The strategic plan for payments will provide wider access to the system, as a way of promoting competition and innovation, and lowering costs, a Treasury consultation paper says.

The government has released the consultation paper, A strategic Plan for the Payment System, seeking input into its plan before it is finalised in the first quarter of next year.

The plan is based on the recommendations of last year’s Review of the Payments System, which was led by lawyer Scott Farrell. Underpinning other changes is an overhaul of the Payment Systems (Regulation) Act 1998.

Farrell recommended a licensing regime based on payment functions, rather than entities. He also recommended that the definition of payments covered by regulation be expanded. 

These changes will allow regulators to deal more easily with emerging payment services and new players.

Speaking at AusPayNet’s 2022 Summit in Sydney yesterday, Financial Services Minister Stephen Jones said: “The move to the regulation of functions, not companies, will allow for coverage of businesses like mobile phone companies that are in the payments system.”

Farrell also recommended that Treasury enhance its payments expertise and take on a bigger planning role.

The consultation paper says features of the strategic plan will include measures to reduce the incidence of scams and payment fraud, and strengthen defences against cyber-attack.

Farrell recommended that all payment providers be required to subscribe to the ePayments Code as a condition of their licence, and the government is likely to adopt this.

Farrell also recommended that access to the payments system be opened up through the provision of “proportionate and transparent access requirements”. The government supports wider access as a way of promoting competition.

The plan will also include ways to align developments in the payments industry with the emerging Consumer Data Right and any developments in the area of central bank digital currency or stablecoins.