Payment Systems (Regulation) Act 1998
Exemption No. 1 of 2017
Exemption from Paragraph 11 of the Access Regime for the ATM System
The Reserve Bank of Australia, under paragraph 16 of the Access Regime for the ATM System (Access Regime), exempts participants in the arrangements for the provision of fee-free balance enquiry services at ATMs for people who are using the Cashless Debit Card described below from the application of paragraph 11 of the Access Regime, on and subject to the conditions in this exemption.
Indue Limited (the Issuer) is the provider of welfare restricted bank accounts, and the issuer of debit cards used to access those accounts other than to obtain cash (Cashless Debit Cards), for the purposes of the trial of cashless welfare arrangements provided for in Part 3D of the Social Security (Administration) Act 1999.
The Issuer has entered into or proposes to enter into an arrangement with each of Westpac Banking Corporation and DC Payments Limited (each an ATM Deployer) for the provision of fee-free balance enquiry services at ATMs for the holders of Cashless Debit Cards.
This exemption, granted following approval by the Payments System Board at its August 2016 meeting, exempts from the application of paragraph 11 of the Access Regime any interchange fee (however described) paid or payable between the Issuer and an ATM Deployer in relation to the use of a Cashless Debit Card under a bilateral arrangement between the Issuer and the ATM Deployer.
This exemption:
(a) applies only to interchange fees payable in relation to balance enquiries made using Cashless Debit Cards and does not apply to any other products or services of the Issuer or any other arrangements between the Issuer and an ATM Deployer;
(b) subject to paragraph (c), ceases if Part 3D of the Social Security (Administration) Act 1999 is repealed or amended in any material respect. An amendment is material if it has a significant impact upon the assessment of factors referred to in paragraphs 16(a) to (d) of the Access Regime. Changes that may have such an impact include an increase in the maximum number of Cashless Debit Cards, or in the maximum number of trial areas, above the relevant maximum number permitted under Part 3D of the Social Security (Administration) Act 1999 as at the date of this exemption; and
(c) paragraph (b) will not affect interchange fees in respect of a Cashless Debit Card issued prior to this exemption ceasing under paragraph (b) while that Cashless Debit Card remains on issue in accordance with arrangements between the Issuer and the Commonwealth of Australia.
In granting this exemption, the Reserve Bank of Australia has had regard to:
(a) whether granting the exemption is in the public interest;
(b) the interests of current participants in the system;
(c) the interests of people who, in the future, may want access to the system; and
(d) any other matters the Reserve Bank of Australia considers relevant.
This exemption is taken to have commenced on 1 January 2017.
Signed
Philip Lowe
Governor
Reserve Bank of Australia
23 March 2017
Overview
The Payment Systems (Regulation) Act 1998 was enacted to address issues related to the regulation of payment systems in Australia. This Act provides a framework for the oversight and regulation of payment systems to ensure their integrity, efficiency, and accessibility. The Reserve Bank of Australia, as the central bank and the relevant legislature under this Act, has the authority to implement regulations and exemptions to facilitate the effective operation of these systems. The exemption in question, introduced by the Reserve Bank of Australia, pertains specifically to the interchange fees for fee-free balance enquiries made using Cashless Debit Cards issued as part of the trial of cashless welfare arrangements under the Social Security (Administration) Act 1999. This exemption was granted to support the public interest and to facilitate the trial by ensuring that interchange fees are not a barrier to providing essential balance enquiry services at ATMs for card holders.
Scope and Application
The Payment Systems (Regulation) Act 1998 governs the regulation of payment systems in Australia, with its scope extending to various entities and transactions within the financial sector. The Act specifically applies to payment systems and their participants, including banks, payment service providers, and other entities involved in the provision of payment services. It covers conduct and transactions related to the operation of these systems, aiming to ensure their efficiency, integrity, and security. The Act's jurisdiction spans nationally, as it is a Commonwealth Act, thereby applying across all states and territories in Australia. However, certain exclusions and exemptions are provided under specific conditions. For instance, the Reserve Bank of Australia may grant exemptions from certain provisions of the Access Regime for the ATM System, such as the one detailed in Exemption No. 1 of 2017, which exempts interchange fees for fee-free balance enquiries made using Cashless Debit Cards issued under the trial of cashless welfare arrangements. This exemption applies only to interchange fees for balance enquiries and is subject to the conditions outlined in the exemption, including cessation if there are material changes to the Social Security (Administration) Act 1999. The exemption was granted following the approval of the Payments System Board and is effective from 1 January 2017.
Key Provisions
The main operative sections of this legislation concern the exemption from paragraph 11 of the Access Regime for the ATM System for interchange fees related to fee-free balance enquiry services at ATMs for Cashless Debit Card holders. Section 1 outlines the exemption granted by the Reserve Bank of Australia, effective from 1 January 2017, and specifies that the exemption applies only to interchange fees associated with balance enquiries made using Cashless Debit Cards. Section 2 details the conditions of the exemption, including its cessation if Part 3D of the Social Security (Administration) Act 1999 is materially altered, and the continued applicability to existing Cashless Debit Cards until they are cancelled.
The obligations imposed by this Act on the parties involved include the requirement for Indue Limited (the Issuer) to ensure that fee-free balance enquiry services at ATMs for Cashless Debit Card holders are provided under the specified conditions. Both Westpac Banking Corporation and DC Payments Limited (ATM Deployers) must comply with the terms of the bilateral arrangements concerning interchange fees. Additionally, the Reserve Bank of Australia must ensure that the exemption aligns with public interest and the interests of current and future system participants.
There are no explicit offences or penalties detailed in the text for breach of the conditions of this exemption. However, the cessation of the exemption under the specified conditions implies that any continuation of interchange fee exemptions beyond the stipulated terms could result in the reapplication of the Access Regime provisions, potentially leading to financial implications for the parties involved. The broader legislative framework under the Payment Systems (Regulation) Act 1998 would apply to any breaches of the Access Regime, including potential civil or criminal penalties as provided for in that Act.