Regulation of the payments industry needs to be better co-ordinated to avoid the overlapping involvement of as many as five regulatory agencies, according to submissions made to the Financial System Inquiry.  Submitters have called for either increased powers for a body such as the Council of Financial Regulators or protocols for more effective co-operation.Payments is an area of rapid change in the financial system. The Australian Payments Clearing Association outlined the "marketisation" of the sector in its submission. It said: "The non-competing schemes and payments products that dominated the landscape in 1997 [the year of the Wallis Inquiry] are now competing with each other and with new entrants. It is a technologically complex environment."APCA supports the continuation of the system set up after the Wallis Inquiry - the establishment of the Payments System Board within the RBA as a specialist payments regulator, working with industry in a co-regulatory approach.However, it said payment service providers were also potentially subject to regulation by ASIC for consumer protection, by APRA for prudential regulation and the ACCC for competition law.APCA chief executive Chris Hamilton said it was not a matter of assigning new powers to any particular body. "It is about achieving effective co-ordination. We are open about how that gets done," he said.Payment services provider PayPal has gone further in its submission, calling for a unified regulatory structure for payments under the umbrella of the Council of Financial Regulators.PayPal recommended that the CFR be given an "enhanced role" and that its membership be expanded to include the Australian Competition and Consumer Commission and Austrac.PayPal also recommended that Australian regulators aim for greater harmonisation with the regulation of payments in other countries. It said: "The variety of regulatory regimes around the world covering payments presents challenges for innovative payment providers."It cited the example of the European Union's adoption of the Payments Services Directive, which provides a single regulatory framework for electronic payments within Europe.Hamilton said international harmonisation was a great aspiration but cautioned that 30 years of development of the European Union lay behind its initiatives in payments regulation. "We don't have that sub-stratum in our region," he said.APCA has called for the Inquiry to review the principle of "functional equivalence established by the Wallis Inquiry. This is the idea that the same economic activity should be regulated in the same way, regardless of different participants and different forms.Hamilton said: "It is a good principle but we have not always achieved it. We need to make sure the Payments System Board has the jurisdictional reach to address new payment methods."