The Australian government is considering new laws that would tighten regulation of digital payment services by tech giants like Apple and Alphabet’s Google.
Treasurer Josh Frydenberg said he would “carefully consider” this and other recommendations in a government-commissioned report on whether the payments system has kept pace with advances in technology and changes in consumer demand.
Services such as Apple Pay, Google Pay and WeChat Pay from China, which have grown rapidly in recent years, are not currently designated as payment systems, putting them outside the regulatory system.
“Ultimately, if we don’t do anything to reform the current structure, it will be Silicon Valley alone that will determine the future of our payments system, a critical piece of our economic infrastructure,” said Frydenberg in an opinion piece published in the newspaper. Australian Financial Review.
The Bank for International Settlements (BIS) earlier this month urged global financial watchers to urgently rein in the growing influence of ‘Big Tech’ and the massive amounts of data controlled by groups like Google, Facebook, Amazon and Alibaba.
The Australian report recommended the government the power to designate technology companies as payment providers, clarifying the regulatory status of digital wallets.
It also recommended that government and industry together establish a strategic plan for the broader payments ecosystem and that a single, integrated licensing framework for payment systems be developed.
The Reserve Bank of Australia (RBA), which is currently responsible for designating who is a payment service provider, reported that payments via digital wallets grew to 8 percent of card transactions in person in 2019, down from 2 per percent in 2016.
The Commonwealth Bank of Australia, which estimated that digital wallet transactions more than doubled in the year to March to AUD 2.1 billion (about INR 11,270 crores), asked regulators to address “competition issues” and consider the security implications of its use.
© Thomson Reuters 2021