Australia announces draft law on digital payments

By implementing the proposed rules, the Reserve Bank of Australia (RBA) would be able to monitor digital wallet payments in the same manner as credit card networks and other transactions. Moreover, this would allow the treasurer to order regulators to verify if any payment platforms pose risks to the country. According to officials, the government is addressing the risks presented by digital payment services, which are currently unregulated, to protect consumers, promote competition, and increase innovation.

Treasury documents showed that the draft law would expand the definitions of payment systems and participants in Australia’s existing laws, as the infrastructure and regulatory framework did not keep pace with the current transitions in finance. The shift is supported by a report from the Australian Banking Association which showed that the country witnessed a definite change in payment preferences in recent years. The number of mobile wallet transactions surged from 29.2 million in 2018 to 2.4 billion in 2022.

Google and Apple are against the government’s decision to designate them as payment providers, stating that customers only use their phones to make payments with cards issued by banks. Apple declined to comment on the draft law, however, the company referred to a submission from July 2023, when it said that any reforms should be proportionate to the limited, indirect role digital service had in the payment system.

Australia’s government requested feedback from stakeholders on the draft legislation until the beginning of November 2023, with the regulation being expected to be introduced to parliament this year. 

According to Statista, cash was the dominant payment method for consumers in Australia less than a decade ago, however, in recent years, cash withdrawals decreased due to the rise of digital payments. The COVID-19 pandemic influenced the way Australians pay, with debit and credit cards and alternative payment methods, including digital wallets and mobile payments, increasing their market share. The Digital Market Outlook shows that the digital payment market is set to continue to expand, encouraged by the digital commerce and mobile point-of-sale segments. Currently, Apple Pay and Afterpay are commonly used to pay in stores and restaurants, suggesting Australians’ increasing acceptance of alternative payment methods. 

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