A payments system review by the Australian government has detailed key regulatory issues in the country’s payment ecosystem.
According to Regulation Asia, the government published a report that examined whether the regulatory architecture of the Australian payments system was fit-for-purpose and responsive to advances in payments technology and business model and consumer demand changes.
The review also intended to examine how the regulatory architecture could offer more productivity-enhancing innovation and competition and ensure that the country was well-placed to take advantage of new technologies.
The report acknowledged key advances in the payment systems as well as the widespread growth of digitisation.
The report detailed, “The payments system has expanded in size and complexity to such an extent that it should be thought of as the payments ecosystem.
“Technology has enabled new methods of payment and has led to the entry of a range of new providers offering new services using traditional payment infrastructures. Consumers are also adopting digital payment methods in record numbers, further accelerating the transformation in the payments ecosystem towards greater digitalisation.”
However, the government review did identify areas of the regulatory architecture where improvement was needed – claiming that the architecture had remained ‘relatively unchanged for over two decades’.
The report stated, “It is vital that the regulatory architecture supporting our payments system can continue to instil confidence and protect the security of the system while promoting innovation and competition in a way that enhances the user experience.”
The government made 15 recommendations over three key areas to make sure that the regulatory architecture is ‘well-positioned and sufficiently modernised’ to respond to Australia’s future developments.
These include strengthening the government’s role in providing strategic direction, vision and oversight with new obligations and powers to protect the payments system. Alongside industry, the government has been recommended to establish a strategic plan for the wider payments ecosystem.
In addition, the report recommends coordination between payment regulators should be strengthened, and a functional perspective on payments regulation should be introduced to bolster consistency and regulatory outcome certainty.
The final recommendation was to introduce a single, integrated licensing framework for payment services that scales up with businesses as they grow, facilitates payment system transparency and provide clear consumer protection.
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