Image: © iuriimotov/Stock.adobe.com
A report by the country’s treasury recommends a significant overhaul of how the law manages payment systems, to cope with rapidly changing technologies.
Australia’s federal government is considering a range of new regulations on digital wallet and payment services like Apple Pay, Google Pay and WeChat Pay.
The country’s treasury has published the final report of a months-long review of payments systems and the laws governing them in Australia, led by lawyer Scott Farrell.
The report recommends that Australia’s finance minister and the Reserve Bank of Australia be given increased power to define which payment services fall under their purview and to regulate them.
It also says that regulations on such services should be integrated into a single, multi-tiered framework for simplicity, and to expand the legal definition of what constitutes a “payment system”, as the current one is said to be unable to cope with emerging technologies and business models.
Writing in The Australian Financial Review, Australian treasurer Josh Frydenburg noted that: “Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure.”
He continued: “The Farrell review makes a strong case for reform and its release now offers the opportunity for further industry feedback before the government finalises its response by years’ end.
“I am committed to reforming our payments system in order to promote competition and support innovation.”
The role of digital wallets and fintech in the Australian financial system has been a contentious topic lately, with traditional banks and tech giants vying for influence. The Commonwealth Bank of Australia, the country’s largest bank, has been engaged in a public clash with Apple over the issue.
The bank’s CEO Matt Comyn told the Australian parliament last month that “the thought that a single provider could have 80pc market share in an individual market is usually cause for concern”.
Apple then hit back, describing Comyn’s comments as “misleading and false”.
The Commonwealth Bank has given its public support for the new report and the recommendations for increased regulations therein.
A spokesperson for the company said: “The Farrell Report provides a well-considered and comprehensive review of the current payments system which indicates there is broad agreement the system needs to be significantly re-shaped to incorporate the rapid changes underway in payments in Australia and globally.”
Fintech companies in the country are likely to support the clarity that would come from regulatory consolidation, having complained in the past about the confusion caused by the current system of overlapping mandates. However, it remains unclear how they feel about the possibility of increased scrutiny.
A number of players in the digital wallet field in Australia did welcome the commissioning of the Farrell review when it was announced in November 2020.
