1.1
On 25 March 2021, the Parliamentary Joint Committee on Corporations and Financial Services began a self-referred inquiry into mobile payment and digital wallet financial services, with particular reference to:
(a)
the nature of commercial relationships and business models, including any imbalance in bargaining power, operating between providers of mobile payment digital wallet services and:
(i)
providers of financial services in Australia;
(ii)
merchants and vendors; and
(b)
differences between commercial relationships in Australia and other jurisdictions;
(c)
the implications for competition and consumer protection;
(d)
the adequacy, performance and international comparison of Australian legislation, regulations, self-regulation, industry codes, standards and dispute resolution arrangements; and
Conduct of the inquiry
1.2
The committee advertised the inquiry on its webpage and invited submissions from a range of relevant stakeholders.
1.3
The committee received 23 public submissions, listed at Appendix 1.
1.4
In addition to this, the committee received confidential correspondence.
1.5
Questions on notice were asked of relevant actors to provide further information necessary for this inquiry. A list of answers to these questions is also provided at Appendix 1.
1.6
The committee held virtual public hearings on 26 and 27 July, and 3 September 2021. A list of witnesses who participated in these hearings is provided at Appendix 2.
1.7
The committee undertook the inquiry following established parliamentary practices and procedures, and sought the views of a wide range of organisations and individuals. Public hearings were accessible to members of the public: proceedings were broadcast online and transcripts of the hearings are available on the inquiry webpage.
Acknowledgements
1.8
The committee thanks the individuals and organisations who contributed to this inquiry by preparing written submissions and giving evidence at public hearings.
References to Hansard
1.9
In this report, references to Committee Hansard are proof transcripts. Page numbers may vary between proof and official transcripts.
Structure of the report
1.10
This report is structured as follows:
Chapter 1: an introduction to the inquiry, including its terms of reference, the conduct of the inquiry, and key terms used throughout the report;
Chapter 2: an overview of the payments ecosystem, outlining both old and new payment rails;
Chapter 3: an overview of the technologies that enable digital wallets and mobile payments, and details of the major platforms and services offered in Australia;
Chapter 4: details of the regulatory environment in Australia as well as jurisdictional comparisons;
Chapter 5: competition issues related to mobile payments and digital wallets, including market dominance, app store terms and conditions, and third party access to the near-field communication chip on mobile devices; and
Chapter 6: other issues related to fees, security and risk, consumer protections, financial inclusion and accessibility, and cross-border payments and remittances.
Terms used in this report
1.11
This section clarifies four key terms used throughout this report.
1.12
First, borrowing from the Treasury, this report describes the payment system as a complex and interconnected ‘ecosystem’. This term reflects how the traditional payments system has grown and evolved to encompass new players and new technologies over recent years (see Chapter 2).
1.13
This report also adopts the widely-used term payment ‘rails’ to describe the systems through which non-cash payment instruments are processed and reconciled. The committee did not receive direct evidence on the origin of this term, but the Treasury uses an analogy of the payment system constituting ‘rails’ that ‘facilitate a payment by providing services that sit “on top” of the system’.
1.14
This report uses ‘EFTPOS’ to refer to the ‘electronic funds transfer at point of sale’ platform that processes debit transactions in Australia. It uses ‘eftpos’ to refer to the company that manages the EFTPOS platform in Australia, eftpos Payments Australia. There does not appear to be wide acceptance of this distinction, and the two terms were often used interchangeably by witnesses and submitters to this inquiry. The report therefore uses ‘eftpos’ when it clearly refers to the company and ‘EFTPOS’ to refer to the system, as far as it is able to make the distinction.
1.15
References to the Buy Now Pay Later provider, Zip Co, are used separately from Zip Pay, which is one of the products offered to consumers by Zip Co.