From cryptocurrency and digital wallets to buy now pay later (BNPL) and legacy bank alternatives, Australia is undergoing the largest reform to its payments system in 25 years, Treasurer Josh Frydenberg said in an address to the Australia-Israel Chamber of Commerce in Melbourne on Wednesday (Dec. 8).
“We are in the midst of a digital revolution. COVID has accelerated and changed the way Australians and businesses engage with digital technologies. And many new and innovative technologies are emerging throughout the economy, impacting every part of our lives,” Frydenberg said.
“Nowhere is this digital disruption playing out faster than in the payments and crypto-asset sectors,” he said.
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He points out that in 1980, paper checks were used in 85% of non-cash payments; by 1995, their use dropped to just 38%. Today, the use of checks in the country has declined to roughly .02% of non-cash transactions, while the use of cash has dropped off to one-third of consumers compared to about two-thirds 10 years ago.
An estimated 55 million non-cash payments totaling about $650 billion are made in Australia daily, Frydenberg said, and some 50% of Australians make payments using their mobile phones. Over 800,000 Australians have transacted digital assets in the last three years, with a 63% increase this year over last.
“These trends will only accelerate and the uses for these technologies will only expand. Despite this disruption, the regulatory framework governing the payments system has remained largely unchanged over the last 25 years,” he said.
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Frydenberg said Minister for Financial Services and the Digital Economy Sen. Jane Hume has been working to set a vision for Australia to be a leading digital economy by 2030. The country earmarked $1.2 billion toward the Digital Economy Strategy, with a commitment to implement digital invoicing, update business registers and establish and expand the Consumer Data Right.
“We have also supported the roll out of 5G to now cover more than 75 percent of the population. These are the foundations of our digital economy,” Frydenberg said.
A tax incentive for research and development was also implemented, as well $1.7 billion invested for the country’s National Cyber Security Strategy.
By the end of next year, the government anticipates having a framework to replace the current payment licensing arrangements, examined the potential of Decentralized Autonomous Organizations (DAOs) and finished a mapping exercise of existing cryptocurrencies and tokens.