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ABA praises payments system review, citing ‘unprecedented changes’
The banking industry says that the federal government’s review of Australia’s payments systems couldn’t come at a better time.

ABA praises payments system review, citing ‘unprecedented changes’
The banking industry says that the federal government’s review of Australia’s payments systems couldn’t come at a better time.

The Australian Banking Association (ABA) has come out in support of the federal government’s latest review of the Australian payments system, framing it as a necessary response to widespread innovation and disruption in the sector.
ABA chief executive officer Anna Bligh said that existing regulations in the sector had served Australia well in the past, but she warned that “unprecedented changes in how we pay each other” are only beginning.
“It’s been more than 20 years since our country updated our payments architecture,” she noted.
Ms Bligh predicted that additional changes in the payment system would come as banks and other payment providers adopted new technologies.
Released earlier this week, the federal government’s report into Australia’s payments ecosystem made 15 discrete recommendations designed to improve alignment and outcomes in the sector.
The most significant of these was the enshrining of a greater role for the federal Treasury in the payments ecosystem, and the introduction of new powers for the current federal Treasurer, Josh Frydenberg.
However, the report also telegraphed the need for new regulation to cover emerging innovations in Australia’s payments ecosystem.
“Changes to the way we make payments and the way payment services are provided have presented new risks to the safety, efficiency and effectiveness of payments,” the report noted.
The report said that the digitisation of payments means that many transactions are effectively data transfers, with the broader payments ecosystem becoming a subset of the Australian data ecosystem.
It highlighted that this development has a number of implications on how payments are facilitated in Australia, and how the national payments ecosystem integrates with the economy.
“Digitisation has delivered significant benefits to consumers and businesses by facilitating commerce across the globe, but it has also given rise to a new set of risks and regulatory challenges,” the report said.
The rise of digital wallets like Apple Pay, Google Pay and WeChat Pay is one challenge.
“While they may become systemically important as they grow in use, digital wallets are not designated as a payment system or required by regulation to meet any standards around availability or accessibility,” the report said.
Similar concerns were raised around the growing buy now, pay later sector.
“Given the emergence of BNPL arrangements are a recently new phenomena in the payments ecosystem, it has not been tested as to whether BNPL meets the definition of a ‘payment system’ under the PSRA,” the report found.
Cryptocurrencies also pose challenges to the existing regulatory framework, the report suggested.
“Partly, these challenges are driven by the fact that one cryptocurrency can differ significantly in design which means different cryptocurrencies may interact with (or be outside of) the regulatory framework in different ways,” it continued.
The report said that any responses to these regulatory challenges will require strong co-ordination between regulators and clear policy direction from the government.
“It also requires a flexible framework that allows cryptocurrencies to be brought into regulation should there be a policy requirement to do so,” the report added.
According to Ms Bligh, the payments system “is a major artery running through the Australian economy, so there are few more important tasks for governments and regulators than ensuring the service, safety, strategy and simplicity of that system”.
“There is no time like the present to update the regulations underpinning this vital part of our economy,” she added.
Ms Bligh said that the ABA and the banking industry looked forward to continued collaboration with the government following the release of the review earlier this week.
“The knowledge and capabilities the banking industry has in this area will be critical to assisting the Treasury to design robust regulatory architecture,” she said.
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