For many of us, shopping using tap and go technology has become second nature; even more since the pandemic struck. But few people may know that the latest evolution of the contactless payment system – “digital wallets” on mobile phones – has turned into an almighty stoush in Australia between Big Tech and Big Banks.

A growing number of banking customers are using digital wallets such as Apple Pay and Google Pay, which allow users to enter card details into their phones and pay using technology that works seamlessly with the vast network. existing contactless point-of-sale devices. .

Every time a payment goes through Apple Pay – which is the only digital wallet app allowed on an iPhone – the tech company pockets an undisclosed fee from the banks. Google Pay, which works on Android phones, doesn’t charge a fee.

Banks have a long list of grievances, including Apple’s reluctance to allow digital wallet competitors on its iPhone (Android phones allow third parties to use its payment technology), lack of regulatory oversight, and the frustration that has invested heavily in the creation of the contactless payment system, Apple now readily bills banks for the use of this infrastructure.

As a result, in October of last year, the Morrison government established a review of the regulatory architecture of the payments industry, led by lawyer and financial technology expert Scott Farrell. Recently released, the review recommended, among other things, new powers for Treasurer Josh Frydenberg to eliminate overlapping oversight responsibilities and potentially force Apple to open up its digital wallet technology to rivals.

The lack of proper oversight was fully visible when officials from the Reserve Bank, the Australian Competition and Consumer Commission, the Australian Prudential Regulatory Authority and the Australian Securities and Investments Commission presented a parliamentary committee that is also reviewing the industry payments under the microscope.

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While they have all played a role in regulating the industry, they all took a step back when asked what they were doing to investigate the growing digital wallet industry. Committee member and Labor MP Deborah O’Neill warned that she “is becoming increasingly concerned that Apple and Google are driving the bus and the government is falling apart and the loopholes … are so open that it’s like the Wild West for these companies to come in here ”.

Treasurer Josh Frydenberg acknowledged the lack of regulation. Write in the Financial analysis, he says, the system is being transformed by the emergence of digital wallets, buy now, pay later, cryptocurrencies and the like. “Individually, their impact is profound, collectively it’s a revolution. Yet despite this disruption, the regulatory framework governing the payment system has not changed.

Banks are keen to avoid the experience of the media industry, where millions of dollars in advertising revenue has been sucked from Australian businesses by Google and Facebook. This led to years of turmoil in the industry before the news media trading code was finally put in place, forcing tech companies to compensate media companies for using their content.

While Australian banks are barely on their knees financially and the Royal Banking Commission has found that they have taken on the role of bully more often than bully, the The treasurer must be true to his word in his commitment to play a much more active role in the oversight of the payments industry. Consumers, drawn to new forms of digital payment, cannot be left behind in the long run by putting too much power over a critical piece of Australia’s economic infrastructure in the hands of big monopoly tech companies.