Australia drags fintech into regulatory future

A mobile payment device associated with Australia’s Commonwealth Bank is used at a business in Sydney, Australia, September 6, 2017. REUTERS/Steven Saphore – RC1C020770C0

MELBOURNE, Dec 8 (Reuters Breakingviews) – Australia has drafted a useful roadmap to bring financial technology regulation into the modern age. The measures being pitched read more look mostly sensible and flexible, and could be helpful to governments elsewhere.

First, Treasurer Josh Frydenberg wants to expand what constitutes a payments system. That’ll suit a push by Reserve Bank of Australia Governor Phillip Lowe to broaden the definition. Existing rules from the 1990s are too narrow to include buy now, pay later companies such as Afterpay (APT.AX), digital wallets like those operated by Apple (AAPL.O), and cryptocurrency assets.

Second, Frydenberg would consolidate the fragmented oversight of payments providers. Combined with some red-tape removal, that should help level the regulatory playing field between incumbent banks and tech upstarts without stifling innovation.

One wrinkle is that he doesn’t seem keen on appointing a payments tsar, a key recommendation in the Farrell Review, one of three investigations he’s leaning on for the changes. With parliamentary legislation needed, however, that may yet change. (By Antony Currie)

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Editing by Jeffrey Goldfarb and Thomas Shum