The Australian government said it will be introducing new laws that will enable the central bank to oversee digital wallets, including Google Pay and Apple Pay.
The new regulations will empower the Reserve Bank of Australia (RBA) to closely monitor the activities of digital wallets in the same manner they monitor credit cards. If passed, the new laws will also grant authority to treasurers to call upon regulators, should there be a threat to national security.
“(The) government is addressing the risks posed by new digital payment services, which are currently unregulated, to protect consumers, promote competition and spur innovation,” Treasurer Jim Chalmers said in a prepared statement.
A Call for Regulation
Digital wallets are growing increasingly popular, especially among younger demographics. That’s because they allow users to pay quickly and securely, without having to enter their sensitive information, which can increase the incidences of fraud.
Providers are required to inform consumers how their information is being used and how this information is safeguarded. As digital wallet adoption continues to rise, regulators have been more vigilant, keeping a watchful eye on how that private information is collected and stored.
“Over four decades, regulators have taken action to ensure that payment transactions are transparent, lending is fair, and disclosures are crisp,” said Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research. “The issue in Australia illustrates that sometimes business developments can outpace governance, and the industry needs to keep pace.”
“Regulators in the U.S. are addressing a similar issue with Regulation B, the underlying protection for fair credit. No one anticipated that alternative decisioning would go beyond the fundamentals of employment verification and good credit scores,” he said. “Now that some lenders are sandboxing more inclusive underwriting methods, the disclosures need to be updated. In Australia’s case on wallets, the regulatory move is appropriate. Expect to see more of these actions worldwide, particularly in the ever-developing world of payments.”
