Upcoming Mallesons seminarsOn the 26 March 1998, the Federal Treasurer introduced the Australian financial sector reform package into the House of Representatives. The bills have been passed by the House of Representatives, and at the time of writing, it is anticipated that the Bills will be passed by the Senate in the May budget sittings. The package is aimed at implementing the recommendations of the report of the Financial System Inquiry ("Wallis Report"). The Treasurer has announced that the Government aims to implement the new scheme in time for the coming financial year.
Purpose of the package
In his Second Reading speech, the Treasurer stated that the series of bills:
"...puts in place a structure designed to improve the efficiency and competitiveness of the Australian financial system while preserving its integrity, security and fairness".
Effect of package on e-commerce
The reform package impacts electronic payments.
The Payments Systems (Regulation) Bill 1998 ("PS Bill") provides for the regulation of payment systems by the Reserve Bank. A payment system is defined in the PS Bill as a "funds transfer system that facilitates the circulation of money" between participants (financial institutions) in the system. This definition is broad, and in the explanatory memorandum which accompanies the PS Bill, the Treasurer stated that smartcards would be among the payment instruments covered by the definition of payment systems.
The PS Bill also establishes a regulatory framework for "purchased payment facilities", ie stored valued instruments such as smartcards and digital cash. In his Second Reading speech, the Treasurer indicated that the PS Bill was to apply to "stored value cards, travellers cheques and Internet cash facilities".
The regulatory regimes imposed on payment systems and purchase payment facilities are not inconsistent. Regulation of payment systems deals with issues such as access, dispute resolution, and the commercial terms of this system. The regulation of purchased payment facilities operate to the prudential regulation of the holders of the store of value of such facilities.
It is therefore possible that a smartcard issuer could be subject to regulation as the holder of the store of value under the smartcard scheme (ie as it is a purchased payment facility), while at the same time the smartcard scheme itself could be subject to regulation by the Reserve Bank as a payment system.
Details of the impact of the Wallis legislation on electronic payment schemes will be discussed in the July issue of E-commerce Update.
Andrea Beatty, Senior Associate
Tel (61 2) 9296 2068
andrea.beatty@msj.com.au
Stuart Walton, Law Graduate
Tel (61 2) 9296 2061
stuart.walton@msj.com.au