The Review found that the current definition of ‘non-cash payment’ (NCP) facility under the Corporations Act 2001 (Cth) is wide, captures all payment-related services and is dependent on regulatory discretions and piecemeal exemptions. The Review considered that payment system providers (PSP) should have greater clarity as to the types of activities that require a licence.

The Review recommends that a defined list of payment functions that require regulation should be developed, based on the functions or activities that PSPs perform (rather than the technology or business model they use). For example, the Review considers that the provision of stored-valued services should be regulated in the same way, irrespective of whether the service is provided through a card or digital wallet, or by a bank, retailer or utilities company.

According to the Review, this approach to payments regulation would align with international regulatory frameworks, such as those of Singapore, the United Kingdom and Canada, which have included (or are in the process of implementing) functional definitions of payment services in their legislative frameworks.

The Review suggests that the Government should be responsible for decisions around the defined list, given they are matters of policy. The Review also proposes that the functional definitions should be outlined in subordinate legislation rather than put into primary law to ensure the list can change and remain fit for purpose as technological advancements occur.