What it does
The Payment Systems (Regulation) Act 1998 (the Act) establishes a flexible regulatory framework for two distinct but overlapping domains: payment systems and purchased payment facilities.
At its core the Act empowers the Reserve Bank of Australia (the Reserve Bank) to designate a payment system (or class of systems) under s11 where it considers the designation to be in the public interest. The public-interest test, elaborated in s8, requires the Reserve Bank to have regard to financial safety for participants, efficiency, competition, and the avoidance of material contribution to systemic risk. Once designated, the Reserve Bank may impose an access regime (Div 3), determine standards (Div 4), arbitrate disputes (Div 5) and give binding directions (Div 6). An access regime, imposed by legislative instrument under s12, sets out the terms on which participants must grant access to the system on a commercial, fair and reasonable basis (see the definition of “access” in s7(1)). Standards made under s18 are also legislative instruments and may apply differentially to classes of participants (s18(1B)). Failure to comply with a standard or access regime can trigger a direction under s21; contravention of such a direction is both a fault-based offence and a civil penalty provision carrying 100 penalty units (s21(9)–(10)), with daily continuing liability (s21(11)).
A parallel track was added by later amendment. The Minister may designate a system as a “special designated payment system” under s11B if satisfied it is in the national interest (a test informed but not exhausted by the s8 public-interest factors—see s8A). The Minister may nominate one or more “special regulators” (which may include the Reserve Bank or other prescribed Commonwealth entities—s11C) and issue them with “matters directions” and “purposes directions” (s11F). Nominated special regulators may themselves impose access regimes, standards and directions, but only after receiving a matters direction and after consulting the Reserve Bank and any other nominated regulator (s11E). Where both a normal and a special access regime, standard or direction apply to the same system, the normal (Reserve Bank) instrument yields to the extent of inconsistency (ss15AA, 18AA, 21A).