ASIC in bid to make ePayments Code mandatory

While ASIC does not have the power to mandate the code, it is understood the federal government is supportive of the move, to ensure it stays effective and relevant.


More than 100 members — including the major banks and credit providers — are part of the voluntary code, which regulates automatic teller machine transactions, online payments, BPAY, EFTPOS transactions, credit and debit card payments and internet and mobile banking.

A new, key element among ASIC’s proposals is the inclusion of better protection for small business.

It would mean that small business would receive the same disclosures, and benefit from the same protections around unauthorised transactions and mistaken payments, as consumers do.

The code currently does not apply to transactions by customers through facilities that are designed primarily for use by a business.

Professor Ross Buckley, a digital payments and fintechs expert at UNSW law school, said consumer-style protection for small business had been a long time coming.

‘Fitness for purpose’

“It makes sense to have a review of the ePayments system and it’s a good idea to extend its protection to small businesses,” he said.

The review could also address the issue of the size of ePayments fees in Australia, he said.

“The EU is done so interesting work to drive those fees down, which, if mirrored here, would prove highly beneficial to business,” he said.


The review will assess the code’s “fitness for purpose” in light of the quantum leap in financial innovation and customer uptake of digital technologies since the most recent full ASIC analysis in 2010.

Consumers now routinely use mobile banking, digital wallets, contactless, “tap and go” payments and biometrics as an alternative to traditional banking and passcodes, or PINs.

In its 2018 annual report, the Payments System Board, which is responsible for the payments system policy of the Reserve Bank, noted that Australians made on average 480 electronic transactions each a year, compared with an average of 215 transactions 10 years ago.

Debit and credit cards combined were the most frequently used payment method, with personal and business cardholders making around 8.7 billion payments worth $591 billion each year.

There has also been a major shift in the way many businesses issue transaction receipts to their customers. Previously, a paper receipt would be issued but many now issue receipts via email or mobile phone text message.

We support the ePayments Code protections being consistently applied

The Banking Royal Commission revealed some major misconduct by the big banks in respect to their small-business clients.

In his report, Royal Commissioner Kenneth Hayne determined there was little appetite among the banks for an extension of consumer credit protections to small business.

However, the ASIC spokesman said some provisions could potentially be extended without apparent significant cost and could be valuable to small businesses.

“We support the ePayments Code protections being consistently applied, ” the ASIC spokesman said.

“A mandatory code would provide the same protections for all consumers, regardless of which service provider they choose.”

The revised code would become a major piece of regulation governing the relationship between financial service companies and their small-business clients.

The ASIC spokesman said the code currently contains two complaints-handling regimes and the review would look at streamlining them into one.

“We can’t see a justification for two regimes, and a consistent approach may be better for consumers,” he said.

Stephen is Investment Editor at The Age and Sydney Morning Herald. He writes about personal finance issues and markets as well as editing Money.

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