- ASIC has released a new ePayments Code, replacing the former EFT Code as a best practice consumer protection regime for electronically initiated transactions.
- The new Code clarifies and strengthens the requirements applying to providers of these electronic payment products and services, and ensures greater certainty in the face of ever-changing products and technologies.
Introduction of the ePayments Code
The new ePayments Code (Code), a voluntary code of practice that provides a consumer protection regime for electronic payments, was introduced by ASIC on 20 September 20111. The Code replaces its predecessor, the Electronic Funds Transfer Code of Conduct (EFT Code)2, and has been introduced after a lengthy review process. The new Code signals ASIC’s intention to cover an ever-broadening range of new electronic payment services and products.
The release of the new Code marks the commencement of a transition period which will end on 20 March 2013. PayPal Australia has already announced that it will sign up to the Code by the end of this period, and ASIC expects current members of the EFT Code—namely banks, credit unions and building societies that provide retail banking services—as well as other providers of new payment services who may not have subscribed to the previous code to sign up.
Why introduce a new Code?
Part of ASIC’s responsibility for the previous EFT Code was a requirement to periodically review it. The most recent review commenced in 2007 and included the release of two consultation papers, the formation of three separate working groups and an extensive consultation process involving key stakeholders. The result of all this effort is the new Code.
One of the main reasons for replacing the EFT Code with the new Code was the ever-changing and developing nature of the electronic payments industry. The advent of new technologies and facilities required that the Code be updated in order to:
- be product and technology neutral
- deal with the growing issue of mistaken internet banking payments
- deal with newer, low value products that pose a lower risk to consumers than other products or transactions (such as prepaid or ‘gift’ credit cards) on a ‘light touch’ basis, and
- be clearer and more accessible to consumers (ie in ‘plain English’).
What are the key changes in the new Code?
The new Code updates a number of requirements of the EFT Code to take into account changes in practice and in technology since the previous review, as well as introducing new requirements in relation to problems that have arisen out of this changing landscape.
The new Code will regulate consumer electronic transactions, including ATM, EFTPOS, debit and credit card transactions (including those using contactless technology), online payments, internet banking and BPAY.
In addition to addressing the issues noted above, key changes include:
- expanding the scope and membership of the code beyond traditional financial services providers by clarifying that the code covers all transactions initiated electronically
- simplifying the structure and drafting of the Code (including the introduction of a statement of objectives) to better clarify its applicability
- introducing tailored, less onerous requirements for products that are capable of holding no more than $500 at any time
- clarifying disclosure requirements in order to take into account current practice, including disclosing charges when using foreign ATMs and ‘opt-in’ electronic delivery of notifications to customers
- amending the complaints handling procedure and internal dispute resolution procedures to refer to external standards and ASIC Regulatory Guide 165
- introducing a regime in relation to mistaken internet payments and clarifying the liability of consumers and subscribers for unauthorised transactions, and
- granting ASIC certain administrative powers, including the ability to modify the application of the Code to a particular product or class of products, as well as clarifying ASIC’s compliance monitoring requirements.
Why sign up to the new Code?
The new Code, in its more accessible and technology-neutral form, now offers a consumer protection regime that has broad applicability to electronic payment products and services that may not currently be subject to any industry codes or regulations. It therefore offers a means for subscribers to provide certainty, confidence and a sense of security to their customers as well as promoting a more general sense of corporate social responsibility.