Daily Management Review

New Laws For Regulating Digital Wallet Services Being Considered By Australia


A set of new laws is being prepared by the Australian government aimed at further tightening regulation of digital payment services offered by tech companies such as Apple and Alphabet's Google.
According to the Australian Treasurer Josh Frydenberg, he would "carefully consider" the latest recommendations as well as others given by a government commissioned report that explored the existing digital payment systems and whether the systems have been able to keep up pace with advancements in technology and changes in demand for financial services form consumers.
Currently under Australian law, a range of payment services offered by tech companies such as Apple Pay, Google Pay and China's WeChat Pay are not officially designated as payment systems and therefore remain out of the country’s regulatory system even as they have grown exponentially in recent years.
"Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure," Frydenberg said in an opinion piece published in the Australian Financial Review newspaper.
A call to all financial regulators of the world to create policies for controlling the growing influence of 'Big Tech' on an urgent basis was given earlier this month by the Bank for International Settlements (BIS). The BIS also called for immediate action to regulate the immense amounts of data tah lie with and are controlled by tech groups such as Google, Facebook, Amazon and Alibaba.
According to the latest government appointed committee report, it is important for the government to have powers to officially identify tech companies as payment providers and clearly set out the legal and regulatory status of digital wallets.
The recommendations by the committee also included the establishment of a strategic plan for the wider payments ecosystem by the government and industry together, so that a single and integrated system of licensing for payment systems can be  developed.
In Australia, there has been a growth of in payments through digital wallets to reach 8 per cent of in-person card transactions in 2019 compared to just 2 per cent in 2016, according to data from the Reserve Bank of Australia (RBA), which is currently the designated regulatory authority for identifying who is a payment services provider.
The regulators have also been urged to look into and tackle "competition issues" and seek ways to ensure safety issues in the use of digital wallet transactions was given recently by the Commonwealth Bank of Australia – according to which the estimated value of all digital wallet transactions in the country increased by more than double for the year to March to reach A$2.1 billion.