The Australian Prudential Regulation Authority (APRA) has released a draft prudential standard and authorisation guidelines for providers of purchased payment facilities or PPFs, a new class of authorised
deposit-taking institution (ADI).

PPFs are new forms of payment instruments such as stored-value cards and internet-based payment
systems or ‘electronic purses’.

The draft proposals require PPFs to:

• obtain a conditional authorisation limited to providing PPF business;
• meet ADI prudential standards on governance, fitness and propriety, outsourcing, business continuity management and auditing requirements;
  and
• meet a simplified capital adequacy framework if the PPF also has stored value at risk. Under the proposed framework, such PPFs would at all times have to hold:
  • Tier
    1 capital at least equal to the larger of either the minimum start-up capital as determined by APRA or five per cent of total outstanding PPF liabilities; and
  • high quality liquid assets at least equal to the value of the float.

Comment on the draft  authorisation guidelines, prudential standard and accompanying discussion paper  are invited by 30 June 2005.