Review of the payment system to cover digital wallets

Treasurer Josh Frydenberg will announce a complete reform of the regulations governing the payment system, to update it with innovations such as digital wallets and cryptocurrencies.

Regulation, this is the key

The government says that without the changes - the biggest in 25 years - Australian businesses and consumers could increasingly transact in spaces beyond the full scope of Australian law, where the rules have been determined by foreign and multinational governments.

He points out that in three decades, payment methods have shifted from cash to checks, from checks to credit cards, from credit cards to debit cards and now to "tap and go" via digital wallets on phones or watches.

About a decade ago, cryptocurrency was a concept. Currently, there are more than 220 million cryptocurrency market participants around the world, including many in Australia. And if you want to participate too, you can take a look at the website of Bitcoin system and let us know in the comments below what you think of this revolutionary platform.

The planned reforms will centralize the oversight of the payment system ensuring that the government plays a greater leadership role. The treasurer will have more power to intervene in certain circumstances.

Consumer protection will be strengthened and more competition and innovation will be promoted.

The reform program will be divided into two phases

First, there will be consultations in the first half of next year on those that are most urgent and easy to implement. Consultations on the rest will be done by the end of the year.

The government says the current single licensing framework for all payment service providers will be replaced by phased and risk-based regulatory requirements.

The feasibility of a retail central bank digital currency and an examination of “de-banking” (where a bank refuses to offer a service to a business or individual) will be considered.

Frydenberg says full payments and the cryptocurrency reform program “would firmly place Australia among a handful of leading countries in the world.

“This is how we will leverage the opportunity for Australia to lead the world in this emerging and fast-growing area that has nearly infinite potential applications across the economy,” he says.

“For businesses, these reforms will address the ambiguity that may exist on the regulatory and tax treatment of crypto assets and on new payment methods.

“In doing so, it will attract even more consumer interest, facilitate even more new entrants and enable even more innovation.

"For consumers, these changes will establish a regulatory framework to support their increasing use of cryptographic assets and clarify the treatment of new payment methods."