On Thursday, Australia passed significant amendments to the Payment Systems (Regulation) Act 1998 (Cth) (PSRA) to modernise the regulatory framework for the country’s payments ecosystem. The changes, introduced through the Treasury Laws Amendment (Payments System Modernisation) Bill 2025, expand the powers of the Treasury and the Reserve Bank of Australia (RBA) to designate, oversee and regulate payment systems.
The reforms aim to:
- expand the coverage of the payments regulatory framework to include new and emerging payment systems and participants;
- provide for new ministerial powers to designate payment systems when it is in the national interest to do so;
- introduce civil penalty provisions and enforceable undertakings; and
- increase maximum penalties for certain criminal offences.
New definition of payment system
The current definition of ‘payment system’ is limited to systems that facilitate the circulation of money and does not capture payments made through digital assets or systems that enable payments without directly processing them. The Bill inserts a new definition of ‘payment system’ into the PSRA as:
(a) … a system under which, or pursuant to which, one or both of the following occur:
(i) the making of payments or the transfer of funds;
(ii) the transmission or receipt of messages that effect, enable, facilitate or sequence the making of payments or the transfer of funds (whether or not those payments are made, or those funds are transferred, under or pursuant to the system); and
(b) includes any instruments or procedures that relate to that system.
This definition is intended to cover broader arrangements such as payment systems using non-monetary digital assets and ‘three party’ or ‘closed loop’ systems.
New definition of funds
Funds is now defined as an umbrella term that includes, but is not limited to, money and digital units of value including digital currency. It is intended to be a broad concept encompassing stablecoins.
New definition of participant
The Bill introduces a new definition of participant to capture all entities involved in the payments value chain, including those that facilitate or enable payments. The previous definition was limited to constitutional corporations that participate in or administer the system.
The new definition is:
A participant in a payment system is a constitutional corporation that:
(a) operates, administers or participates in the payment system; or
(b) provides services that enable or facilitate one or more of the following:
(i) the operation or administration of, or participation in, the payment system;
(ii) the making of payments, or the transfer of funds, under or pursuant to the payment system;
(iii) the transmission or receipt of messages under or pursuant to the payment system that effect, enable, facilitate or sequence the making of payments or transfers of funds (whether or not those payments or transfers are made under or pursuant to the payment system).
This definition is intended to capture all entities with a relationship to the payment system. The Explanatory Memorandum provides examples such as digital wallet services (e.g., ApplePay) and services facilitating payments in crypto assets. It is designed to be technology neutral and adaptable to new services as they emerge.
New role for the Minister to designate payment systems
Previously, only the RBA could designate a payment system as a special designated payment system. Under the reforms, the Minister may now do so if it is in the ‘national interest’. This designation differs slightly in that the Minister must identify and consider matters that:
- are not core public interest matters; and
- are materially relevant to determining whether the action is in the national interest.
When considering the national interest, the Minister may take into account factors such as national security, consumer protection, cybersecurity, crisis management and AML/CTF.
Enforceable undertakings
The Bill introduces a formal framework allowing the RBA and nominated regulators to accept and enforce written undertakings from payment system participants. These undertakings may be accepted before an access regime is imposed or a standard is made.
If a participant breaches an undertaking, the RBA or regulator may apply to a relevant court for enforcement orders. Courts may issue orders including:
- directing compliance with the undertaking;
- requiring payment to the Commonwealth of any financial benefit gained from the breach;
- compensating affected parties; and
- any other order the court considers appropriate.
Criminal and civil penalties
New provisions cover both criminal and civil penalties for failure to comply with a direction or to provide information to the RBA. While the substance of the provisions remains similar to the previous regime, the amendments introduce a civil penalty framework and increase maximum penalties.
What’s next?
In a joint media release, Treasurer Jim Chalmers and Minister for Financial Services Daniel Mulino state:
These changes will modernise our payments system and help make our economy more productive. This is all about making our payments system more seamless, safer and stronger, and suitable for the times.
While the amendments to the PSRA are drafted with the intention of keeping pace with the evolving modern economy, the regulatory framework may still struggle to align with the realities of distributed and permissionless blockchain systems. For example, imposing access restrictions or operational standards on decentralised networks such as Ethereum presents practical (and philosophical) challenges.
With major players such as Circle, Fireblocks and Stripe entering the stablecoin space and building their own payment networks, it will be interesting to see how the Australian Government chooses to exercise its new powers and what the Minister will consider to be in the ‘national interest’. Policy makers and regulators are grappling with an increasingly dynamic payments ecosystem and have designed a regulatory framework that permits a high degree of flexibility in how they regulate it. However, with such broad authority will come significant policy and political challenges in finding an appropriate balance between different policy objectives and limitations in an increasingly globalised financial and payments system.
