Australian Government Considers New Regulations On Digital Wallets From World Tech Giants

JAKARTA - The Australian government is considering a new law that would tighten regulation of digital payment services by technology giants such as Apple and Alphabet's Google.

Australia's Finance Minister Josh Frydenberg said he would "carefully consider" that and other recommendations from the government-commissioned report on whether payment systems have kept pace with technological advances and changing consumer demand.

Services such as Apple Pay, Google Pay, and China's WeChat Pay, which have grown rapidly in recent years, are not currently designated as payment systems, placing them outside the regulatory system.

"Ultimately, if we do nothing to reform the current framework, only Silicon Valley will determine the future of our payments system, which is an important part of our economic infrastructure", Frydenberg said in an opinion piece published in the Australian newspaper Financial Reviews.

The Bank for International Settlements (BIS) earlier this month called for global financial watchdogs to urgently address the growing impact of 'Big Tech', and the vast amounts of data controlled by groups such as Google, Facebook, Amazon, and Alibaba.

The Australian report recommends governments be empowered to designate technology companies as payment providers, clarifying the regulatory status of brands' digital wallets.

It also recommends that governments and industries jointly establish a strategic plan for the wider payments ecosystem and that a unified licensing framework for payment systems be developed.

The Reserve Bank of Australia (RBA), which is currently responsible for designating who is a payment service provider, reports that digital wallet payments have grown to 8% of direct card transactions in 2019. This number is up from 2% in 2016.

The Commonwealth Bank of Australia, which expects digital wallet transactions to more than double in the year to March to A$2.1 billion, has urged regulators to address "competition concerns" and consider the security implications of their use.