Are merchants who accept payments ready for the closure of the 3G network?

An image of a telecommunications tower next to the text '3G', on a purple background.

15 May 2024

By Paul Anguita, Head of Engagement, AusPayNet

What is 3G?

The 3G network is the third generation of the mobile cellular network. It was designed to meet the growing need to be more connected through technology, as devices using this network would be able to send and receive data much faster than its predecessor, 2G, and connect users to the internet wherever they are. 3G also enabled many new features and applications.

Why are the Telcos closing the 3G network?

Each telecommunications provider has been planning the closure of the 3G network for some time. The primary reason for discontinuing the 3G network is to create space for the newer networks (4G and 5G). The radio frequencies used by 3G are precious real estate and as demand for data skyrockets, there are simply not enough free frequencies available. Re-purposing 3G frequencies for 4G and 5G allows for faster and wider bandwidth.

Each provider has been working towards end dates for their 3G network services. These include:

TPG Telecom/Vodafone, which switched off its 3G network in January 2024
Telstra, which just extended its deadline to Saturday, 31 August 2024
Optus, which will shut down its 3G network in September 2024.

You can find more information on the closure of the 3G network on the Australian Mobile and Telecommunications Association (AMTA) website.

Why is this network closure important to the payments industry?

Digital payments (e.g. cards transactions, online transfers, cash withdrawals from ATMs) depend on two other industries to work effectively: energy and telecommunications.

Notably, payment devices, like Point of Sale (POS) devices and ATMs, use mobile telecommunication networks for transaction processing.

Many of these payment devices use the 3G network and the acquirers/payment service providers for POS and ATMs have been upgrading these devices for the past two years in preparation for the closure of the 3G network.

However, there is still some concern from the payments industry that some merchants may not be ready for the closure of the 3G network. Unfortunately, if a merchant is using a 3G POS device to accept payments, they will most likely need to physically upgrade (swap out the device for a new one) to ensure it has a 4G modem. Many merchants may have already done this, but some may not have completed the necessary work in preparation for the closure of the 3G network.

As a result, some retail merchants may not be able to accept payments after the closure of the 3G network.

What should merchants do?

If you are a merchant accepting payments, the best thing to do is to reach out to your bank, acquirer or payment service provider and ask them if your payment devices need to be upgraded.