The Australian government is moving closer to implementing regulations on digital payment services, including Apple Pay and Google Pay, as part of its efforts to modernize the country’s payment system. On October 11, a draft legislation was released that would expand the power of the Reserve Bank of Australia (RBA) to regulate new and emerging payment systems. The legislation also introduced a new ministerial designation power to impose additional oversight on payment services or platforms with significant national risks.
This move comes after a government review revealed that the RBA’s existing regulatory powers may not adequately cover all systems and participants in the payments ecosystem. The Labor government has been working to modernize Australia’s payment system, with plans to phase out cheque usage by 2030. Macquarie Bank has already implemented a total ban on cash and cheque deposits and withdrawals.
Under the proposed legislation, the definition of “payment system” will be expanded to include those that use non-monetary digital assets or provide services that facilitate payments, such as mobile wallets. The definition of “participant” will also be broadened to include all entities involved in the payment value chain. These changes will grant the RBA the authority to impose an access regime, determine compliance standards, and give directions to digital payment services.
The legislation will also provide new powers to the minister in charge, allowing them to nominate an entity to perform regulatory powers and functions related to a designated payment system. It will establish a civil penalty framework and increase maximum criminal penalties for misconduct.
The government states that these new laws will address risks posed by digital payment services, protect consumers, and promote competition and innovation. However, technology companies like Apple and Google have expressed concerns and pushed back against the changes. They argue that their payment platforms do not pose financial and operational risks to banks and should be exempt from regulations.
Despite pushback from tech companies, the government believes that the shift to digital payments needs to occur in a way that fosters competition, innovation, and productivity across the entire economy. Government data shows that a significant portion of Australian card transactions are already made through mobile wallets, and the New Payments Platform processed one billion transactions in 2021-22.