ASIC today released the new ePayments Code which provides a best practice consumer protection regime for electronic payment products.
PayPal Australia welcomes the new ePayments Code and has agreed to sign up to the revised code by the end of the transition period which is 20 March 2013. ASIC expects it to be joined by banks, credit unions and building societies who are members of the existing version of the code. ASIC is also in discussion with a number of other providers of new payment services about subscribing to the new code.
The ePayments Code provides key consumer protections in cases of fraud and unauthorised transactions and plays an important role in the regulation of electronic payment facilities in Australia.
The release of the Code concludes an extensive review of the previous Electronic Funds Transfer Code of Conduct (EFT Code), involving widespread consultation between ASIC, industry and consumers. A major objective of the review was to ensure the Code covers all consumer electronic payment products, not just those from traditional banking organisations.
ASIC Chairman Greg Medcraft said: ‘I'd like to thank all stakeholders who have contributed to the review of the Code. Our new Code sets out best practice in consumer protection and is product neutral and in plain English. It will encourage consumers to have confidence in our epayment systems. I encourage all providers of consumer payment products to demonstrate they put their customers first and subscribe to the Code. Industry members are important gatekeepers and self-regulation has a role to play in improving industry standards and consumer experiences.’
Frerk-Malte Feller, Managing Director of PayPal Australia, said: ‘The release of the ePayments Code exemplifies ASIC’s commitment to protecting consumers in a time of significant technological change.
‘The rapid adoption of smartphones and other internet enabled devices used to access banking and payments solutions requires a dynamic code of practice to ensure adequate consumer protection. It is imperative that positive advancements in Australia’s banking and financial infrastructure are not stifled; the ePayments Code will assist in managing this delicate balance.’
ASIC has been responsible for the EFT Code since 1998 and is required to review it periodically. The current review formally commenced in 2007 with the release of Consultation Paper 78 Reviewing the EFT Code (CP 78). In October 2008, ASIC released a second consultation paper, Consultation Paper 90 Review of the EFT Code of Conduct: ASIC Proposals (CP 90). During the second consultation phase two working groups were formed, one to address the issues surrounding the overall review of the EFT Code and the second to resolve the issues around mistaken payments. In November 2010, ASIC formed another working group for the redraft of the Code into plain English.
For more information on the EFT Code review please see Report 218 Electronic Funds Transfer Code of Conduct Review: Feedback on CP 90 and Final Positions.
The new Code
The Code replaces the existing EFT Code and will regulate consumer electronic payments including ATM, EFTPOS, debit and credit card transactions (including contactless transactions), online payments, internet banking and BPAY.
Traditionally all banks, credit unions and building societies that provide retail banking products signed up to the EFT Code. We expect all to continue with the new ePayments Code. ASIC has begun re-subscribing current EFT Code subscribers to the new Code: existing subscribers have an 18 month transition period to move to the new Code. The transition period starts today and subscribers must comply with the new Code by 20 March 2013.
The new Code has been designed to deal with recent consumer issues and developments in the electronic payment industry. Changes incorporated into the Code include:
a tailored set of light touch requirements for low value products (with a maximum balance of $500);
a new regime to resolve mistaken internet banking payments; and
plain English drafting that is product and technology neutral.
ASIC strongly encourages all providers of consumer electronic payment products, particularly those from outside the traditional banking sector, to subscribe to the Code. Benefits of subscribing to the Code include:
a more level playing field for participants – a Code that offers across the board protection for products that are currently not subject to any industry codes or regulations;
improved consumer confidence due to an uptake of the Code;
an opportunity for subscribers to demonstrate their commitment to ethical conduct and corporate social responsibility; and
participants in the electronic payment space can be confident they comply with their general obligations under the law.
The ePayments Code sets out how subscribers should conduct themselves when dealing with consumers. The following examples illustrate how the Code applies to some situations:
a consumer whose electronic payment account has been hacked into and used by a third party to make purchases without their authorisation will not bear the monetary loss if the account provider is a subscriber to the Code;
a consumer who inadvertently transfers money to the wrong person because they enter the wrong payment details can use the procedures to recover the money;
a consumer is not liable for any unauthorised transactions on their debit card that were done without a PIN or signature;
subscribers need not provide receipts for their low value products, but must provide consumers with ways to check their balance and transaction history.
The Code only protects consumers when dealing with a subscriber. You should check that the banking or payment services organisation you are dealing with is a subscriber by
checking the ASIC register of subscribers; or
checking the product’s terms and conditions (if the company is a subscriber, it will say so in the product’s terms and conditions).