Australia unveils draft law to regulate digital payment providers

Australian Government Proposes New Laws to Regulate Digital Wallet Providers

In a move to protect consumers, promote competition, and foster innovation, the Australian government has announced plans to introduce legislation that would empower the Reserve Bank of Australia (RBA) to regulate digital wallet providers. This includes popular platforms such as Apple Pay, Google Pay, and China’s WeChat Pay, which have experienced significant growth in recent years.

Currently, these digital wallet providers are not designated as payment systems, placing them outside of Australia’s financial regulatory system. However, under the proposed rules, the RBA would have the authority to monitor digital wallet payments in the same way as credit card networks and other transactions. Additionally, the treasurer would be granted powers to order regulators to assess any potential risks posed by payment platforms.

Treasurer Jim Chalmers emphasized the government’s commitment to addressing the risks associated with unregulated digital payment services. By expanding the definitions of “payment system” and “participant” in existing laws, the proposed legislation aims to ensure that payments infrastructure and the regulatory framework keep pace with the evolving digital economy and payments landscape.

The Australian Banking Association has noted a significant shift in payment preferences, with mobile wallet transactions surging from 29.2 million in 2018 to a projected 2.4 billion in 2022. This rapid growth highlights the need for updated regulations to safeguard consumers and maintain a level playing field for all payment providers.

While Apple and Google have expressed concerns about being designated as payment providers, they have also acknowledged the importance of proportionate reforms. Apple, in a submission to the treasury, emphasized the limited and indirect role that digital services play in the payment system. Google has yet to comment on the proposed legislation.

The government is currently seeking feedback from stakeholders on the draft legislation until November 1st. It is expected that the legislation will be introduced to parliament later this year.

By taking proactive measures to regulate digital wallet providers, the Australian government is demonstrating its commitment to ensuring the safety and security of digital payments. These proposed laws will not only protect consumers but also promote healthy competition and encourage further innovation in the digital payments sector.