Exemption No. 1 of 2021 Exemption from Paragraphs 11 and 12 of the Access Regime for the ATM System

Overview

The Payment Systems (Regulation) Act 1998 was enacted to regulate payment systems in Australia and ensure their efficiency, effectiveness, and safety. The Act was introduced to address issues in the payment systems industry and provide a legislative framework to manage the risks associated with these systems. This exemption, granted by the Reserve Bank of Australia under the Access Regime for the ATM System, was approved by the Payments System Board and came into effect on 19 October 2021. It exempts participants in the ATM system from certain provisions in the Access Regime, specifically paragraphs 11 and 12, concerning interchange fees in one-way arrangements. The exemption aims to balance the interests of current participants, future users, and the public interest.

Scope and Application

The Payment Systems (Regulation) Act 1998, as modified by Exemption No. 1 of 2021, applies to participants in the ATM system in Australia, specifically exempting them from certain provisions related to interchange fees in one-way arrangements. This exemption is granted by the Reserve Bank of Australia, acting under the authority of the Access Regime for the ATM System. The exemption specifically concerns the interchange fees paid by an ATM Issuer to an ATM Acquirer in any one-way arrangement. It allows an ATM Issuer to enter into multiple one-way arrangements with different ATM Acquirers and pay interchange fees for each, irrespective of whether the ATM Issuer, as an ATM Acquirer, receives interchange fees from other ATM Issuers under separate one-way arrangements. This legislative change aims to balance the interests of current participants, potential future participants, and the public interest, and it has been in effect since 19 October 2021. The exemption may also be extended or modified through subordinate instruments, thereby influencing its scope and application within the ATM system.

Key Provisions

The Payment Systems (Regulation) Act 1998, through Exemption No. 1 of 2021, specifies that certain participants in the ATM system are exempt from paragraphs 11 and 12 of the Access Regime (sections 11(i) and 12). These exemptions allow for interchange fees to be paid or received under one-way arrangements without the constraints outlined in the original Access Regime. Specifically, paragraph 11(i) originally prohibited the payment of an interchange fee under a one-way arrangement unless it was solely for accessing another participant’s ATMs, while paragraph 12 prevented a participant from receiving an interchange fee unless both parties were members of an ATM sub-network and the fee was a common one. Exemption No. 1 of 2021, however, permits an ATM Issuer to enter into multiple one-way arrangements with different ATM Acquirers and to pay interchange fees for these arrangements, irrespective of whether the ATM Issuer also receives interchange fees from other participants. Entities subject to the Access Regime, specifically ATM Issuers and ATM Acquirers, are now able to engage in multiple one-way arrangements and pay interchange fees without the previous restrictions. This means that an ATM Issuer can have one-way arrangements with various ATM Acquirers and pay interchange fees for each arrangement without needing to be part of an ATM sub-network with the other participants. Similarly, an ATM Acquirer can receive interchange fees from different ATM Issuers under separate one-way arrangements without the need for a sub-network membership. In granting this exemption, the Reserve Bank of Australia considered several factors to ensure it was in the public interest. These considerations included the interests of current participants in the ATM system and potential future participants. The exemption was designed to provide flexibility and potentially encourage broader participation in the ATM system by allowing more diverse arrangements without the constraints of being part of a sub-network. For breaches of the provisions in the Payment Systems (Regulation) Act 1998 or the Access Regime, the legislation may impose both civil and criminal penalties. The exact nature and severity of these penalties depend on the specific breach and the context in which it occurs. Generally, violations can result in fines, imprisonment, or both, with the maximum penalties varying based on the severity and intent behind the breach. The Reserve Bank of Australia, as the governing body, has the authority to enforce these penalties and ensure compliance with the regulatory framework.