Review of the Australian Payments System

In January 2021, we welcomed the opportunity to respond to Treasury’s Consultation, the Review of the Australian Payments System. A summary of our submission follows.

Australia has a world-class payments system, and its regulatory architecture has largely stood the test of time. We are at an inflection point where payments, traditionally the purview of banks, has been transformed by technology, the associated proliferation of data, new participants and business models, and customer expectation to service the digital economy.

Alongside this, a range of industries, not just financial services, are thinking differently about payments, data, and more broadly what constitutes the transfer of value. As the participants, products and services evolve, it is appropriate to consider whether the current regulatory architecture is well suited to the new paradigm, given its dominant focus on financial stability and prudential oversight.

The challenge for regulation is to provide a level playing field in which new business models can flourish, while providing appropriate protection for, and maximising benefits to, customers. The needs of the digital economy will be well serviced by a regulatory architecture that is based on greater clarity, coordination, and self-regulation; this can be achieved by:

• Creating a clearer legislative framework by reviewing the Payment Systems (Regulation) Act 1998 (PSRA) and clarifying respective roles: government sets policy objectives that align with the needs of the digital economy, the payment regulator oversees a principles-based rule set, and industry collaborates on implementation including self-regulatory standards for interoperability, stability and customer protection.
• Increasing coordination between government, regulators and end-users via the establishment of an appropriate forum with end-to-end visibility of the policy objectives, strategic agenda, and value chain.
• Continuing to leverage self-regulation – which has served Australia well – in ensuring market-driven innovation continues to deliver interoperability, and consistent end-user experiences, benefits and protections.

The full submission (including Appendix 1 and 2) is available below.