EML Payments Announce Changes to NSW Legislation on Purchasing of Gift Cards

EML Payments Limited is aware of recent changes to the Fair Trading Act 1987 (NSW), commencing 31 March 2018. The changes introduce a mandatory minimum expiry period of 3 years for gift cards and gift vouchers sold to a consumer in NSW, Australia, as well as a ban on post-purchase administration fees.

The proposed changes will only affect a small portion of EML’s Australian gift card business as over 80% of Australian Non-Reloadable Gross Debit Volumes derive from corporate funded incentive card programs which are exempt from these legislative changes. In FY18, EML expects to generate less than 0.5% of group EBTDA from consumer loaded gift programs impacted by the change.

EML is working with program managers to minimise the impact on clients and consumers and to ensure compliance with the new legislation prior to the end of the transition period on 30 September 2018.

For those cards sold within NSW impacted by the legislative changes, the time in which card breakage converts into cash will increase from 12 months to 36 months.

The impact of this delayed cash flow will be immaterial to the Group’s results and will be offset, to some degree, by interest generated on the breakage funds, which we are required to hold for the extended period.

Breakage from NSW-sold consumer gift cards will continue to be recognised in accordance with the group’s accounting policy for revenue from expired funds, as detailed in the Group’s last annual report available on our website

The NSW legislative changes form part of the varied international regulatory environments in which EML operates. EML does not expect any flow-on impacts to our international markets, given regulators in each region or country in which we operate are working to their own set of priorities and timelines. We would note that since inception as a public company in 2011, the potential impact of an adverse regulatory change materially impacting breakage revenues has been raised and over that same time period we have seen no such material adverse impacts.

In the event of any adverse regulatory change to breakage, impacting either revenue recognition or cash flow, we would inform shareholders under our continuous disclosure obligations and we would manage the impact of the changes as part of our ongoing dedication to proper risk and compliance principles.


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