Revocation of Designation No. 2 of 2004 (the designation of the EFTPOS system)

Overview

The Payment Systems (Regulation) Act 1998 was enacted to provide a regulatory framework for payment systems in Australia, ensuring their efficient and safe operation while protecting consumers and maintaining financial stability. This Act was introduced to address the need for regulation of payment systems to mitigate risks associated with electronic payments and to ensure that these systems operate in a manner that is consistent with the public interest. The Act was passed by the Parliament of Australia and aims to strike a balance between facilitating innovation in payment systems and protecting participants in the financial system. The Reserve Bank of Australia, acting under the authority conferred by the Act, has the power to designate certain payment systems, thereby subjecting them to specific regulatory requirements designed to protect consumers and maintain financial stability. In this context, the Reserve Bank has the authority to revoke the designation of a payment system if it determines that such designation is no longer in the public interest.

Scope and Application

The Payment Systems (Regulation) Act 1998 applies to payment systems operating within Australia and encompasses entities and conduct associated with these systems. Specifically, the Act allows for the designation of certain payment systems, with the Reserve Bank of Australia holding the authority to designate and subsequently revoke the designation of these systems. The revocation of a designation, such as the one for the EFTPOS system as announced on 27 August 2015, is executed through a notice published in the Gazette, following the procedures outlined in Section 11(3) of the Act. This revocation pertains solely to the EFTPOS system as it was initially designated in 2004, and does not affect any subsequent designations, such as that of 2012. The jurisdictional reach of the Act is confined to Australia, and its application is executed by the Reserve Bank of Australia, which may extend or restrict the application through subordinate instruments as necessary.

Key Provisions

The main operative sections of the Revocation under the Payment Systems (Regulation) Act 1998 provide for the revocation of a previously designated payment system. Section 11(3) of the Act allows the Reserve Bank of Australia to revoke a designation if it is no longer in the public interest for the system to be designated. In this case, the EFTPOS system, which was designated in 2004, has been revoked due to a change in circumstances. However, it is important to note that this revocation does not affect the designation of the EFTPOS system under Designation No 1 of 2012, which remains in place. The Act imposes certain obligations on the Reserve Bank of Australia. Under Section 11(3), the Reserve Bank must provide a notice in the Gazette when revoking a designation. The notice must specify the date the revocation takes effect and clarify that the revocation does not impact any other designations. This ensures transparency and allows affected parties to prepare for the change. Additionally, the Act requires the Governor of the Reserve Bank to sign the notice, as seen in the revocation notice dated 27 August 2015. Breaching the requirements set out in the Payment Systems (Regulation) Act 1998 can result in civil or criminal consequences. However, the Act does not specify any particular offences, penalties, or consequences for failing to comply with the revocation notice. The focus of the Act appears to be on the procedural correctness of the revocation process rather than penalising non-compliance. Therefore, the main concern for parties affected by the revocation would be to ensure they understand and prepare for the change in designation, rather than facing penalties for non-compliance.