Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2004 -- 2005
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
PAYMENT SYSTEMS (REGULATION) AMENDMENT BILL 2005
EXPLANATORY MEMORANDUM
(Circulated by authority of the Treasurer,
the Hon Peter Costello, MP)
Table of Contents
OUTLINE ..........................................................................................................1
FINANCIAL IMPACT STATEMENT .....................................................................3
REGULATION IMPACT STATEMENT .................................................................5
NOTE ON INDIVIDUAL CLAUSES.......................................................................7
Payment Systems (Regulation) Amendment Bill 2005 iii
1
Outline
Payment Systems (Regulation) Amendment Bill 2005
1.1 The Payment Systems (Regulation) Act 1998 (the Act) provides for the
regulation of payment systems and purchased payment facilities. Subsection
11(1) of the Act provides that the Reserve Bank of Australia (RBA) has the
power to designate payment systems if it considers that it is in the public interest
to do so.
1.2 Subsection 18(1) of the Act provides that the RBA may determine standards
to be complied with by participants in a designated payment system.
1.3 On 26 August 2002, the RBA determined a standard on the setting of
wholesale `interchange' fees for participants in credit card schemes. The
standard came into force on 1 July 2003. The RBA designated three participants
for the purposes of the standard on 12 April 2001 -- Visa, MasterCard and
Bankcard. Interchange fees are charged between financial institutions in order to
provide credit card services.
1.4 However, if participants in the designated schemes comply with the standard
on the setting and charging of interchange fees, they risk contravening Part IV of
the Trade Practices Act 1974 (TPA). Part IV of the TPA describes and prohibits
various restrictive trade practices.
1.5 Subparagraphs 51(1)(a)(i) and (ii) of the TPA respectively provide that
anything specified in, and specifically authorised by an Act or regulations made
under an Act, is exempted from the operation of Part IV.
1.6 The Payments System (Regulation) Regulations 2003 -- made under
section 32 of the Act -- provides interim relief by protecting credit card schemes
from liability under Part IV of the TPA. However, these regulations only apply
until 30 June 2005 as paragraph 51(1C)(c) of the TPA prevents such regulations
Payment Systems (Regulation) Amendment Bill 2005 1
Outline
from operating for more than 2 years and prevents similar regulations from being
introduced.
1.7 The Bill eliminates the overlap between the TPA and a standard by
specifically authorising, for the purpose of subparagraph 51(1)(a)(i) of the TPA,
the setting and charging of interchange fees in designated payments systems by
participants of specified schemes in accordance with a standard.
1.8 The effect is to exempt such conduct from Part IV of the TPA.
2 Payment Systems (Regulation) Amendment Bill 2005
2
Financial Impact Statement
2.1 This Bill will have no significant financial impact.
Payment Systems (Regulation) Amendment Bill 2005 3
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Regulation Impact Statement
3.1 The Office of Regulation Review has advised that no Regulation Impact
Statement (RIS) is required as one was prepared for the package of reforms in
relation to credit cards released by the RBA on 27 August 2002 and further
RISs would be provided in conjunction with the development of further
standards.
Payment Systems (Regulation) Amendment Bill 2005 5
4
Note on Individual Clauses
Clause 1 -- Short title
4.1 This clause provides the short title by which the Act may be cited.
Clause 2 -- Commencement
4.2 This clause provides that this Act will commence on 1 July 2005.
Clause 3 -- Schedule(s)
4.3 This clause makes it clear that the Payment Systems (Regulation) Act 1998
is amended as set out in the Schedule, and that any other item in the Schedule
has effect according to its terms.
Schedule 1 -- Amendments
4.4 The Schedule amends the Payment Systems (Regulation) Act 1998.
Item 1 -- Section 18A
4.5 Subsection 18A(1) authorises conduct for the setting and charging of
wholesale `interchange' fees for participants in a designated payments system to
which an `interchange fees standard' applies. This authorisation ensures that
such conduct is exempt from Part IV of the Trade Practices Act 1974.
4.6 Subsection 18A(2) defines `interchange fees standard' in two parts. The
first is to include the RBA Standard No. 1, entitled the Setting of Wholesale
(`Interchange') Fees as determined on 26 August 2002 (and any subsequent
variations). This standard applies to conduct of participants in credit card
schemes designated by the Reserve Bank on 12 April 2001 in compliance with
Payment Systems (Regulation) Amendment Bill 2005 7
Note on Individual Clauses
Standard No. l (that is, the Bankcard, MasterCard and Visa credit card
schemes). The second part of the definition permits the identification of further
standards through regulations.
Item 2 -- Application of the amendment
4.7 This item limits the application of the amendment to things done on or
after the commencement of the amendments.
8 Payment Systems (Regulation) Amendment Bill 2005