Australia unveils draft law to regulate digital payment providers. The Australian government announced on Wednesday that it intended to submit legislation giving the central bank the authority to control companies that offer digital wallets, such as Apple Pay (AAPL.O) and Google Pay from Alphabet (GOOGL.O).
Since they are not now recognized as payment systems, China’s WeChat Pay, Apple Pay, and Google Pay—all of which have experienced remarkable growth in recent years—fall outside Australia’s financial regulatory framework.
The Reserve Bank of Australia (RBA) would be allowed to monitor digital wallet payments in the same manner as credit card networks and other transactions are monitored under the proposed guidelines. Additionally, it would give the treasurer the authority to ask authorities to look into whether certain payment platforms pose threats to the nation.
“(The) government is addressing the risks posed by new digital payment services, which are currently unregulated, to protect consumers, promote competition and spur innovation,” Treasurer Jim Chalmers stated in a statement.
According to treasury papers, the new bill would broaden the definitions of “payment system” and “participant” in Australia’s current rules.
In particular, Australia’s digital economy and payments have not kept up with changes in finance, and neither has the legal framework for payments. The Australian Banking Association stated in a study released in June that it has noticed a “phenomenal shift” in consumer payment preferences in recent years, with the number of mobile wallet transactions in the nation expected to increase from 29.2 million in 2018 to 2.4 billion in 2022.
With the argument that users only use their phones to utilize cards provided by banks to make payments, Google and Apple have been fighting the government’s effort to designate them as payment providers.
Apple chose not to respond to questions about the proposed legislation and instead pointed to a proposal it made to the Treasury in July, stating that any adjustments “should be proportionate to the limited, indirect role” that digital services played in the payment system. An inquiry for comment from Google did not immediately receive a response.
By November 1st, the government is asking for comments on the proposed law from interested parties. This year, the legislation is anticipated to be presented to the legislature.
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