Global: Australia Proposes New Regulations for Digital Payment Providers Including Apple Pay and Google Pay

On Wednesday (October 11, 2023), the Australian government announced its intention to introduce legislation that would grant the central bank the authority to regulate digital wallet providers such as Apple Pay and Alphabet’s Google Pay.

Currently, digital payment services like Apple Pay, Google Pay, and China’s WeChat Pay operate outside Australia’s financial regulatory framework as they are not classified as payment systems. The proposed regulations aim to change this and bring these digital wallet services under the oversight of the Reserve Bank of Australia (RBA).

Under these new rules, the RBA would have the authority to oversee digital wallet payments, similar to how credit card networks and other transactions are monitored. The treasurer would also be empowered to instruct regulators to assess if any payment platforms pose risks to the country.

Treasurer Jim Chalmers stated, “(The) government is addressing the risks posed by new digital payment services, which are currently unregulated, to protect consumers, promote competition, and spur innovation.”

According to treasury documents, the draft law would expand the definitions of “payment system” and “participant” within Australia’s existing laws.

Australia’s payment infrastructure and regulatory framework have not kept pace with the evolving financial landscape, especially in the digital economy and digital payments sector.

A report from the Australian Banking Association in June highlighted a remarkable shift in payment preferences, with mobile wallet transactions in the country soaring from 29.2 million in 2018 to 2.4 billion in 2022.

Both Google and Apple have voiced their opposition to the government’s efforts to classify them as payment providers. They argue that customers use their phones solely for making payments with cards issued by banks.

Apple has not provided a comment on the draft legislation and referred to a submission it previously made to the treasury in July. In this submission, Apple emphasized that any reforms should be proportionate to the limited, indirect role that digital services play in the payment system.

Lucinda Longcroft, Director of Public Policy at Google Australia, stated that Google has been working collaboratively with the Australian government to support its reform of the country’s payment system.

The government has opened the draft legislation for feedback from stakeholders until November 1. It is expected that the legislation will be introduced to parliament later this year.