Australia to Tighten Grip on Digital Wallets with New Regulatory Framework
The Australian government has announced plans to broaden the Reserve Bank of Australia's (RBA) authority to regulate digital
Australia to Tighten Grip on Digital Wallets with New Regulatory Framework
The Australian government has announced plans to broaden the Reserve Bank of Australia's (RBA) authority to regulate digital payments, bringing services like Apple Pay and Google Pay under the same regulatory framework as traditional credit cards. This move, which was first flagged last month, aims to ensure that Australia's payments framework remains effective and up-to-date in the face of rapidly evolving technologies. The proposed legislation is slated for introduction in parliament this week.
Despite their widespread adoption, digital wallets offered by tech giants like Apple, Google, and Tencent's WeChat remain outside the purview of Australia's payments legislation.
"We are modernising Australia's payments system to ensure it meets the needs of our economy now and into the future. We want to make sure the increasing use of digital payments occurs in a way that helps promote greater competition, innovation and productivity across our entire economy," Treasurer Jim Chalmers said in a statement.
The proposed legislation aims to amend the Payment Systems (Regulation) Act 1999, wherein the RBA currently holds supervisory authority over card payment networks and specified payment systems. If the proposed changes are enacted, the RBA's jurisdiction would expand to cover "new payment technologies," such as digital wallets and other evolving payment methods.
The government has stated that the objective of the legislation is to enhance competition, foster innovation, and improve efficiency within the payments system, all while maintaining its safety, reliability, and resilience. Additionally, the envisaged amendments are anticipated to assist Australia in fulfilling its international commitments outlined in the Committee on Payments and Market Infrastructure (CPMI) Principles for Financial Market Infrastructures.
The rapid growth of digital wallets, particularly among younger users, has prompted regulatory scrutiny. In the June quarter, digital wallet transactions accounted for 35 per cent of all card transactions, up from 10 per cent in early 2020.
The amendments will additionally empower a designated minister to impose enhanced oversight on any system or platform deemed to pose a "national significance" risk.