OVERVIEW OF PAYMENTS
| Licence | Definitions/ Descriptions | References |
|---|---|---|
| The Australian Transaction Reports and Analysis Centre (AUSTRAC) registers remittance service providers as one or more of the following: Remittance network provider (RNP) Affiliate of a remittance network provider Independent remittance dealer. (AUSTRAC issues a separate registration for each type of remittance service provider.) |
Some remitters may need an Australian financial services (AFS) licence. However, an exemption applies when remittance dealers offer products that meet the following criteria: The issuer is an operator of a payment system or an authorised deposit-taking institution. Payment is made within two business days. The funds are transferred electronically. There is no standing arrangement with the client under which funds may be transferred electronically. |
Australian Business Licence and Information Service (ABLIS) |
| Authorised deposit-taking institution (ADI) | “ADI means: 1. a body corporate that is an ADI for the purposes of the Banking Act 1959; or the Reserve Bank of Australia; or a person who carries on State banking within the meaning of paragraph 51(xiii) of the Constitution.” |
Anti-Money Laundering and Counter-Terrorism Financing Act 2006 Banking Act 1959 |
| Payment purchased facilities (PPF) | “A purchased payment facility is a facility (other than cash) in relation to which the following conditions are satisfied: (a) the facility is purchased by a person from another person; and (b) the facility is able to be used as a means of making payments up to the amount that, from time to time, is available for use under the conditions applying to the facility; and (c) those payments are to be made by the provider of the facility or by a person acting under an arrangement with the provider (rather than by the user of the facility) However, a facility covered by a declaration under subsection (3) is not a purchased payment facility for the purposes of this act.” |
Payments Systems (regulation) act 1998 The list of authorised deposit-taking institutions covered under the Financial Claims Scheme can be found here. |
| Business Activity Regulation | Definition | Reference |
|---|---|---|
| Acquiring of a payment transaction |
The acquiring of payments is “a participant in the Scheme in Australia that provides services to a merchant to allow the merchant to accept a credit card" |
Payment Systems (Regulation) Act 1998 Access Regime for the VISA Credit Card System, Article 3 |
| Issuing of a payments transaction |
The issuer is “a participant in the Scheme in Australia that issues credit cards to the issuer’s customers”. |
Payment Systems (Regulation) Act 1998 Access Regime for the VISA Credit Card System, Article 3 |
| Remittance - money transfer business |
Remittance means “the transfer of money for payment or as a gift from one person to another”. A designated remittance arrangement is a remittance arrangement, where at least one of the persons described in the following subparagraphs is a non financier: a person who accepts an instruction from the transferor entity for the transfer of money or property under the remittance arrangement; a person who makes money or property available, or arranges for it to be made available, to an ultimate transferee entity as a result of a transfer under the remittance arrangement; and the remittance arrangement satisfies such other conditions (if any) as are specified in the AML/CTF Rules. A “remittance arrangement” is a reference “to an arrangement that is for the transfer of money or property, and includes a reference to an arrangement that, under the regulations is taken to be a remittance arrangement for the purposes of this act”. |
Anti-Money Laundering and Counter-Terrorism Financing Act 2006, Article 10 |
| Prepaid cards | A prepaid card refers to “a device that can be used in Australia, under the rules of the scheme, to make payments for goods or services using a store of value that has been prepaid or pre-funded and is accessible to make payments for goods or services only through the use of that, or a linked or related, device (irrespective of whether the device is issued in or outside Australia).” |
Payment Systems (Regulation) Act 1998 - Standard no. 3 of 2016- Scheme Rules Relating to Merchant Pricing for Credit, Debit and Prepaid Card Transactions, Article 2.3 |
| Digital currency |
The regulation defines digital currency as: “(a) a digital representation of value that: (i) functions as a medium of exchange, a store of economic value, or a unit of account; and (ii)is not issued by or under the authority of a government body; and (iii) is interchangeable with money (including through the crediting of an account) and may be used as consideration for the supply of goods or services; and (iv) is generally available to members of the public without any restriction on its use as consideration; or (b) a means of exchange or digital process or crediting declared to be digital currency by the AML/CTF Rules; but does not include any right or thing that, under the AML/CTF Rules, is taken not to be digital currency for the purposes of this Act.” |
Anti-Money Laundering and Counter-Terrorism Financing Act 2006, Article 5 |
| Providers of payment purchased facilities |
“A purchased payment facility is a facility (other than cash) in relation to which the following conditions are satisfied: (a) the facility is purchased by a person from another person; and (b) the facility is able to be used as a means of making payments up to the amount that, from time to time, is available for use under the conditions applying to the facility; and c) those payments are to be made by the provider of the facility or by a person acting under an arrangement with the provider (rather than by the user of the facility). However, a facility covered by a declaration under subsection (3) is not a purchased payment facility for the purposes of this act.” |
Payments Systems (Regulation) Act 1998 The list of authorised deposit-taking institutions covered under the Financial Claims Scheme can be found here. |
REGULATORY FRAMEWORK
| Main Laws and Regulations | |
|---|---|
| Banking Act 1959 | This act gives the Australian Prudential Regulation Authority (APRA) powers to issue directions and regulate banking activity. Section 66 of the act gives APRA the power to prohibit the use of expressions which a business may use to assure the public that the business is an authorised institution, for example, “bank”, “banker”, “banking”, etc. |
| Banking Regulation 2016 | These regulations repeal the Banking Regulations 1966 and provide regulation for the purchase of payment facilities. |
| Cheques Act 1986 | This act governs cheques, a definition of which is provided in Section 10. |
| Corporations Act 2001 | The Australian Securities and Investments Commission (ASIC) is responsible for the general administration of this act. The act governs corporations and registered schemes, as well as financial products and services. |
| Electronic Transactions Act 1999 | This act aims, among other things, to provide a regulatory framework that facilitates and promotes the use of electronic transactions. |
| Financial Services Reform Act 2001 | This act promotes informed decisions for consumers on financial products and services, and requires financial service businesses to hold an Australian financial services (AFS) licence or be authorised by a licensee to provide financial services on its behalf. |
| National Consumer Credit Protection Act 2009 | This act provides compliance requirements for credit licensees and credit activities that it authorises and gives ASIC general powers of investigation. |
| Payment Systems (Regulation) Act 1998 | The Reserve Bank of Australia (RBA) is the primary authority of payment systems in Australia. The act allows the RBA to designate payment systems where it considers it to be in the public interest. |
| Payments Systems and Netting Act 1998 | The act allows the RBA to approve payment systems and multilateral netting arrangements. |
| Reserve Bank Act 1959 | This act gives the RBA its statutory authority. The act creates the Reserve Bank Board and the Payments System Board, and regulates both. |
| Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 | This act provides measures to prevent and combat money laundering and terrorism financing. |
| Consumer Data Right (CDR) | The Competition and Consumer Act 2010, the Australian Information Commissioner Act 2010 and the Privacy Act 1988 have been amended to create the Consumer Data Right (CDR). The Consumer Data Right provides fundamental measures for the application of open banking in Australia. The legislation applies to individuals and businesses with a right to access specified data in relation to them and how it is used and shared. |
| Competition and Consumer Act 2010 | This act promotes fair trade competition and consumer protection. |
| ASIC Corporations (Foreign Financial ASIC Corporations (Foreign Financial Services Providers— Foreign AFS Licensees) Instrument 2020/198 | The instrument establishes a regulatory framework for foreign financial services providers (FFSPs), aiming to provide certain financial services to Australian wholesale clients without having to pursue a local licence via the traditional route. |
AUTHORITY FRAMEWORK
| Main Authorities | |
|---|---|
| Reserve Bank of Australia (RBA) | The Reserve Bank Act 1959 attributes to the Reserve Bank of Australia (RBA), the country’s central bank, its functions and powers. Its duty is to contribute to the stability of the currency, full employment and the economic prosperity and welfare of the Australian people. |
| Australian Payments Network Limited (AusPayNet) | The self-regulatory body that the payments industry set up to develop and maintain payments clearing and settlement regulations in Australia. The RBA is one of its members with special rights of representation. |
| Australian Payments Council (APC) | A strategic coordination body for the payments industry. It promotes industry collaboration and promotes strategic coordination between the payments industry and the RBA’s Payments System Board. |
| Australian Securities and Investments Commission (ASIC) | The Australian Securities and Investments Commission Act 2001 (ASIC Act) set up and administers the corporate, markets, financial services and consumer credit regulator. ASIC is required to: Maintain, facilitate and improve the performance of the financial system and entities within it. Promote confident and informed participation by investors and consumers in the financial system. Administer the law effectively and with minimal procedural requirements. Enforce and give effect to the law that provides functions and powers on it. Efficiently and quickly process and store information received. Make available to the public, as soon as practicable, information about companies and other bodies. |
| Australian Prudential Regulation Authority (APRA) | APRA supervises banks, credit unions, building societies, general insurance and reinsurance companies, life insurers, friendly societies and most members of the superannuation industry. It was established on July 1, 1998. |
| Australian Transaction Reports and Analysis Centre (AUSTRAC) | It protects the integrity of Australia's financial system and contributes to the administration of justice through its expertise in countering money laundering and terrorism financing. |
| Office of the Australian Information Commissioner (OAIC) | An independent regulator for privacy and freedom of information and its main aim is to protect personal data, handling privacy complaints, investigating possible data breaches and providing guidance. |
SPECIALIST AREAS
| Specialism | Main Regulation | Authority | Scope/Sectors Concerned |
|---|---|---|---|
| Anti-money laundering | Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) Financial Transaction Reports Act 1988 |
Australian Transaction Reports and Analysis Centre (AUSTRAC) |
Financial sectors Gambling sector Bullion dealers Remittance service providers Cash dealers “Designated services” according to the AML/CTF Act. |
| Data protection | Privacy Act 1988 Privacy Amendment (Enhancing Privacy Protection Act 2012) Competition and Consumer (Consumer Data Right) Rules 2020 |
Office of the Australian Information Commissioner (OAIC) |
The Privacy Act applies to: Businesses that are incorporated in Australia. Businesses outside Australia whether they collect personal information from Australia or hold personal information in Australia and carry on a business in Australia (Section 5B of the Privacy Act). |
| Consumer protection | Australian Securities and Investments Commission Act 2001 (ASIC Act) National Consumer Credit Protection Act 2009 (National Credit Act) Competition and Consumer Act 2010 (Competition and Consumer Regulations 2010) |
Australian Securities and Investments Commission (ASIC) Australian Financial Complaints Authority (AFCA) |
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