Australian Government Proposes New Laws to Regulate Digital Wallet Providers
Introduction
The Australian government has announced plans to introduce legislation that would give the central bank regulatory authority over digital wallet providers such as Apple Pay and Google Pay. Currently, these popular payment platforms are not designated as payment systems, which means they operate outside of Australia’s financial regulatory system.
Regulating Digital Wallet Providers
The proposed laws would empower the Reserve Bank of Australia (RBA) to monitor digital wallet payments in a similar manner as credit card networks and other transactions. Additionally, the treasurer would have the power to order regulators to assess any payment platforms that may pose risks to the country.
- These new laws aim to protect consumers, promote competition, and foster innovation in the digital payment services sector.
- The definitions of “payment system” and “participant” in Australia’s existing laws would be expanded to accommodate the changing landscape of finance, particularly in the digital economy.
The Growing Importance of Digital Wallets
The Australian Banking Association has reported a significant shift in payment preferences, with mobile wallet transactions reaching 2.4 billion in 2022, compared to 29.2 million in 2018. This surge in popularity highlights the need for updated payments infrastructure and regulatory frameworks to keep pace with the evolving digital economy.
Apple and Google’s Opposition
While the Australian government is taking steps to regulate digital wallet providers, companies like Apple and Google have expressed their opposition to being designated as payment providers. They argue that customers simply use their phones to make payments using cards issued by banks.
- Apple has refrained from commenting on the draft law, instead referring to a submission it made to the treasury in July. In that submission, Apple emphasized the limited, indirect role digital services play in the payment system.
- Google, on the other hand, has been working closely with the Australian government to support its payment system reform.
Next Steps
The Australian government is 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.
It is crucial for the government to address the risks associated with unregulated digital payment services to protect consumers, foster competition, and encourage innovation. By regulating digital wallet providers, Australia can ensure a safer and more efficient financial ecosystem for its citizens.
