David Moncrieff (Hughes, Australian Labor Party) Share this | Hansard source

():  Payments are something that Australians are engaging with in everyday life, sometimes dozens of times a week. These days, that looks like tapping cards for groceries, paying bills online, splitting meals through apps and subscribing to services that debit our account each month. These payment methods were unthinkable decades ago. For younger Australians, buy-now pay-later platforms are a part of everyday life.

For many small businesses, digital wallets are now as common as cash registers once were. I remember when, about 10 years ago, I was working at Woolworths Jannali on the cash register and there was a bunch of young teenagers that came through. One of them wanted to pay with cash, and all of his friends were teasing him because he was paying with cash. They asked, 'Haven't you heard of a card?' It was just ridiculous that these young people would be paying with cash. Even at that time I thought that was fairly reasonable; I still used cash. But, for young people now, it's such a different economy to what we used to have.

The way that money moves in our economy has changed dramatically, but the laws that underpin these movements have not kept pace. The Payment System (Regulation) Act dates back to 1998. At the time it was written, smartphones did not exist, digital wallets were unheard of, cryptocurrencies were decades away and even contactless cards were still in the future. This act served us well for its time, but it is now out of step with reality. That lack of synchronicity creates risk for consumers, for small businesses and for the economy as a whole. This bill, the Treasury Laws Amendment (Payments System Modernisation) Bill 2025, tackles those risks. It brings the law into line with how Australians live, trade and pay in 2025.

There are three pillars to this bill. The first thing that this bill does is update definitions. The current definition of 'payment system' is too narrow. It only focuses on the circulation of money in a funds transfer system, and that leaves major gaps. It does not clearly capture digital wallets, closed-loop systems like American Express or the growing number of services that facilitate payments in new ways. This bill replaces that outdated definition with a modern, technology-neutral one. It ensures that a system falls within the regulatory net whichever way it makes payments possible—whether through traditional currency, stablecoins or other digital units of value.

The bill also updates the definition of 'participant'. Right now, the law is limited to formal members of a designated system, but many entities play a critical role without being formal members. Think of things like Apple Pay, Google Wallet or buy-now pay-later providers. The new definition captures the full value chain of entities that facilitate or enable payment.

This is not about regulating retailers or everyday merchants who sell goods and services. It's about ensuring that those who operate or enable payment systems are accountable under the law. Why does this matter? It matters because, today, your payment might involve five or six different actors before it reaches its final destination. Without clear definitions, regulators cannot capture the whole chain, which creates blind spots. Those blind spots are where risks accumulate—risks like unfair fees, misuse of consumer data or instability in new digital assets. By updating definitions, this bill ensures that new technologies are captured from the outset, rather than after problems arise. It makes our framework resilient, not reactive.

The second thing that this bill does is strengthen accountability and flexibility. Under the old act, only the Reserve Bank could designate a payment system and only on public interest grounds. That was a narrow test. It did not allow action on issues that fall outside financial stability or competition. The payments system review recommended giving government a broader role, and this bill does exactly that. It gives the minister the power to designate a payment system if, and only if, it's in the national interest. That is important because payments issues today are not confined to financial stability. They touch on cybersecurity, data integrity, consumer protection and even national security. For example, the spread of digital wallets raises privacy questions, and the rise of foreign backed stablecoins can create sovereignty questions. In such cases, it is appropriate for government to be able to act directly, not just rely on the Reserve Bank's limited remit.

The bill also allows the minister to nominate specialist regulators. Depending on the circumstances, ASIC, APRA, the ACCC or AUSTRAC might be the right regulator to act. That ensures flexibility, speed and expertise. This is an important change. It recognises that payments are no longer just financial plumbing issues; they cut across competition law, prudential stability, consumer rights and anti-money-laundering frameworks. By nominating the right regulator for the right issue, government avoids duplication and ensures effective oversight. As someone who used to work for the prudential regulator, I can wholeheartedly put my faith in the professionalism of our prudential and financial regulatory landscape. This bill also requires the minister to consult with the Reserve Bank and other regulators before exercising these powers, and ministerial directions must be system-wide, not targeted at individual companies. That balance protects regulatory independence while allowing timely government intervention when the national interest is at stake.

The third thing that this bill does is it modernises enforcement and penalties. A regulatory framework is only as strong as its enforcement tools. The current penalty regime in the act is outdated. Maximum penalties are too low. The only enforcement route is through criminal proceedings, which are heavy handed and slow. This bill creates a civil penalty framework alongside criminal offences. That gives regulators a more flexible set of tools—civil penalties for routine breaches; criminal penalties for the most serious misconduct. It also allows enforceable undertakings so regulators can secure binding commitments from participants without resorting to court every time. And it raises maximum penalties to reflect the seriousness of noncompliance. A company that ignores a regulator's direction should face meaningful consequences. For context, under the old regime, failure to comply with a direction attracted 50 penalty units. Under this bill, the maximum penalty doubles to 100 units per day of noncompliance—500 units for corporations. That sends a clear signal that regulators mean what they say and that compliance is not optional. Civil penalties also bring it into line with other areas of financial regulation, such as corporate law and consumer protection. They reduce reliance on criminal prosecutions, which are costly and time consuming, and instead allow proportionate responses to breaches.

For consumers, this is about trust. Whether you are paying through a debit card, a buy-now pay-later app or a digital wallet, you should know the system is regulated, fair and safe. You should not have to worry that gaps in the law leave you unprotected.

For small businesses, this is about confidence. Many small shops rely heavily on digital payments. They deserve clarity and consistency in the rules and assurance that competition will be protected. The updated framework also ensures that small businesses benefit from clear access regimes, meaning they are not unfairly blocked from participating in major payments systems. For the broader economy, this is about resilience. Payments are the plumbing of commerce. If they fail, or if trust in them is undermined, the economy suffers. By updating the framework, we reduce risks before they turn to crises.

Some have asked whether this bill imposes new costs on business. The answer is that compliance costs are minimal. The bill is estimated to have nil financial impact on the budget and minimal compliance costs. It largely brings existing practices into the formal regulatory framework. What it delivers in return—certainty, consistency and trust—is well worth it. This bill also reflects international best practice. Other advanced economies are modernising their payments systems laws. We cannot afford to fall behind. If Australia wants to remain a leader in safe, efficient and innovative payments, our laws must keep pace. This bill also builds in safeguards. Ministerial powers are not unchecked. Before designating a system in the national interest, the minister must consult with the Reserve Bank and relevant regulators. Ministerial directions to regulators cannot single out individual participants. They must be systemwide and consistent with the regulators' independence. These are important protections. They strike the right balance between giving government the tools it needs and maintaining regulatory independence.

The payments system may seem invisible to most people. It works quietly in the background. But that is precisely why it must be robust. When it fails, the impact is immediate. When it is misused, the harm is wideranging. By passing this bill, we are future-proofing Australia's payments framework. We are ensuring that it is technology-neutral, flexible and strong enough to meet emerging risks.

There's one final point I want to emphasise. This is not about slowing innovation; it's about creating confidence for innovation to thrive. When consumers know their rights are protected, they are more likely to embrace new technologies. When businesses know the rules are clear, they are more likely to invest. By modernising the regulatory framework, we encourage safe innovation; we do not stifle it. Australians expect this parliament to act before problems arise, not after. This is what this bill does. It responds to the finding of the payments system review. It closes gaps in our regulatory framework, and it strengthens consumer protection. It supports competition and innovation. It secures the resilience of a system that every Australian depends upon. I commend this bill to the House.

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