The government is concerned about a lack of clarity in the regulatory arrangements for some emerging payment systems, such as cryptocurrency, and uncertainty about the adaptability of regulatory settings to new systems, such as buy now pay later.
These concerns are highlighted in an issues paper for the Payment System Review released by Treasury on Friday.
The focus of the paper is on new and emerging elements of the payments landscape, including BNPL, cryptocurrency, cross-border payments, digital wallets, stored value facilities and the Consumer Data Right.
The paper says: “Australia’s regulatory architecture has served us well and has supported a number of innovative reforms in recent years that have delivered a significant benefit to end users.
“However, developments in the payments system continue to gather pace and in some cases evolve in an unpredictable manner. Our regulatory architecture must be agile, responsive to technological advances and capable of setting a long-term direction for payments policy in Australia.”
The review’s terms of reference say the government wants to look at ways to encourage more productivity-enhancing innovation and competition in payments, including in relation to how the New Payment Platform is being rolled out.
They ask whether government payments system can take advantage of new payments functionality and how Australia should respond to global trends.
The issues paper asks what is the appropriate balance of self-regulation, formal regulation and government policy and whether there are any gaps or duplication in the current architecture.
It also asks whether current regulatory settings have the right balance of risk management and efficiency.
The issues paper identifies the NPP as a key source of future innovation, recognising the RBA’s role in getting it going. It says the regulatory architecture needs to ensure it can drive further innovation in the NPP.
The paper points to international developments, including the establishment of the Payment Systems Regulator in the UK in 2015, and the establishment of a self-regulatory body Payments NZ in New Zealand in 2010.
The government wants feedback by December 31.