Exploring Australia’s Proposed Payments Reforms

Why It Matters

The reforms close regulatory gaps that have deterred fintech investment and expose consumers to risk, while aligning Australia with global standards and fostering competition in both traditional and digital payments.

Key Takeaways

• Tranche 1 expands regulatory perimeter to include fintechs and stablecoins.
• APRA gains oversight of major SVF providers and designated PSPs.
• New safeguarding and consumer protection rules apply to all payment services.
• Mandatory ePayments Code and unclaimed money framework introduced.
• Transitional period gives licensed firms 1 month, unlicensed 6 months to comply.

Pulse Analysis

Australia has moved to overhaul a payments regime that has lagged behind rapid fintech innovation for more than five years. The 2021 Farrell Review and the 2023 Treasury Strategic Plan highlighted gaps in licensing, consumer protection and systemic risk, prompting the government to propose a two‑tranche reform package. Tranche 1, slated for parliamentary introduction in 2026, builds on an earlier consultation (Tranche 1a) and seeks to align the regulatory perimeter with modern payment functions such as stored‑value facilities, payment initiation services and tokenised assets. The aim is to replace an outdated framework with a functional, risk‑based approach.

The draft rules introduce several concrete obligations. Payment service providers that hold customer funds must meet safeguarding standards embedded in Australian Financial Services licensing and prudential rules, while the ASIC Act now treats payment products as financial products, granting regulators full oversight and extending consumer protections. APRA will supervise major stored‑value facilities and designated PSPs, and a mandatory ePayments Code will standardise industry practices. A new unclaimed‑money regime directs dormant balances to the ASIC for restitution. Crucially, stablecoins and tokenised custody platforms fall under the AFS licence, giving digital‑asset firms regulatory certainty.

Industry leaders see the reforms as a step toward parity with the United Kingdom, where payment firms already operate under a clear regime. By expanding the regulatory perimeter, Australia aims to attract new entrants, reduce compliance uncertainty and bolster competition in both traditional and crypto‑related payments. The upcoming Tranche 2 will revisit the ePayments Code and explore non‑bank access to core infrastructure, further shaping a more inclusive ecosystem. Companies should monitor the 2026 rollout and prepare licensing applications now to avoid the abrupt obligations that trigger after the transition deadlines.