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Final Report: Payment Systems Review
30 August 2021
On 30 August, the Treasurer, the Hon Josh Frydenberg MP, released the final report of the Review of the Australian Payments System.
The review makes 15 recommendations. Consultation on the recommendations will be conducted by Treasury ahead of the Government finalising a response.
Summary of recommendations
| Recommendation 1 – Consumers and businesses should be at the centre of policy design and implementation |
| The regulatory architecture should serve the consumers and businesses that rely on the payments ecosystem for their day‑to‑day activities. A principle of Service means considering these users of the payments ecosystem and taking their perspective at every step of policy development and implementation. It also means recognising the important distinctions between the needs of consumers and businesses. To support outcomes for consumers and businesses, the regulatory architecture should support three other key principles: that prepares the ecosystem for future innovation and addresses challenges in a holistic manner to protect the businesses and consumers that use the payments ecosystem, and to ensure consumers and business can understand their rights and obligations, and to reduce regulatory barriers to entry for new firms offering new services to consumers and businesses. |
| Recommendation 2 – Leadership of the payments ecosystem |
| Given the increased complexity of payments issues and the acceleration of financial innovation, enhanced leadership, vision and oversight is needed in the payments ecosystem. The government, through the Treasurer, is best placed to provide this. |
| Recommendation 3 – A strategic plan for the payments ecosystem |
| The government should develop a strategic plan for the payments ecosystem in collaboration with regulators, industry, and representatives of consumers and businesses. The plan should provide certainty on policy priorities and strategic directions for the payments ecosystem, while being adaptable to future challenges and opportunities. |
| Recommendation 4 – Enhance Treasury’s payments policy function |
| The Treasury’s payments policy function should be enhanced to support the Treasurer’s enhanced leadership role, including in relation to the strategic plan for the payments ecosystem. Treasury should be strengthened with the necessary skills, capabilities and resources to perform this function effectively. |
| Recommendation 5 – Establish a payments industry convenor |
| The Treasurer should appoint a payments industry convenor. Supported by Treasury, the payments industry convenor should collaborate with regulators and industry to develop the strategic plan, identify key issues, coordinate responses, and provide strategic advice to the Treasurer on payments‑related matters. The payments industry convenor should help the Treasury function in facilitating communication and coordination in relation to strategic priorities of the payments ecosystem. |
| Recommendation 6 – Expand definition of payment system in the PSRA |
| The RBA should be better positioned to regulate new and emerging payment systems that are part of the changing and growing payments ecosystem. Expanding the definition of a payment system will broaden the RBA’s ability to designate new and emerging payment systems under the Payment Systems (Regulation) Act 1998 (PSRA), where it is in the public interest as defined in the PSRA. |
| Recommendation 7 – Introduce a Ministerial designation power |
| The Treasurer should have the power to designate payment systems and participants of designated payment systems where it is in the national interest to do so. The designation power includes the power to direct regulators to develop regulatory rules and the power for the Treasurer to give binding directions to operators of, or participants in, payment systems. |
| Recommendation 8 – Introduce a list of payment functions that require regulation |
| A defined list of payment functions that require regulation should be developed. This should be used consistently across all payments regulation. The list should be able to change to ensure it remains fit‑for‑purpose as technological advancements gather pace. |
| Recommendation 9 – Introduce a single, tiered payments licensing framework |
| A single, payments licensing framework in line with a defined list of payment functions should be introduced. There should be separate authorisations for the provision of payments facilitation services and the provision of stored‑value facilities, and two tiers of authorisations based on the scale of the activity performed by the payment service provider. Applicants should be able to apply for this payments licence solely through ASIC, without the need to go through multiple regulators. ASIC should coordinate on behalf of licence applicants with other relevant regulators. Ongoing obligations under different authorisations under the licence should remain with the regulators responsible for overseeing those obligations. |
| Recommendation 10 – Mandate the ePayments Code for payments licensees |
| The ePayments Code should be mandated for all holders of the payments licence. Accordingly, the ePayments Code should be brought into regulation. |
| Recommendation 11 – The single payments licensing framework should facilitate transparent access to payment systems |
| The common access requirements for payment systems should form part of the payments licence to facilitate access for licensees to those systems. The RBA should develop common access requirements in consultation with the operators of payment systems. |
| Recommendation 12 – Align industry standards |
| Compliance with technical standards set by authorised industry bodies should be mandatory for payments licence holders. These standards should be aligned with broader payments policy objectives, with the RBA providing authorisation and oversight of industry standard‑setting bodies. |
| Recommendation 13 – Better align regulator approaches and regulatory requirements |
| The enhanced Treasury function should take steps to improve coordination between payments regulators, and the alignment of payments regulatory requirements, including with respect to AML/CTF issues. |
| Recommendation 14 – Educating consumers and businesses |
| Improved payments capability should be a goal of the refresh of the National Financial Capability Strategy. Regulators should work with industry to coordinate the development of a business education programme in relation to payments, to ensure they understand their options and are empowered with choice. |
| Recommendation 15 – Leverage the position of government as a large customer of the payments ecosystem to support broader objectives |
| Governments should use the payment systems that best serve the needs of Australians. The government should leverage its position as a large user of the payment ecosystem to support broader payments policy objectives. |
Download the full final report as a PDF
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