The Australian federal government has unveiled an exposure draft of legislation designed to empower the Reserve Bank of Australia (RBA) with the authority to regulate digital wallets and buy-now-pay-later (BNPL) providers. These groundbreaking regulatory powers, initially proposed in December 2022, are intended to provide oversight over “new and emerging payment systems.”
The legislation includes provisions for ministerial designations that can bring payment systems with “risks of national significance” under additional regulatory scrutiny. Additionally, the bill introduces civil penalty provisions, enforceable undertakings, and updates criminal penalties in the Payment Systems (Regulation) Act of 1998.
Regulating Digital Wallets and BNPL Providers
The exposure draft of this legislation aims to bring digital wallets and BNPL providers under regulatory oversight, granting the RBA the power to ensure their compliance with national payment system standards. Apple Pay and Google Wallet are among the notable digital wallet services that will be subject to this regulation.
Apple and Google’s Opposition
Both Apple and Google have submitted statements expressing their opposition to being categorized as payment systems and thereby subjected to regulation. Apple clarified that it does not directly provide financial or payment services in Australia, emphasizing that it does not issue cards or engage in transaction processes. Google similarly asserted that it is not involved in financial transactions but rather serves as a technology platform for transmitting electronic bank information.
Expanded Definition of Payment Systems
The proposed legislation broadens the definition of payment systems to encompass not only digital wallets but also BNPL products, cash in transit services, and cryptocurrency payment systems. Notably, this extension applies to those services interacting with existing payment systems such as Visa or Mastercard.
Resolution of Digital Wallet Access Disputes
The legislation also addresses the contentious issue of access to digital wallet services. It provides for the imposition of an access regime on payment system participants, giving regulators the authority to ensure equitable access within the payment system.
The Australian government’s exposure draft of legislation marks a significant move toward enhanced regulation of digital wallets and BNPL providers by granting authority to the RBA. While Apple and Google have expressed their objections to this regulatory shift, the expanded definition of payment systems encompasses a wide range of financial technologies.
Furthermore, the legislation seeks to resolve access issues related to digital wallet services, underscoring the government’s commitment to overseeing and strengthening the nation’s payment systems. The consultation on this legislation remains open until November, allowing stakeholders to voice their perspectives and concerns.
