Australia to reform mobile wallet, cross-border payments

Reserve Bank of Australia (RBA) Governor Philip Lowe said in a lecture on the payments system that retailers should not be forced to use a single system, as is currently the case, and should instead have a choice of mobile wallet services.

According to Lowe, in order to begin the necessary investments throughout the payments ecosystem, wallet providers must complete their plans and share them with the industry.

Overall, we're hopeful that least-cost routing will help balance the factors raising merchants' payment costs, especially for small enterprises, said Lowe.

The remarks were made as the government unveiled plans to upgrade payment systems, regulate the Buy Now Pay Later industry, and create a framework for regulating cryptocurrency service providers as part of a regulatory overhaul of Australia's financial system.

As part of this, the RBA will receive new authority to oversee cutting-edge payment systems including those that offer digital wallets.

Cross-border transactions, which are costly and generally delayed in Australia, are another area that needs reform, according to Lowe.

In order to do this, the RBA put pressure on banks to permit the national real-time payments system to handle the final Australian dollar leg of incoming crossbred transfers.

By Dec. 1, 2023, the industry had agreed to launch this new service, and Lowe predicted that the banks would meet this commitment.