Australia’s central bank wants mobile wallet providers to offer least cost routing options for merchants by the end of 2024, under new regulatory powers set to be granted by the government.
In a speech on the payments system, Reserve Bank of Australia (RBA) Governor Philip Lowe said merchants should have the option of which mobile wallet service to use rather than being locked in to one system as is often the case now.
Wallet providers needed to finalise their plans and share them with the industry so the necessary investments across the payments ecosystem can get under way, said Lowe.
“Overall, we are optimistic that least-cost routing will help counter the forces that are adding to merchants’ payment costs, particularly for small businesses,” Lowe said.
The comments came as the government announced a shake up of regulations across Australia’s financial system that would update payment systems, regulate the Buy Now Pay Later sector and establish a framework to regulate crypto service providers.
As part of this, the RBA will be given new powers to regulate new and emerging payment systems, such as digital wallet providers.
Lowe said another area of reform was cross border transactions which were expensive and relatively slow in Australia.
As part of this, the RBA was pressing banks to allow the final Australian dollar leg of inbound crossbred payments to be processed through the national real-time payments system.
The industry had committed to providing this new service by Dec.1, 2023 and Lowe said he expected this deadline to be met by the banks.