Modernising the Payment System

tap card payment

Original media release (7/06/2023) from the Treasurer, The Hon Dr Jim Chalmers MP:

The Albanese Government is taking the next important steps to modernise the way Australians make and receive payments.

The Strategic Plan for Australia’s Payments System released today presents a roadmap for the development of the sector.

Our vision is for a modern, world?class and efficient payments system that is safe, trusted and accessible, enabling greater competition, innovation and productivity.

New digital products are changing the way we make payments and the way businesses provide payments services. The Government is acting to ensure Australia’s payments system remains fit?for?purpose now and into the future.

The plan will help coordinate action between the public and private sectors, provide certainty for industry investment, and support new entrants navigate the regulatory landscape.

The Strategic Plan has five key components:

  1. promoting a safe and resilient payments system by reducing scams, strengthening cyber?security, and updating the RBA’s supervision frameworks.
  2. updating the payments regulatory framework including a new licensing framework, more competition and transparency across systems, more collaboration amongst regulators, and steps to reduce small business transaction costs.
  3. modernising payments infrastructure by phasing out cheques and supporting the industry’s transition to the New Payments Platform.
  4. uplifting competition, innovation and productivity by aligning the payments system with other reforms including the Consumer Data Right framework, Digital ID, and the skills agenda.
  5. making Australia a leader in global payments, including through work in the G20 and the Pacific to improve the availability of fast, low?cost international transfers, and piloting a central bank digital currency.

As part of our plan, the Government is today releasing two consultation papers to ensure regulations keep pace with payments innovations.

The first consultation paper proposes updates to the Payments Systems (Regulation) Act 1998 (PSRA) to address the risks posed by new payments technologies. The consultation proposes changes to:

  • ensure the Reserve Bank of Australia can regulate new and emerging payments systems, such as digital wallet providers, and
  • introduce a new Ministerial designation power that would allow particular payments services or platforms that present risks of national significance to be subject to additional oversight by regulators.

Feedback is requested by 5 July. It is expected that legislative amendments to the PSRA will be introduced to Parliament before the end of 2023.

The second consultation paper invites feedback on the proposed list of payments functions that would be regulated under the new licensing framework. Feedback is requested by 19 July.

Further consultation on the regulatory obligations under the new licensing framework will take place later in 2023 to facilitate the introduction of legislation for the new payments licensing regime in 2024.

These reforms will ensure that the Australian payments system works for consumers, businesses and investors, and delivers for the economy.