Digital wallets such as Google Pay and Apple Pay would be regulated under draft laws released by the federal government.
It is the next step in the government’s plan to modernise the nation’s payments system, which includes phasing out cheque payments by 2030.
The plan is expected to go before parliament this year, so digital wallets would face the same regulations as credit cards and EFTPOS transactions.
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Treasurer Jim Chalmers flagged the move in a speech to the Australian Banking Association, stating new powers were needed to respond to emerging challenges.
Chalmers said the changes would make Australia’s system flexible enough to meet economic needs into the future.
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“As payments increasingly become digital, our payments system needs to remain fit for purpose so that it delivers for consumers and small businesses,” he said.
“We want to make sure the shift to digital payments occurs in a way that promotes greater competition, innovation and productivity across our entire economy.”
The laws would let the Reserve Bank of Australia regulate emerging payment systems and address any risks posed to consumers.
The relevant minister could add any new payment system to the list requiring regulation.
Digital wallet payments accounted for 35 per cent of card transactions in the June quarter, spiking from 10 per cent in 2020, according to ABA figures.
Nearly two-thirds of Australians aged between 18 and 29 use mobile app payments.
Meanwhile, there has been an almost 90 per cent decline in the use of cheques in the past 10 years, with the payment option accounting for only 0.2 per cent of non-cash retail payments.
Chalmers in June announced the government would phase out cheques by 2030.
“We want to systematically transition these transactions to digital to improve the efficiency of this sector and getting Australians their money faster as well,” he said.
“As cheque use declines, the cost of supporting the cheque system will continue to increase.
“At the same time, many merchants are ceasing to accept cheques as a means of payment.”
The seven-year transition plan would provide time for banks and financial institutions to assist customers with the shift, Chalmers said.
“The government will work with industry to minimise adverse impacts to consumers and businesses and ensure vulnerable Australians have the assistance they need to switch to other payment methods,” he said.
“We understand the change in payment methods that is already underway is difficult for some people, including older Australians and some small businesses.”
The move away from cheques comes under one of five areas for reform outlined in the government’s strategic plan for the nation’s payments system, including:
Resilience and security of payment infrastructure, including reducing scam and fraud and strengthening defences against cyberattacks;Modernisation of payments by phasing out cheques, upgrading systems and maintaining access to cash;Uplifting productivity and competition through technology advancements such as digital ID and artificial intelligence;Establishing Australia as a leader in the global payments landscape by facilitating cross-border payments and creating an environment that attracts innovation; andUpdating the payments regulatory framework by changing the Payments System Act, reducing small business transaction costs, and enabling greater collaboration between payment systems regulators.
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