Ed Husic (Chifley, Australian Labor Party) | Link to this | Hansard source

On behalf of the Standing Committee on Economics, I present the committee's report entitled A level paying field: report on the inquiry into schemes, digital wallets and innovation in the payments sector, together with the minutes of proceedings.

Ordered that the report be made a parliamentary paper.

by leave—Tap. Pay. Go. There have never been more ways to pay for things Australians want. Moving from cash to card has seen a massive shift within our payments system. On average, Australians use a credit or debit card 540 times a year. Non-cash payments worth nearly $300 billion are made every business day. That equals an 11 per cent slice of our annual GDP. It's a big deal generating a lot of revenue. Every tap of a card, every payment of a phone, every online purchase passes through a maze of companies, platforms and payment schemes. Most Australians don't know how all this works, but they know they pay for it.

The inquiry into schemes, digital wallets and innovation in the payments sector asks: are we all benefiting from the extraordinary transformation of our payments system? Evidence showed a payment system that is very clever, very complex, very concentrated and very closed off to new challenges. Companies that invest in new ways of doing things should be rewarded for that investment. But, as is often the case, the firms that throw huge investment dollars to master the technology end up mastering markets, and they use that clout to set the terms of service and what we pay for them.

The sheer multiplicity and complexity of scheme fees is a case in point. The committee heard that net scheme fees reached $2 billion in value in a single year, growing by 11 per cent in just 12 months, and the Mastercard and Visa duopoly—the companies that don't think they're sitting in a duopoly, by the way—find it hard to explain why, in some cases, they might charge up to 400 different scheme fees. Imagine opening up your electricity bill, finding 400 different line items, each with a different name and different purpose, spanning 800 pages. Most Australians wouldn't know where to start, let alone have the time to filter through all that information to shop around for the best deal. Time- and resource-poor small businesses are expected to somehow make sense of the cost of accepting a card payment through Mastercard or Visa, and the reality is that they often have to wear this cost because they have no other choice.

Customers want to pay in the easiest way—a way that's dominated by massive, global firms. Surprisingly, even large players such as our banks struggle to understand this maze of scheme fees. If the banks representing some of the biggest companies in the nation can't negotiate their way through this, what chance does a local cafe, butcher or retailer have? If it's good to call out the effect of government red tape on business, then let's do the same when corporate red tape like scheme fees punish small businesses and consumers. It's important we empower and encourage the RBA to drive unnecessary costs out of our payment system. Lower costs, lower prices and lower inflationary pressure is good for the economy.

Australia needs a simpler, more transparent payment system that is more open to competition and delivers a fairer deal for smaller businesses and consumers. This report deliberately asked uncomfortable questions of very powerful players in the payment system. We made over a dozen recommendations, including that, if Mastercard and Visa reckon they're not a duopoly, let's test that, just like they did recently with the supermarkets. The ACCC should begin an inquiry into card payments in Australia to understand how the dominance of global players affects our economy. A burning spotlight should be fixed on the complexity and number of card scheme fees. Card schemes should explain the reasons for these fees and prove that they're not just there as a clever way to pad profits.

Speaking of market dominance, one multi-trillion dollar company increasingly controls how millions of Australians tap and pay on their phones. The ACCC has a role here to see whether Apple's digital wallet stranglehold limits competition and whether we're all paying more for that. We should look to see how Apple could open up access to its near-field communications technology, and our banks should prove that getting access to Apple's NFC can meaningfully deliver for customers. If it can be done in the EU, it can be done here.

There's a lot of talk by card schemes of special small-business rebates, but there's a big question as to whether these savings actually reach small businesses. We want the Reserve Bank to make sure that greater transparency and lower costs are genuinely flowing to small businesses and, ultimately, customers.

Finally, since competition has been shown to drive down fees and costs, we need to build the growth of clever Australian fintech firms to provide that competitive pressure, and we need to make it easier for those fintechs to access our payments infrastructure. I want to thank everyone who contributed to the inquiry, which occurred while the RBA was completing its review of merchant card payment costs and surcharging. We want to thank the RBA for its important work in this space. I also want to thank the deputy chair and all the committee members for their commitment to this inquiry, which was held in a very bipartisan spirit and where everyone, I hope, felt that they could make a contribution. I also want to thank the secretariat for their mammoth amount of work in helping support the inquiry and my own team as well. The benefits of innovation should be shared by many, not hoarded by a few. If Australians are going to keep embracing new ways to pay, then they deserve confidence that the system behind every tap, every click and every transfer is open, competitive and fair—a genuinely level paying field.

Simon Kennedy (Cook, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) | Link to this | Hansard source

by leave—Firstly, I'd like to acknowledge the chair and the whole committee with how this inquiry was conducted. It was good to see bipartisanship is alive and well in this parliament, and, on such an important issue as the payments sector, I think the chair has shown great leadership as well as the whole committee in getting to an aligned report. I fully support all the recommendations in the report, as does the rest of the committee.

For most Australians, payments are often invisible. They're not transparent. We just tap a phone. We tap a watch. We pay a bill. We order online. We expect it to be instant, safe and cheap. But behind that simple tap is a complex web—a system involving banks, card schemes, digital wallets, technology companies, fintechs, merchants, regulators, consumers and a lot of concentration of market power. The question for this parliament is simple: is this system delivering the best outcome for Australian consumers and Australian businesses? Australia has always been an early adopter and innovator of payments technology. We embraced tap-and-go. We embraced online banking. We embraced real-time payments. We embraced mobile wallets. We have had some of the best fintechs in the world come from this country.

Apple, Google and Samsung offer three of the main pass-through mobile wallets in Australia. The Reserve Bank reported that these three companies' share of all credit and debit transactions in Australia grew from 10 per cent in March 2020 to over 45 per cent by the end of 2025. That's in just four years. It's an extraordinary shift in growth. When almost half of card transactions are flowing through mobile wallets controlled by three global technology companies, we're no longer talking about a niche product; we're talking about essential economic infrastructure. Of them, Apple is by far and away the strongest player. When infrastructure becomes essential, access matters, competition matters and costs matter.

For small businesses all around the country and in my electorate of Cook—in San Souci, Caringbah, Miranda, Kirrawee and Sutherland—these payment costs are not theoretical. A local café, a local retailer, one of the thousands of tradies in my electorate, the many health providers around Caringbah and Miranda—these family businesses don't have unlimited margins, and they are getting squeezed. Every cost and every fee matters. Every instance of lack of competition matters. Every restriction on routing or access eventually lands in the cost of doing business.

Consumers across this country and across my electorate also deserve choice. They deserve security, privacy and convenience and should be able to use the payment method that works best for them, not simply the one favoured by the device maker or the credit card scheme partner. That's why recommendation 8 is one of the most important in the report. It says 'that the Australian Government consider whether to require, through regulatory intervention similar to that undertaken by the European Union, that Apple permit access to its near field communication and secure element technology without requiring developers to enter commercial arrangements'.

Apple has built an excellent product. Millions of Australians use Apple products because of its product excellence, and they use Apple Pay. It's easy, secure and convenient. This isn't about punishing Apple for its success. This is not about undermining innovation. The question is whether Apple should be able to control the core technology that allows competitors to offer alternative wallet products on equal terms. On an iPhone, the tap-and-go experience is heavily controlled by Apple. It gives Apple enormous power over the mobile payments ecosystem. If a bank, fintech or payments provider can build a better wallet, a cheaper wallet, a more merchant-friendly wallet or a more consumer-friendly wallet, it should have a fair opportunity to compete. The EU has already moved on this issue and has recognised that access to near-field communication technology is fundamental to competition in mobile payments. Australia should be exploring similar approaches.

Firstly, we've called on the ACCC to conduct a broader review into Apple's market power in digital payments and recommend policy options that deliver greater competition and consumer benefit. The question is this: what is the market power? What are the barriers to entry? What are the fees and terms? What are the reforms that would deliver better outcomes for consumers and small businesses right across Australia?

Secondly, any policy recommendations should be mapped against the real benefits for Australians, small business and consumers. This debate should not be a fight between banks and big technology companies where everyone else is forgotten. The purpose of reform is not to give one group of large corporations more leverage over another; the purpose is to lower costs and provide more choice, better products, stronger privacy, stronger security and more innovation. Too often, small businesses sit at the end of the payments chain. They don't design the schemes. They don't set the fees. They don't control the wallet infrastructure. They simply pay the bill.

Thirdly, we need to improve the usability of the PayTo and New Payments Platform. The New Payments Platform is one of Australia's most important pieces of payment infrastructure. PayTo has the potential to make account-to-account payments easier, faster and more transparent. But good infrastructure is not enough. The user experience needs to work, and it needs to be improved. If PayTo is confusing, inconsistent or hard to use, adoption will lag. That is why the Treasury or the RBA should look at the PayTo network and set standards for user experience of PayTo. We need this to be user friendly, and the banks have to come to the party. The consumer should not need to understand the payments architecture to make a good choice. A small business should not need a consultant to access lower cost payment rails.

Fourthly, Australia must move faster on stablecoins. Stablecoins are developing extremely rapidly in other jurisdictions. Australia doesn't need reckless adoption, but we do need a clear framework, and we need it now. Treasury should establish a framework within six months for enabling stablecoins as an alternative payment rail in Australia. If we wait until these systems are fully developed overseas, we will have missed the boat, missed the economic opportunity, and will be forgoing Australia's leadership in fintech and payments. We'll be rule takers, not rule makers. Australian innovators will be forced to build around standards designed somewhere else and, even worse, will be using foreign companies. We need to encourage Australian stablecoin providers and have them lead the world, not watch them go overseas and send jobs overseas. So we're looking to Treasury, the RBA and everybody to take a lead role in this, with ASIC as well.

Finally, the updated strategic plan for Australia's payments system should expressly include agentic commerce. AI agents will increasingly be used to search, compare, negotiate and transact on behalf of consumers and businesses. It's already happening. So this raises serious questions about consent, authentication, liability, privacy and dispute resolution. This payments system needs to be ready for the future, and Australia must lead and not be left behind.

The central point is this: payments regulation cannot be backward looking. It cannot only regulate yesterday's payments system. It must anticipate where technology is going and enable Australian businesses to innovate. The future of payments should be open, competitive, secure and built around the interests of consumers and small businesses. If we can do that, I'm confident Australian payments companies will lead the world. This is the test of this reform, and I commend the report to the House.

Steve Georganas (Adelaide, Australian Labor Party) | Link to this | Hansard source

The member for Chifley?

Ed Husic (Chifley, Australian Labor Party) | Link to this | Hansard source

I move:

That the House take note of the report.

Steve Georganas (Adelaide, Australian Labor Party) | Link to this | Hansard source

In accordance with standing order 39, the debate is adjourned, and the resumption of the debate will be made an order of the day for the next sitting.