Australia calls for regulation as digital payments soar

Australian banks have called for an update on the payment laws to incorporate digital payment services, whose market share has skyrocketed in recent years.

The Australian Banking Association (ABA) called on the country’s parliament to pass proposed amendments to the Payment Systems (Regulation) Act, which would expand the scope of regulations to include digital payments. The Act was passed in 1998 and has not been updated since, leaving banks heavily regulated while their digital counterparts enjoy massive regulatory flexibility.

“The payment system has rapidly evolved, yet regulations have not been updated for over 25 years,” stated Anna Bligh, the ABA CEO. “When the current laws were made in 1998, cash and cheques were the dominant payment methods, internet shopping didn’t exist, and mobile phones still had antennas.”

The payments landscape in Australia has evolved rapidly over the past decade, with mobile wallets and other forms of digital payments becoming popular as Aussies abandon cash. A recent report by GlobalData found that digital payments accounted for 53% of all e-commerce transactions in 2024, surpassing card payments and cash combined for the first time.

The most recent report by the Reserve Bank of Australia (RBA) found that Aussies are making over 500 million digital payments monthly, transacting over $20 billion, “and it’s imperative that these payments are captured within the regulatory framework,” Bligh says.

“With mobile wallets becoming a dominant force in Australia’s payments architecture – it’s only fair that global tech companies are subject to the same oversight and consumer protection laws as the rest of the payments system.”

Indeed, global digital payments giants dominate the Australian market. One report found that PayPal (NASDAQ: PYPL) has a substantial lead in digital payments in the country, with Apple Pay (NASDAQ: AAPL) and Google Pay (NASDAQ: GOOGL) also in the top five. BPay, a bill payment service owned by the four largest banks, is the most used local service, with the other local firm in the top five—buy now, pay later service Afterpay—owned by American firm Block.

The banking association criticized legislators for dragging their feet, which it says has continued to hurt the local banks.

“These reforms can be passed this sitting fortnight. They were first flagged over 1200 days ago and are urgently needed to ensure payments regulations remain fit-for-purpose and provide the necessary customer protections,” Bligh stated.

While the new amendments to the payments law will introduce a comprehensive framework for digital payments, digital assets remain in regulatory limbo in Australia. In December, the securities watchdog proposed new amendments that would give it enhanced jurisdiction over virtual asset service providers (VASPs). Under the proposed law, the watchdog would oversee non-fungible tokens (NFTs), yield-bearing stablecoins, tokenized securities, and staking services.

Digital payments lead to drop in ATMs in India

Digital payments have taken off in India as well, and according to the latest data, they are leading to a gradual reduction in the number of automated teller machines (ATMs).

In Ahmedabad, the largest city in the western Indian state of Gujarat, ATMs dropped marginally for the first time in years in the year ending September 2024, with the convenience of digital payments to blame. In the broader Gujarat, the total number of ATMs rose by a paltry 1.12% after years of rapid growth, reports the Times of India.

India has seen a sharp uptick in digital payments over the past decade, with a burgeoning fintech sector and ubiquitous mobile ownership as some of the key drivers. The country’s Unified Payments Interface (UPI), an instant payment protocol launched in 2016, now boasts over 350 million users and is available in other nations, including the United Arab Emirates, Nepal, France, and Singapore.

“The number of digital transactions has increased exponentially, especially through UPI. As a result, the requirement for cash is reducing, and a more convenient mode of payments is being adopted,” one senior official from the State Level Bankers Committee told The Times.

The decline in ATMs was also attributed to the rising adoption of technology by the banks, which are now pushing consumers to digital platforms, which are cheaper to operate. Mergers and acquisitions have also played a role, with the consolidated outfits merging their ATMs.

The blow to ATMs could be exacerbated by the rise of the e-rupee. Indian lenders and fintechs are increasingly offering the central bank digital currency (CBDC) to their users, dealing another blow to cash usage.

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