Revocation of Designation No. 1 of 2015 (the designation of the American Express Companion Card system)

Overview

The Revocation of Designation No. 1 of 2015 under the Payment Systems (Regulation) Act 1998 was enacted to address the need for the Reserve Bank of Australia to reassess the public interest considerations pertaining to the designation of specific payment systems. The Act, passed by the Australian Parliament, seeks to regulate payment systems to ensure they operate in a manner that protects consumers and maintains financial stability. The policy objective of this revocation is to reflect the Reserve Bank's current assessment that the continued designation of the American Express Companion Card system is no longer warranted for the public interest, leading to the revocation effective from 1 January 2022. This action demonstrates the Reserve Bank's commitment to adapting regulatory measures in response to changing market conditions and emerging risks.

Scope and Application

The Revocation of Designation No. 1 of 2015 under the Payment Systems (Regulation) Act 1998 pertains to the cessation of the designation of the American Express Companion Card system operated within Australia. This revocation, which takes effect from 1 January 2022, was issued by the Reserve Bank of Australia, acting under subsection 11(1) of the Act. The decision to revoke the designation was based on the Reserve Bank's assessment that it is no longer in the public interest for the American Express Companion Card payment system to be designated. This revocation applies to all entities and persons involved in the operation of this specific payment system within Australia. The scope of the Act encompasses the regulation of payment systems, and the revocation directly impacts the designated status of the American Express Companion Card system. The revocation does not extend to other payment systems or systems operated outside of Australia, maintaining a clear jurisdictional focus on designated systems within the Australian Commonwealth. The Act allows for the revocation of designations through subordinate instruments, as demonstrated in this case, thereby providing flexibility in managing the regulation of payment systems according to evolving public interest considerations.

Key Provisions

The key operative sections of the Revocation of Designation No. 1 of 2015 under the Payment Systems (Regulation) Act 1998 (the Act) primarily revolve around the revocation of the designation of the American Express Companion Card system, effective from 1 January 2022. Pursuant to subsection 11(1) of the Act (1), the Reserve Bank of Australia (the Bank) has decided to revoke the designation of the American Express Companion Card payment system as it no longer considers this designation to be in the public interest. This revocation is to be applied from the specified date of 1 January 2022, and the notice of this revocation was published in the Gazette on 15 October 2015 (2). This revocation nullifies the previous designation of the American Express Companion Card system, which was known as ‘Designation No. 1 of 2015’ (3). The Act imposes specific obligations on the parties or entities it governs. The Reserve Bank of Australia is tasked with the responsibility of assessing whether a payment system is in the public interest. This assessment must be conducted periodically, and if the Bank determines that a designated payment system is no longer in the public interest, it has the authority to revoke the designation (4). Additionally, the Bank is required to notify the public of such revocations through official channels, in this case, the Gazette (5). These obligations ensure that the payment systems operating within Australia are continually evaluated to align with the public interest. Under the Act, breaches or non-compliance with the revocation of a designated payment system can result in various consequences. While the specific offences, penalties, or consequences for non-compliance are not detailed within the text, it is reasonable to infer that failure to adhere to the Bank's determinations could lead to legal repercussions. These might include financial penalties, legal action, or other measures as deemed necessary by the courts. The maximum penalties for such breaches, if specified, would depend on the severity and nature of the non-compliance, as well as the relevant provisions of other applicable legislation. This underscores the importance of compliance with the Bank's decisions under the Act to avoid potential legal and financial ramifications.