The future of payments in Australia will be powered by open banking
In the near future, open banking will be the default way to pay online in Australia – here's why.
There are strong signals that open banking will lead Australia away from its legacy, card-based payments systems towards true digital payments. The latest is Treasury's Payments System Review, which was released at the end of August and made 15 highly-targeted recommendations aimed at levelling the payments playing field, currently controlled by the banks. The paper recommends simplifying access to the payments infrastructure via a single, tiered licensing framework, creating common regulatory requirements and, perhaps most importantly, aligning the payments ecosystem with Australia’s open banking regime. Those actions will open up payments to a connected ecosystem, as a range of new players access the same regulatory protections and reputational benefits as the big banks. That in turn will encourage innovation, competition and ultimately choice, as individuals and businesses are enabled to pay the way they want, without unnecessary friction. "Payments now perform a vital role in providing consumers and businesses with a way to engage with Australia’s digital economy," wrote King & Wood Mallesons senior partner Scott Farrell in the 100+ page document. Mr Farrell was chosen by Treasurer Josh Frydenberg to spearhead the payments system review. He has also led two reviews into open banking. "The payments ecosystem at large should support Australia’s digital economy and be aligned with broader developments in the data ecosystem, such as the future directions of the Consumer Data Right and digital identity."That ecosystem includes digital wallets, crypto, buy-now-pay-later, digital central bank currencies and open banking, where the signals indicate payments will be the next stage of expansion.