Government consults on its plan to transform payments system

4 minute read  21.12.2022 Richard Batten, Prayas Pradhan, Amanda Khoo, Matthew Clifford

Following various reviews over the past few years into the payment sector, Treasury is consulting on its strategic plan to reform Australia's payment system.


Key takeouts


  • The Government's consultation paper outlines the key principles, objectives and initiatives of its Strategic Plan for the Payments System. Feedback from industry will inform the Government’s inaugural Strategic Plan for the Payments System.
  • The Government has posed a series of questions to stakeholders. Submissions to the consultation paper are due on 6 February 2023.
  • The paper does not break new ground. It only seeks feedback on a Strategic Plan that covers much of the same issues as Government and Parliamentary reviews in recent years.

On 14 December 2022, Treasury released for consultation its Strategic Plan for the Payments System (Plan). The Plan outlines the Government's policy priorities in the reform of the evolving payments landscape.

The Plan is a key government initiative to modernise Australia's financial system. The updating and strengthening of Australia's payments system has become a clear priority for the Albanese Government in 2023.

Guiding principles

The Government has indicated the Plan will be guided by several overarching principles. These are:

  • Efficiency: Our payment system should be efficient and enable fast and seamless transfer of funds. This will promote competition between payment service providers and interoperability amongst domestic and cross-border systems.
  • Innovation: Our payment system should be agile, proactive and forward-looking. It should prioritise customer experience and foster innovation to enhance the payment experience for all.
  • Accessibility: Our payment system should be simple, inclusive and accessible for all. It should empower consumers and business with greater choice of payment products, avoid unnecessary restrictions and removes barriers to entry.
  • Trustworthiness: Our payment system should be safe, secure, reliable and resilient. It should provide robust protections against fraud and scam, supporting stability in the broader system.

Key objectives and corresponding initiatives

The Government has indicated the Plan is to have the following objectives at front of mind, which will in turn be supported by specific initiatives.

Objective: Promoting a safe and resilient payments system

Supporting initiatives:

  • Reduce the prevalence of scam and fraud by supporting and monitoring government initiatives that pool intelligence to disrupt scams and mandating the ePayments Code as part of the new licensing framework for payment service providers.
  • Strengthen defences against cyber-attacks by supporting the Government's agenda on cyber security (such as implementing the obligations of the Security of Critical Infrastructure Act 2018 (Cth)).
  • Supervision of payment systems deemed to be critical infrastructure assets by the Reserve Bank of Australia.

Objective: Ensuring the regulatory framework is fit-for-purpose and competitive

Supporting initiatives:

  • Provide a roadmap to implement changes to the Payment Systems (Regulation) Act 1998 (Cth), including to ensure appropriate coverage to all entities playing a significant role in Australia's payments system
  • Introduce a licensing scheme for payment service providers.
  • Facilitate greater collaboration between payment regulators by supporting the pre-existing inter-agency payments forum.
  • Promote competition by relaxing the requirements for payment participants to hold an ADI licence.
  • Reduce small business transaction costs by implementing least-cost routing for transaction types including mobile wallet debit transactions.

Objective: Ensuring alignment with the broader transformation of the digital economy

Supporting initiatives:

  • Ensure the payment system is aligned with the Consumer Data Right framework and is part of action initiation in response to The Inquiry into the Future Directions for the Consumer Data Right.
  • Consider the public policy case for issuing a retail or wholesale central bank digital currency in Australia from a legal, regulatory and technological standpoint.

Objective: Modernising payments infrastructure

Supporting initiatives:

  • Coordinate action between private and public sector participants to support the industry transition away from outdated, legacy systems to more modern and efficient payment alternatives.
  • Maintain access to cash in order to ensure accessibility while considering the efficiencies of the payments system.
  • Consider and discuss priorities to facilitate cross-border payments in accordance with the G20 Cross-Border Payments Roadmap and consider how cross-border payments could increase payment efficiencies.

Review of the Strategic Plan

The Government has indicated that the Plan will be reviewed on an annual basis to ensure it remains relevant and adaptable to the changing payments landscape.

The Government also intends on engaging with both the private and public sector in regularly updating the Plan, comprised of both roundtables with regulators, industry groups, consumers and business representatives in addition to bilateral stakeholder meetings. The Government plans to engage with these stakeholders within the first year of the publication of the Plan before the annual review commences.

Slow progress

The release of this consultation paper marks the Labor Government's first move to start the reform process for the payments landscape. It follows three major reviews of Australia's payments systems framework in 2021, being:

In its response, the Morrison Government had accepted the vast majority of recommendations made by the abovementioned reviews. However, the federal election and change of government largely stalled progress in 2022.

Although it is promising to see the Government announcing its intentions in this area, the consultation paper does not break new ground. In particular, no further details have been provided or developed about what the revised/new licensing and regulatory framework for payment systems and payments service providers will look like.

With the Plan to be released 'in the first quarter 2023', it is likely to take many more months before we see any draft legislation and likely not until 2024 that relevant reforms are sought to be implemented. In that time, the payments industry will have to persist with an outdated regulatory framework that will fall further behind the ever-evolving nature of the industry.

Next steps

The consultation paper features a series of questions for interested stakeholders to provide feedback on the principles, objectives and initiatives proposed in the Plan. Submissions to the consultation paper are open until 6 February 2023. These responses will be considered by the Government in launching the Plan, expected to be delivered in the first quarter of 2023.

We encourage participation in the Government's consultations and will provide further updates as and when the Government's consultation papers are released. Please contact us if you have any queries or require any assistance with making a submission.

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