On 8 December 2023, Treasury released its second consultation paper on payments licensing reform which contains the details of a proposed licensing regime for payments service providers (PSPs). As our Public Policy Lead — Gabe Perrottet — reports, Zepto's public policy advocacy is having a real impact on the future of payments regulation in Australia.
That second consultation paper is a significant step forward for payments licensing reform in Australia. Treasury has consumed a significant number and diversity of submissions in response to its earlier consultation paper on defining the payment functions to underpin the licensing regime, and has done an incredible job to produce a framework for a payments licence of this level of detail and sophistication.
It was particularly pleasing to see Treasury embrace many of the key submissions we made in response to the earlier consultation, including that:
- PSPs should be regulated through the existing Australian Financial Services Licence (AFSL) regime - Treasury is now proposing that the payments licence be administered by ASIC under the existing AFSL regime with Major Stored Value Facility (SVF) providers to be required to obtain an additional licence from the Australian Prudential Regulation Authority (APRA);
- the 31-day criteria for the definition of SVFs should be dropped on the basis that the financial/insolvency risk to a customer’s funds held in a SVF does not increase with every additional day the funds are held in the SVF, but rather repeats;
- storing value is not the same thing as taking deposits and therefore should not be considered “banking business” and attract equivalent regulatory requirements - Treasury now recommends separating the definition of SVFs from banking business by repealing the current Purchased Payment Facility definition and defining SVFs as a stand-alone class of regulated entities;
- the proposed payment function “payment facilitation, authentication, authorisation and processing services” is too broad and should be broken up to ensure no category contains different payment functions with different associated risks - Treasury now recommends two separate functions, namely, “Payment Facilitation Services” and “Payment Technology and Enablement Services”;
- joint regulatory guidance should be made available through a website portal to all PSPs and prospective PSPs to provide a clear understanding of all regulatory obligations which apply or will apply to them - Treasury has proposed that ASIC create and maintain a website portal to publish joint regulatory guidance for prospective payments licensees necessitating coordination between ASIC, AUSTRAC, APRA, ACCC and the RBA; and
- a public consultation process should take place to ensure the ePayments Code is fit-for-purpose prior to it being mandated for PSPs.
This is a significant result for Zepto and is a credit not only to our public policy and government relations teams but to everyone across the organisation who, by their contributions to making Zepto what it is - a leader in the industry pioneering the future of payments - have given Zepto a voice worth listening to.
It's an exciting time to be a part of Australia's payments ecosystem - and we look forward to working with Treasury on this latest consultation to continue to shape the future of payments regulation in Australia.
CLICK HERE to learn more about Zepto's public policy and advocacy work.
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