On 9 October 2025, the Albanese Government released an exposure draft of a Bill that lays the foundations for a new regulatory framework for payment service providers (PSPs). The draft Bill builds on the changes the Government made last month with the passage of the Treasury Laws Amendment (Payments System Modernisation) Bill 2025 and will work alongside the exposure draft legislation on digital asset platform reforms that is also out for consultation.
Financial Services Licensing Changes
The exposure draft of the Bill updates Australia’s financial services licensing architecture to capture new types of financial products and services and ensure that the framework as applied to PSPs is tailored to the specific nature of the different PSPs operating in Australia. Presently, a financial product is defined in the Corporations Act 2001 (Cth) (Corporations Act) as a facility through which a person:
- Makes a financial investment;
- Manages a financial risk; or
- Makes non-cash payments.
If the Bill becomes law, a “non-cash payment” will be repealed from the general financial product definition. In its place, section 764A of the Corporations Act, which contains a list of specific things deemed to be financial products, will include:
- a stored value facility (SVF) (being a facility that allows a person to store value by transferring funds to another person without any onward payment instruction and subsequently redeem that value by making a non-cash funds transfer); and
- a payment instrument (being a facility where the issuer of the facility provides a method for a payer to make non-cash funds transfers using funds credited to that payment under a facility).
Also, section 766A(1) of the Corporations Act which includes specific services deemed to be a financial service will include providing “a payment service”. A payment service is defined to include payment initiation services, payment facilitation services and payment technology and enablement services (each of which is in turn defined). These defined payment services cover the various activities involved in a non-cash funds transfer.
The proposed changes are in part designed to address existing uncertainty about the scope of the present definition of a non-cash payment facility.
Further reforms
Further reforms that enhance the regulation of payment services in Australia will also be introduced including:
- Major SVF providers and designated PSPs will be required to register with the Australian Prudential Regulation Authority (APRA), and APRA will be given new powers to monitor and regulate these entities to manage broader financial stability risks of the Australian financial system.
- The Minister will be empowered to make a new, mandatory ePayments Code to bind PSPs, authorised deposit taking institutions, and payment participants under the Payment Systems (Regulation) Act 1998 to minimum standards of consumer conduct.
- New requirements to safeguard payment-related money will ensure payment-related money held by licensees is available to complete transfers or be returned to the person who is legally entitled to it.
- A streamlined process for managing inactive and dormant money held in major SVF accounts will ensure major SVFs are able to deal with this type of unclaimed money in a streamlined manner.
However, the additional elements of the reforms mentioned above, as well as amendments relating to exemptions and exclusions from the Australian financial services licensing framework and transitional arrangements, are not included in this exposure draft of the Bill. Exposure draft legislation will be issued next year (see below).
Next steps
The deadline for comments on the exposure draft legislation is 6 November 2025.
The exposure draft of the Bill is the first of several tranches with the next tranche of draft legislation expected next year. The second tranche of draft legislation will cover more parts of the reform including common access requirements and an industry standard setting body. The Government will also review and update the ePayments Code.