Apple and Google have been put on notice as the government considers new powers that could see the tech giants forced to change their digital payment systems.
A review, penned by lawyer and financial technology expert Scott Farrell, recommend the government should be given the power to designate tech companies as payment providers.
The changes, if legislated, would cut down the ministerial overlap and afford the Treasurer the power to direct the two tech giants to open up their platforms for greater competition.
About 55 million payments worth $650bn are made in Australia everyday. Services such as Apple Pay and Google Pay, which have grown rapidly in recent years, are currently outside of Australia’s regulatory system.
Treasurer Josh Frydenberg said while the technology had evolved considerably, regulation had not caught up with it.
“Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure,” he said in an opinion piece published in the AFR.
Richard Holden, Professor of Economics at the University of New South Wales, said the government’s response was “sensible”.
“What I took away from (the review) is one very sensible broad point, which is to take a functional approach to thinking about regulating participants in the payment system,” he told NCA Newswire.
Digital wallet operators – particularly Apple – have long held out on demands from the big four banks to allow access to their phones technology.
Commonwealth Bank chief executive Matt Comyn told a parliamentary inquiry that 80 per cent of smart phone payments were completed using Apple Pay.
Professor Holden urged the government to think progressively on the issue as many Australians had become accustomed to the convenience of digital payments.
“For a lot of people it’s the fact that, you know, now you don’t have to carry a wallet around … and that has made their lives a lot more convenient and a lot better,” he said.
“And we don’t want regulations that get in the way of that … although we obviously do need to regulate things like Bitcoin and cryptocurrencies. So it’s a balancing act for the government.”