Australia’s Reserve Bank Calls for Transparency in Digital Wallet Costs
The Reserve Bank of Australia (RBA) has expressed concerns about the lack of transparency in the cost of digital wallets, such as Apple Pay, and the impact it could have on business owners. Speaking at a business summit in Sydney, the RBA’s Head of Payments Policy, Ellis Connolly, called for increased transparency and clarification of the RBA’s powers over mobile wallet providers.
Connolly highlighted that the providers require card issuers to enter into confidential agreements, meaning there is little information about the costs involved in these arrangements. However, media reports suggest that the costs could be more than $100m per year.
Connolly said that promoting transparency of payment costs associated with mobile wallets could boost efficiency and competition, which is increasingly important as their use skyrockets during the broader transition away from cash. He added that the RBA’s next “frontier” is reducing costs for virtual wallet transactions, such as those facilitated by Google Pay, Samsung Pay, and Apple Pay. These services allow mobile phone or smartwatch users to store debit and credit card information to use on the go.
The RBA is warning that the shift to electronic payments, including credit and debit cards, has resulted in businesses being hit with increased charges. The use of cash for transactions has halved in Australia from 26% to just 13% over the past three years, according to the RBA’s Consumer Payments Survey. The survey also found that around a third of consumers made contactless payments by tapping a mobile device.
The RBA has called for clarification over the extent to which its powers can be applied to digital wallets and other new types of payments. The commonwealth government is working on a strategic plan to update the way the payments system is regulated, which aims to ensure Australians can make purchases in a safe, secure, and efficient environment.
The plan is due to be finalised this year, and it includes reducing transaction costs for small businesses. The RBA has backed the government’s plans for reform, and Connolly said that the RBA wanted to engage with the payments industry “in the spirit of co-operation” while the government irons out the details of its reform agenda for the sector.
The RBA’s call for transparency in digital wallet costs reflects the growing importance of mobile wallets and the broader shift towards electronic payments.
As businesses face increased charges, there is a need for clarification and reform of the payments system to ensure a safe, secure, and efficient environment for consumers and businesses alike. With the government working on a strategic plan, the RBA is supporting efforts to reduce costs for small businesses and promote greater transparency in payment costs.