Paymate and EFT Code of Conduct

One of the submissions to the ACCC on eBay's notified conduct on payment options was from ASIC. This was to say it was highly desirable for PayPal to become a signatory to the EFT Code of Conduct

ASIC said in its submission:

"PayPal's business involves the provision of EFT transactions in relation to EFT accounts within the meaning of Section 1 of the EFT Code, and, if it became a signatory to the Code, it would be regulated by Part A of the Code. Part A prescribes rules of conduct relating to the provision of EFT transactions, including around:

record-keeping requirements
liability for unauthorised transactions
liability in cases of system or equipment malfunction
audit-trails, and
complaint investigation and resolution procedures.

ASIC considers that it is highly desirable that PayPal become a signatory to the EFT Code, given the large numbers of retail customers who use eBay, as it would provide an additional desirable layer of consumer protection that is not currently in place." Read more about the EFT Code here.

A couple of Paymate clients have asked if we are a signatory to this EFT Code of Conduct.

Paymate's buyers and sellers are automatically protected by major financial institutions under the EFT Code of Conduct when they use a credit card or bank account via Paymate.

Paymate is NOT a signatory to the EFT Code of Conduct since we do NOT operate an EFT account (such as a stored value account, bank account or credit card). All our payments are processed 'straight through' to sellers bank accounts, often the same night as we receive them ('Straight Through Payments').

Some extracts from the EFT Code of Conduct might be helpful:

1.1(a) ""EFT transactions are funds transfers initiated by giving an instruction, through electronic equipment and using an access method, to an account institution (directly or indirectly) to debit or credit an EFT account maintained by the account institution."
1.1(b) Part A of the Code governs the rights and duties of account institutions and users (including account holders). It does not directly govern the rights and duties of third parties, such as issuers of access methods who are not account institutions or third parties in an EFT network such as merchants." [Our emphasis].

In effect, Paymate only ever processes payments via authorised account institutions (e.g. banks) who are signatories to the EFT Code of Conduct. We process debits to bank accounts via a Sponsoring Bank and debits to credit cards via two Acquiring Banks, all being signatories to the EFT Code.

This means our buyers and sellers are automatically protected by major financial institutions under the EFT Code of Conduct when they use a credit card or bank account via Paymate.

Paymate is regulated by ASIC under an Australian Financial Services License, however, that requires us to:

have adequate compliance arrangements
have adequate resources (including financial, technological and staffing)
have adequate risk management arrangements
have adequate arrangements to compensate clients for any losses associated with the provision of financial services, and
maintain compliant internal and external dispute resolution arrangements (including through membership of an external dispute resolution scheme such as the Banking and Financial Services Ombudsman Service).