Body
FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.
For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.
Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.
Introduction
Attitude of the country towards modern payment services
Australia has transcended from cash being a consumer's first choice payment method. Digital wallets and contactless payment methods have surged in recent years with consumers using their phones and smartwatches to pay. The majority of Australian banks allow for their cards to be added to a digital wallet and used in conjunction with Apple Pay and other digital wallet options.
Most significantly, there has been mass consumer adoption of “buy now, pay later” (BNPL) as a payment model. As a result, there has been heightened regulatory scrutiny of BNPL service providers and the government’s announcement of its intention to modernise payments system legislation to accommodate BNPL structures.
Legal affairs
Obligations and requirements to provide payment services or ancillary services described above
Issuers of credit cards/online wallets (non-cash payment facilities) are required to hold an Australian Financial Services Licence (AFSL). For non-cash payment facilities, there are exemptions to needing an AFSL. If the business only facilitates receipt of funds and is a low-value non-cash payment facility, then the business will likely not need an AFSL.
A low-value non-cash payment facility is one in which, for each customer’s account, the total available is no more than AU$1,000, and the amount held in total (for all customers) is less than $10 million.
Payment service businesses may also be subject to regulations from the Australian Prudential Regulation Authority (APRA) under the Authorised Deposit-Taking Institution (ADI) scheme. Widely available payment services and APRA has designated as subject to the ADI scheme will be required to comply with APRA’s regulations.
Anti-Money Laundering regulations will also apply to a FinTech where credit cards are issued and acquired, and/or where there is the issuing of stored value cards.
Additional comments regarding the legal situation for payment services or what FinTech’s must be aware of in this business area
Greater regulation in payment systems is anticipated with the government presently reviewing the regulations of the Australian payment system. The Reserve Bank of Australia has also just undertaken a review of the framework for credit card payments, so there will likely be further reform within this area.
Economic conditions
Market size for payment services and biggest payment service providers
More and more Australians are leaving their wallets at home preferring other payment methods to cash. In 2021, one (1) in 10 people did not carry a wallet with them, preferring digital wallets on their smartphone as their primary payment method.
Thirty-seven per-cent (37%) of smartphone users now use their digital wallets, which has doubled from 2020. The COVID-19 pandemic has driven the need for, and contactless payment options have increased, both contributing to more people using this payment option.
Of the different payment services available, Apple Pay, Google Pay and Samsung Pay are the most popular.