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Australia may soon see the most significant changes to its payment systems in more than 25 years, the government has revealed.
Newly announced federal reforms to Australia’s governance of payment systems will aim to protect Australian consumers making financial transitions via digital means, such as with digital wallets or using buy now, pay later products (BNPL).
Outlining the reforms, Treasurer Josh Frydenberg noted that almost half of Australians now make payments using their mobile phones, and there are more than five million active BNPL customer accounts.
Details of the measures have yet to be hammered out, following a consultation process with a number of federal agencies that is set to wrap up at the end of 2022, but primarily, they will aim to centralise oversight of the payment system with the government, and in certain situations, give more powers to the Treasurer.
One focus will be ensuring companies offering BNPL services or facilitating digital payments through mobile phone apps such as Apple Pay and Google Pay are covered in Australia’s regulatory framework.
By the end of the coming year, the government also aims to report on the feasibility of introducing a retail central bank digital currency. Adapting the system to account for a greater number of transactions and investments taking place with cryptocurrency is also within the purview of the reforms.
The announcement of the government’s plan follows a series of reviews that found new technologies had exposed regulatory gaps that could leave Australian consumers and businesses open to risk. That’s because instead of transacting via methods covered by Australian law, they’re instead being governed by corporations with varying levels of rigour.
“Failure to modernise our regulatory framework will mean Australian businesses and consumers are increasingly engaging with unregulated parties and the rules governing our systems could be increasingly determined by foreign governments and large multinational companies,” Mr Frydenberg said.
“Australia must retain its sovereignty over the payment system.”
Canada, Singapore and the United Kingdom have all undertaken changes to their payments regulatory architecture in response to similar concerns.
In addition, the government is looking to ensure that the country’s regulation supports competition by removing the barriers to market entry for innovative new companies.
My Frydenberg commented that as much as change was urgently needed to protect consumers, it was also a moment of potential.
“What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalise on the convergence between finance and technology,” Mr Frydenberg said.
The reforms will be carried out in two phases, with the most pressing issues to be consulted on in the first half of 2022 and the remainder by the end of 2022.
In relation to payments, by mid-2022, the government will:
- Present a strategic longer-term plan for the payments system, developed with industry and reviewed annually.
- Settle the details of additional powers for the Treasurer to set payment system policy.
- Determine the changes necessary to modernise payments system legislation to accommodate new and emerging payment systems, including consideration of BNPL and digital wallets.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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