Australia is entering a new era in payments. Over the next two years, the country will implement its most significant regulatory overhaul in decades—reshaping how payment providers, fintechs, and platforms operate.
This is not just a compliance update. It’s a structural shift that will redefine competition, innovation, and trust across the ecosystem.
Why Reform Now?
Australia’s payments framework has struggled to keep pace with rapid innovation:
- Rise of digital wallets and embedded finance
- Growth of fintechs and non-bank providers
- Increasing complexity in cross-border and real-time payments
The existing system, built around legacy definitions, left large parts of the ecosystem either lightly regulated or inconsistently supervised.
👉 The reform aims to fix this by introducing a technology-neutral, activity-based regulatory model.
What Is Changing?
1. From Entity-Based to Function-Based Regulation
The new framework regulates what a company does, not what it is.
This means activities such as:
- Payment initiation
- Wallet services
- Merchant acquiring
- Payment facilitation
…will be regulated consistently, whether performed by a bank, fintech, or tech platform.
👉 This creates a level playing field across the ecosystem.
2. Expansion of Licensing Requirements (AFSL)
A major shift is the expansion of the Australian Financial Services Licence (AFSL) regime.
Many players that previously operated outside full licensing will now need to be licensed, including:
- Payment service providers (PSPs)
- Digital wallet operators
- Marketplaces handling payments
- Cross-border payment firms
👉 Result: Fintechs become regulated financial entities, not just technology providers.
3. Regulation of Emerging Payment Models
The reforms explicitly bring newer models into scope:
- Digital wallets
- Buy Now Pay Later (BNPL)
- Stablecoins and tokenised value
- Embedded finance platforms
👉 This ensures the framework is future-proof and innovation-ready.
4. Stronger Safeguarding and Consumer Protection
New obligations will require firms to:
- Safeguard and segregate customer funds
- Comply with a mandatory ePayments Code
- Strengthen dispute resolution and fraud handling
👉 The goal is simple: increase trust in digital payments.
5. Expanded Regulatory Powers
Regulators will have broader authority to:
- Designate and oversee payment systems
- Enforce compliance with stronger penalties
- Intervene in the national interest when required
👉 This introduces tighter system-level governance.
When Will This Happen?
The rollout is phased:
- 2025 → Legislation and detailed consultation
- 2026 → Licensing regime begins
- 2026–2027 → Transition period for compliance
- Post-2027 → Full enforcement
👉 Firms will need to act early—especially to secure licensing within transition timelines.
Who Is Driving the Reform?
Australia’s payments reform is coordinated across multiple regulators:
- Treasury → Policy design and legislation
- ASIC → Licensing and conduct regulation
- Reserve Bank of Australia (RBA) → System oversight and stability
- APRA → Prudential regulation for large stored-value providers
- AUSTRAC → AML/CTF compliance and financial crime monitoring
👉 Together, they create a multi-layered regulatory model covering conduct, risk, and system stability.
What Is the Impact?
1. Fintechs and Payment Providers
- Significant uplift in compliance requirements
- Need for governance, risk, and reporting frameworks
- Increased cost of operations
👉 Outcome: Higher barriers—but also greater credibility and trust
2. Banks
- Benefit from regulatory parity with fintechs
- Face more competition from better-regulated non-banks
👉 Outcome: More balanced competitive landscape
3. Marketplaces and Platforms
Platforms that manage payments (e.g., escrow, wallets) will:
- Fall directly under regulation
- Need to redesign payment flows and safeguarding models
👉 Outcome: Business model and product redesign
4. Cross-Border Payment Providers
- Must comply with Australian licensing and AML requirements
- Increased operational complexity
👉 Outcome: More friction, but greater regulatory certainty
5. Industry-Wide Effects
Consolidation
Smaller players may struggle with compliance costs, leading to:
- Mergers
- Partnerships
- Market exits
Compliance as a Competitive Advantage
Firms that integrate compliance into product design will:
- Scale faster
- Build stronger customer trust
Platformisation of Finance
Fintechs will evolve into:
👉 Licensed financial platforms, not just service providers
Strategic Insight: What This Really Means
This reform is not just regulatory—it’s transformational.
It will:
- Blur the lines between banks, fintechs, and tech platforms
- Force tighter integration between product, compliance, and risk
- Elevate the importance of payments infrastructure expertise
👉 The winners will be those who can combine innovation with regulatory strength.
Final Thoughts
Australia’s payments reform represents a long-term bet on trust, stability, and scalable innovation.
- Short term: Increased complexity and compliance costs
- Long term: A stronger, more resilient payments ecosystem
For businesses, the question is no longer:
“Do we need to comply?”
But rather:
“How do we turn compliance into a strategic advantage?”