Global: Australian Government Proposes Legislation to Regulate Digital Payment Providers

Australia’s government announced plans on Wednesday () to introduce legislation granting the central bank regulatory authority over digital wallet providers, including Apple Pay and Google Pay.

Currently, digital wallet services such as Apple Pay, Google Pay, and China’s WeChat Pay operate without formal designation as payment systems, placing them outside of Australia’s financial regulatory framework.

The proposed regulations would empower the Reserve Bank of Australia (RBA) to oversee digital wallet payments in a manner similar to credit card networks and other financial transactions. Additionally, the legislation would grant the Treasurer the authority to instruct regulators to assess potential risks associated with payment platforms.

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 encourage innovation.”

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

The country’s payments infrastructure and regulatory framework have lagged behind the rapid advancements in the finance sector, particularly in Australia’s digital economy and payments sector.

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

Both Google and Apple have opposed the government’s efforts to classify them as payment providers, contending that customers primarily use their phones to access bank-issued cards for making payments.

Apple refrained from commenting on the draft law and instead referred to a submission made to the treasury in July, emphasizing the need for proportionality in regulating digital services’ indirect role in the payment system. Google did not immediately respond to requests for comment.

The government has invited input from stakeholders on the proposed legislation until November 1. The legislation is expected to be presented to parliament later this year.