Australia’s government is taking steps to regulate digital payment services like Apple Pay and Google Pay, bringing them subject to the same regulatory oversight as credit cards and other traditional payment methods. This move is in response to the rapid growth of digital wallets, which have become increasingly popular in recent years. (via. Reuters)
The new legislation is expected to be introduced to parliament this week and will give the Reserve Bank of Australia (RBA), Australia’s central bank, more oversight of digital payment providers. The RBA will be able to collect data from these providers and set rules around competition, innovation, and security.
The move to regulate digital payments is part of a broader effort by the Australian government to modernize the country’s payments system. The government believes that this will help to promote greater competition, innovation, and productivity in the economy.
Australia owes the new regulation to the fact that usage of digital wallets has skyrocketed in recent years. In the June quarter of 2023, 35% of all card transactions were made using a digital wallet, up from just 10% in early 2020. This growth is especially pronounced among young Australians, with two-thirds of those aged 18 to 29 using mobile payments. This is a significant increase from the pre-pandemic era, when mobile payments were used by less than 20% of young Australians.
Apple has raised concerns about the proposed regulations, arguing that they could harm privacy and security. The company also argues that the regulations could stifle innovation and competition in the digital payments sector.
Apple has stated that Apple Pay is designed to promote competition by giving consumers more choices and smaller banks and fintech providers more access to the market. The company also argues that the proposed regulations are unnecessary, as there is no evidence that Apple Pay poses any financial or operational risks to Australian banks.
The proposed regulations are likely to have a significant impact on the digital payments industry in Australia. Digital wallet providers will need to comply with the new rules, which could increase their costs. The regulations may also make it more difficult for new companies to enter the market.
However, the government believes that the benefits of regulating digital payments outweigh the costs. The government argues that the regulations will help to protect consumers and promote competition and innovation.
The Australian government’s decision to regulate digital payments is a huge step forward in the country’s efforts to modernize its payments system. The regulations are likely to have an impact on the industry, but the government believes that the positive aspects surpass the negative ones.