Overview

The Payment Systems (Regulation) Act 1998, enacted to regulate payment systems in Australia, included provisions for the Access Regime for the EFTPOS System, which was designed to manage the complexities of bilateral connections and interchange fees within the EFTPOS network. Over time, the establishment of a centralised network and governing body, eftpos Payments Australia Limited, along with industry-wide changes to system architecture, rendered the Access Regime redundant. Consequently, the Payments System Board of the Reserve Bank of Australia determined that the EFTPOS Access Regime should be revoked to eliminate outdated obligations on system participants. This decision was made after extensive consultation with stakeholders, including the release of a consultation paper in June 2012 and the review of the regulatory framework, culminating in the final determination in August 2014. The revocation of the Access Regime aims to streamline the regulatory framework, aligning it with current industry practices and ensuring efficient operation of the EFTPOS system.

Scope and Application

The Payment Systems (Regulation) Act 1998 applies to payment systems in Australia, and the revocation of the Access Regime for the EFTPOS System is an instrument that implements the decision by the Payments System Board of the Reserve Bank to revoke the Access Regime for the EFTPOS System. The Act applies to entities participating in the EFTPOS system, including financial institutions, merchants, and payment service providers. The revocation removes redundant obligations on system participants and recognises the changes to the governance framework and the underlying architecture of the EFTPOS system. The revocation applies nationally and the decision was made in consultation with stakeholders. The EFTPOS Access Regime is no longer necessary due to the establishment of a new governing body, eftpos Payments Australia Limited, and the introduction of a centralised network and clearing hub to replace bilateral connections.

Key Provisions

The Payment Systems (Regulation) Act 1998 (the Act) contains the primary provisions that enable the Payments System Board (the Board) of the Reserve Bank of Australia (the Bank) to regulate payment systems within Australia. The Act specifically allows the Board to impose access regimes on payment systems, as seen in section 11 (subsection 11(1)). This includes the ability to establish rules that govern the manner in which entities can connect to and participate in these systems. In the context of the EFTPOS system, the Board has historically used these powers to ensure fair and efficient access for all participants. Under the Act, the Board has a responsibility to review and adjust the regulatory framework for payment systems to reflect changes in the industry. Section 12 (subsection 12(1)) mandates that the Board must conduct reviews at least every five years to assess the effectiveness and relevance of existing regulations. The Board must also consider the views of stakeholders, which involves a formal consultation process as seen in the case of the EFTPOS system. This ensures that the regulations remain appropriate and aligned with industry developments. In terms of the obligations imposed on parties by the Act, section 11 (subsection 11(2)) requires entities participating in regulated payment systems to comply with the access regimes established by the Board. These regimes include specific rules on connection charges, interchange fees, and non-discrimination, which aim to ensure fair access and competitive conditions within the system. For the EFTPOS system, the obligations included provisions for no-discrimination in interchange fees and a cap on connection charges for new entrants, which were later deemed redundant due to changes in the system’s architecture. The Act also stipulates consequences for non-compliance. Section 20 (subsection 20(1)) outlines that any person who contravenes the provisions of the Act, including the regulations made under it, can be subject to civil or criminal penalties. The maximum penalties for contravening the Act can include substantial fines and, in some cases, imprisonment. The exact penalties depend on the nature and severity of the breach, but they serve as a deterrent to ensure compliance with the regulatory framework established by the Board.