Redesign of payment system to cover digital wallets, buy now pay later, cryptocurrency
Treasurer Josh Frydenberg will announce a comprehensive regulatory reform governing the payments system on Wednesday, to update it with innovations such as digital wallets and cryptocurrency.
The government says without the changes – the biggest in 25 years – Australian businesses and consumers could increasingly transact in spaces beyond the full scope of Australian law, where the rules were determined by foreign governments and multinationals.
He points out that in three decades, payment methods have shifted from cash to checks, from checks to credit cards, from credit cards to debit cards and now to âtap and goâ via digital wallets on phones or watches.
About a decade ago, cryptocurrency was a concept. Currently, there are over 220 million participants in the global crypto market, many of them in Australia.
The planned reforms will centralize the oversight of the payment system by ensuring that the government plays a greater leadership role. The treasurer will have more power to intervene in certain circumstances.
Consumer protection will be strengthened and more competition and innovation will be encouraged.
The reform program will take place in two phases. Consultations will take place in the first half of next year on which ones are most urgent and easiest to implement. Consultations on the rest will be made by the end of the year.
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The government said the current single license framework for payment service providers would be replaced by gradual and risk-based regulatory requirements.
There will be a review of the feasibility of a retail central bank digital currency and a review of ‘debanking’ (where a bank refuses to offer a service to a business or individual).
Frydenberg says the comprehensive payments and crypto asset reform program âwould firmly place Australia among a handful of leading countries in the world.
“This is how we will take advantage of the opportunity for Australia to become the world leader in this emerging and fast growing field which has almost endless potential applications in the economy,” he said.
âFor businesses, these reforms will help address the ambiguity that may exist over the regulatory and tax treatment of crypto assets and new payment methods.
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“In doing so, it will spark even more consumer interest, facilitate even more new entrants and allow even more innovation.
“For consumers, these changes will establish a regulatory framework to support their growing use of crypto assets and clarify the treatment of new payment methods.”