Reserve Bank to oversee Apple Pay, Google Pay, digital wallets

The use of mobile wallets and tap-and-go technologies has soared in recent years in an unregulated environment, raising concerns about the ability of government to intervene to promote competition and innovation, and ensure the stability of the payments system.

The government has drafted legislation to empower the Reserve Bank of Australia - which already regulates credit cards, EFTOS and other payment systems - to have similar oversight for digital transaction arrangements.

It would also give a minister authority to direct additional supervision of payment systems or platforms considered to pose nationally significant risks.

Treasurer Jim Chalmers said the new laws were needed as part of reforms to modernise the nation's payments system.

"As payments increasingly become digital, our payments system needs to remain fit for purpose so that it delivers for consumers and small businesses," Dr Chalmers said.

''We want to make sure the shift to digital payments occurs in a way that promotes greater competition, innovation and productivity across our entire economy."

Australians have been among the most enthusiastic adopters of contactless payment methods.

More than a third of all card transactions in the June quarter involved payments made via digital wallets, up from 10 per cent around three years ago, and almost two-thirds of those aged 18 to 29 years use mobile payments.

The government proposes to change the Payment Systems (Regulation) Act 1998 to update the definition of payment and payments systems to encompass current and future digital payment methods.

Earlier this year, Dr Chalmers flagged the reforms as a necessary step in helping to aid the adoption and use of faster, more efficient and secure payment systems.

"Our regulatory frameworks and infrastructure have not kept up with the big trends and transitions happening in finance, especially when it comes to the digital economy and payments," he told an Australian Banking Association conference in June .

The treasurer said the infrastructure used by a lot of businesses and government for basic function like payroll were "clunky, inefficient and cumbersome".

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He said the government aimed to have policy and regulatory settings in place to support the adoption of more modern payment systems as a way to reduce transaction costs and boost productivity.

"Our vision is to create a modern, world class, and efficient payments system that is safe, trusted, and accessible and enables greater competition, innovation and productivity across the economy," Dr Chalmers said.

Among other reforms, the government is looking to phase out cheques, strengthen cyber-security and supervision frameworks, align payments reform with consumer rights, digital identification systems and other innovations and support advances to smooth international transactions.