Work for Treasury in new payment technologies, report

By Tom Ravlic

November 3, 2021

Treasury called on to beef up its oversight of mobile payment and digital wallet financial services. (THINK b/Adobe)

Federal Treasury needs to tool up with the necessary expertise in new payment technologies so that it can demonstrate leadership in an emerging policy area, a powerful parliamentary committee has recommended.

The Parliamentary Joint Committee on Corporations and Financial Services called on treasury to beef up its brains trust in a recently tabled report on mobile payment and digital wallet financial services.

That report explored the new payment methods such as Google and Apple Pay, AfterPay and similar players, and how policies and regulations should be shaped for these relatively new entrants in the finance market.

The committee said the government and regulators do not have the luxury of watching how the market develops given the speed at which these payment services are being developed and launched.

“[This] report recommends government urgently develop proactive policy and implement legislative and regulatory change. In particular, the committee recommends the treasury report to parliament on gaps in the current self-regulatory model and provide policy advice on the merits of regulating payment platform providers as participants in the payments ecosystem,” the report said.

“The committee also calls for the definition of a payments system within key regulations to be expanded to encompass new and emerging payments technologies and platforms.”

Competition among players in the payment systems sector features in the report with the committee noting the difference between the Apple and Google payment systems.

Apple limits third party access to near-field communication antennas used in mobile devices that results in the global giant earning revenue from each transaction.

The committee said it was concerned about Apple’s system and the possibility that it might restrict competition and innovation but that there was no need for regulators to intervene at this point.

“In contrast to the fees charged by Apple for the use of its payment technology, Google does not charge a fee for the use of its Google Pay payments platform. Many of the witnesses and submitters to this inquiry promoted Google’s approach as promoting competition and innovation in the payments space,” the committee report said.

“The committee, however, is concerned that the business model underpinning Google Pay may lead to significant issues related to the privacy and the use of customer data.”

Constant reference is made throughout the report to the ‘payments ecosystem’, and how technology is moving at breakneck speed to the point where legislators cannot afford to sit down and wait for the sector to mature before acting to regulate.

The committee recommends that there be a more fluid approach to developing law and regulations in the finance sector to cope with the proliferation of payment systems.

“Ensuring this flexibility will require first, that legislation and regulations are updated to become as technology-neutral as possible, rather than wedded to particular ideas of how and what constitute payment platforms and systems,” the committee said.

“Second, new powers should be vested in the government to allow it to designate firms as participants in the payments system to ensure they fall under existing legislation and that regulations keep pace with practice.”


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