses the Insurance Card Facility – prominently set out on the Device:
(i) in a manner that makes it clear that it is an expiry date; or
(ii) by stating:
(A) the date of issue of the Device; or
(B) a date that succeeds the date of issue of the Device by no more than three months,
together with a statement on the Device, to the effect that the Device cannot be used after the expiry of a period of months or years after the date set out on the Device;
(b) in any other case – prominently displayed in a manner that could reasonably be expected to come to the attention of a person who is given or given use of a Device at the time it is given and at the time it is used, and makes it clear that it is an expiry date.
6. The Issuer holds an Australian Financial Services licence under the Corporations Act 2001 which authorises the Issuer to deal in, and provide financial product advice in relation to, non-cash payment facilities which include the Insurance Card Facility (expressions used in this paragraph have the meaning given in the Corporations Act 2001).
7. The Issuer only promotes or markets the Insurance Card Facility and any Device to be issued under the Insurance Card Facility as being capable of being used to make non-cash payments:
(a) at merchants that have agreed to be promoted or marketed as accepting non-cash payments made using a Device issued under the Insurance Card Facility (or at agents of such merchants), whether those payments are made at a retail outlet or online via the merchant’s or agent’s website; or
(b) at or through a website hosted or managed by the Issuer or a related body corporate (within the meaning of the Corporations Act 2001) of the Issuer.
Signed
Glenn Stevens
Governor
Reserve Bank of Australia
2 October 2012
Overview
The Payment Systems (Regulation) Act 1998 was enacted to regulate and ensure the stability and efficiency of payment systems in Australia. This Act provides the legal framework for the oversight and regulation of payment systems, aiming to protect consumers and maintain the integrity of the financial system. The Reserve Bank of Australia, as the enacting body, has the authority to exempt certain payment facilities from the Act if it is deemed not appropriate for the Act to apply. This approach allows for flexibility in the regulation of payment systems, ensuring that the Act can be tailored to the specific characteristics and risks of different payment facilities. Declaration No 1 of 2012 under the Act exempts the Westfield insurance card facility from its scope, recognising that the nature and operation of this facility do not require the comprehensive regulatory oversight provided by the Act. The policy objective behind this exemption is to balance the need for regulatory oversight with the potential for over-regulation of low-risk payment facilities.
Scope and Application
The Payment Systems (Regulation) Act 1998, under which the Reserve Bank of Australia exercises its regulatory powers over payment systems, applies comprehensively to various entities and transactions across the Commonwealth of Australia. The Act primarily targets entities engaged in the provision of payment facilities and services, encompassing both financial institutions and non-financial businesses. Its application extends to the regulation of payment systems, the conduct of entities involved in payment transactions, and the oversight of payment infrastructure to ensure safety, efficiency, and consumer protection. The Act’s jurisdiction is nationwide, imposing obligations and restrictions that apply uniformly across all states and territories of Australia. However, certain exclusions and exemptions exist, such as the specific declaration regarding the Westfield insurance card facility, which is exempted from the Act’s purview as it pertains to purchased payment facilities related to insurance claims, provided they meet specified criteria. This exemption is tailored to ensure that such facilities do not fall under the regulatory umbrella of the Act unless explicitly stated otherwise through subordinate instruments or specific legislative amendments.
Key Provisions
The Payment Systems (Regulation) Act 1998, as declared by Declaration No 1 of 2012, specifies that the Act does not apply to the Westfield insurance card facility. This facility is operated by Westfield Gift Cards Pty Limited (ACN 113 171 663) and allows for the issuance of a card, certificate, voucher, token, coin, or other object, or a code, which can be purchased by an insurer to be given to a policyholder in satisfaction of a claim. The amount available on these devices is capped at $5,000, and cannot be increased except through the reversal of a non-cash payment or correction of an error. These devices are only usable for non-cash payments and cannot be withdrawn in cash, except under specific conditions determined by the issuer (sections 1-7).
The obligations imposed by this declaration require the issuer to adhere to certain conditions. Firstly, the amount available on each device must not exceed $5,000 and must be determined at the time of issue. Secondly, the devices can only be used to make non-cash payments and cannot be converted to cash, except under specific circumstances. Thirdly, the expiry date of the device must be prominently displayed to ensure the cardholder is aware of when the device will no longer be valid for non-cash payments. The issuer must also hold an Australian Financial Services licence under the Corporations Act 2001 and only market the facility and devices as being usable for non-cash payments at specified merchants or through specified websites (sections 1-7).
There are no explicit offences, penalties, or consequences for breach detailed in this declaration. However, any breach of the conditions set out in the declaration, such as exceeding the $5,000 limit or misinforming about the expiry date, could potentially lead to legal action or regulatory penalties under the broader framework of the Payment Systems (Regulation) Act 1998 or the Corporations Act 2001. The specific penalties would depend on the nature and severity of the breach, but they could include fines, corrective actions, or other regulatory measures (sections 1-7).