Modernising Australia's payments laws - Consultation on key definitions which will modernise Australia's payments laws commences – Tranche 1A released, lots more to come
22 October 2025
On 9 October 2025, the Treasury released Tranche 1A of its proposals to amend and enhance the regulatory framework for payment service providers to bring it into the 21st Century. This long awaited framework proposes to (amongst other things) introduce:
- 2 new financial products – being a stored value facility (SVFs) (which includes a tokenised SVF) and a payment instrument;
- 1 new financial service of providing a payment service which includes a payment initiation service, payment facilitation service; and payment technology and enablement service; and
- some licensing obligations, including additional disclosure obligations such as monthly reporting of reserve assets for Tokenised SVFs,
The proposals from the Treasury are set out in Exposure Draft Treasury Laws Amendment Bill 2025: Payments System Modernisation — amendment of the Corporations Act 2001 (Exposure Draft).
If implemented, this will significantly broaden the scope of the types of payment service providers which are regulated under the Australian financial services licensing regime contained in Chapter 7 of the Corporations Act 2001 (Cth) (Corporations Act).
But this is only tranche 1A. The true breadth of these reforms will not be apparent until Tranche 1B, regarding licensing, powers and exemptions (amongst other things) is released next year, and Tranche 2, regarding common access requirements, an industry standard setting body, and the ePayments Code, at a later date to be determined.
Until then, we recommend every business which plays a role in making payments available or storing value consider if, and, if so, how, they are captured under the proposed Exposure Draft.
What do I need to know?
Given the breadth of the reform proposals, some of the impacts to bear in mind are:
- For current Australian financial services licence (AFSL) holders with non-cash payment facility authorisations: As a non-cash payment facility will no longer be a financial product, there would be a change to the financial products and services being provided.
- For stored value holders: Any person who holds stored value should consider if the product is a SVF, as, if passed may be required to consider any revisions to AFSL authorisations and, if relevant, comply with specific obligations. Any SVF holding more than a prescribed amount of Australian dollars (AUD 200 million has been proposed) would also be required to register with APRA;
- For stablecoin issuers: The facility through which value, being Australian or foreign currency, is stored and redemptions by a person who possesses a digital token are facilitated, is a tokenised SVF. Providers will be required to hold an AFSL, meet existing obligations and comply with monthly disclosure obligations to prove reserves.
- For all other payment service providers: Remitters, payment gateway providers and even credit card issuers are likely to be required to comply with Chapter 7 of the Corporations Act as a 'payment instrument' is proposed to be a financial product, and 'payment services', being payment initiation, facilitation and technology and enablement services, is proposed to be introduced as a new financial service.
- For others who currently rely on exemptions from being a NCPF (i.e. loyalty providers, low value NCPF etc.): Some exemptions may remain but many are proposed to be removed. The detail should be included in Tranche 1b but until then, we would recommend anyone relying on these exemptions consider how these new definitions may impact their operations and, if so, what exemptions may be needed to allow them to continue to operate.
Ultimately, these reforms are designed to modernise our payments regulatory framework, updating it for the 21st Century. In doing so, they broaden the ambit of who is required to comply with Chapter 7 of the Corporations Act and change the obligations of those who currently comply as existing financial product definitions are repealed and replaced.
We recommend every person in the payments space should review what payment products they make available, which payment services are being undertaken and, to the extent that person is currently relying on exemptions, what impact their removal might have on operations.
Treasury's payments reforms – legislative changes in 3 tranches
Treasury has announced that it will consult on amendments to our payments regulatory framework in the 3 tranches set out in the table below:
Tranche | Reform proposals | Timing |
Tranche 1a | This proposes relevant definitions, some licensing obligations and a framework for APRA powers. Further details on this current consultation are below. | Consultation open until 6 November 2025 |
Tranche 1b | Treasury has indicated this will include:
| Consultation to commence in 2026 |
Tranche 2 | Treasury has indicated that this will include matters regarding common access requirements and an industry standard setting body, and that Treasury will review and update the ePayments Code at this time. | No time has been proposed |
Tranche 1a – the current proposals
The Exposure Draft contains the Tranche 1a amendments which propose:
- 2 new financial products – being a stored value facility (SVFs) (which includes a tokenised SVF) and a payment instrument;
- 1 new financial service of providing a payment service which includes:
- payment initiation service;
- payment facilitation service; and
- payment technology and enablement service;
- some licensing obligations, including additional disclosure obligations such as monthly reporting of reserve assets for tokenised SVFs;
- removing non-cash payment facilities from the general definition of financial product by repealing section 763A(1)(c) and section 763D of the Corporations Act (and corresponding amendments); and
- other powers including:
- introducing a concept of Major SVF providers which hold over a certain amount in stored value (proposed to be AUD 200 million) which will be required to register with APRA, and includes powers for APRA to monitor and regulate these facilities; and
- for the Minister to make new mandatory ePayments code for PSPs, ADIs and payment participants under the PSRA to meet minimum standards of consumer conduct.
Most relevantly, Tranche 1a introduces relevant definitions for new financial products, services and concepts, which are set out in the table below.
Financial products and services
Term | Relevant parts of definition | Examples |
| stored value facility | A facility under which
The ability to store funds without an onward payment instruction, and the ability to exercise the rights in the facility, are the key features defining an SVF, regardless of whether that feature is used in any particular moment.
| Digital wallets, emoney facilities, prepaid cards. |
| tokenised stored value facility | A SVF where:
Under this proposal the ‘payment stablecoin’ is not itself regulated as a financial product. Instead, a digital token is connected to the tokenised SVF and it is this digital token that is transferred. Transfer of the digital token is not intended to cause a person to acquire, dispose of, or transfer a tokenised SVF. | Stablecoin issuers, including of stablecoins in AUD and foreign currency. This must reference the value of a single currency. |
| major stored value facility provider | If the person is a stored value facility provider and the total of the amount standing to the credit of relevant facilities it or its related bodies corporate issues is more than the amount specified in the regulations (currently proposed to be AUD 200 million), provided amounts standing to the credit of the facility can be redeemed in Australian currency and the facility’s issuer was required to hold an Australian financial services licence covering the issuing of the facility, unless exempted under the Regulations. | Providers of SVF (including tokenised SVF) where the value held is over AUD 200 million. |
| payment instrument | A facility that provides the terms on which a person may, as the payer, use a particular method to make non-cash funds transfers of funds standing to the person’s credit under a facility. Note the definition of 'non-cash funds transfer' and 'funds' below. | Debit and credit card facilities (including virtual versions of those cards), online account management facilities, such as direct debit or PayTo facilities, and BPay facilities. |
Financial Service | ||
| payment service | A person provides a payment service if they provide:
| See below |
| payment initiation service | A person (the provider) provides a payment initiation service if:
| PSPs that provide ‘PayTo’ services and direct debit services to merchants. |
| payment facilitation service | A person (the provider) provides a payment facilitation service if:
| Merchant acquiring services, remittance services. Note that this can also be provided by one PSP to another. |
| payment technology and enablement services | A person (the provider) provides a payment technology and enablement service if:
However, the provider does not provide a payment technology and enablement service if:
| Payment gateways which enable a payee to accept payments, a digital wallet service where virtual cards can be added to the wallet and used to make payments. |
Other definitions
These new financial products and services refer to the key concepts set out in the table below.
Term | Definition | Notes |
| non-cash funds transfer | A person (the payer) makes a non-cash funds transfer if:
Like the definition of non-cash payment facility, t if the funds are transferred by means of the following, this is excluded from 'making a non-cash funds transfer'
| That this has some similarities with the current definition of a non-cash payment facility. It is intended to cover the overall transfer of funds from a payer to the ultimate payee. However, as funds may be transferred from one PSP to another in a chain before being transferred to the ultimate payee when working out who the payer and payee are any persons interposed between the initial payer and the ultimate payee/recipient of the non-cash funds transfer are to be disregarded. |
| transfer | includes any act or thing, or any series or combination of acts or things, that may reasonably be regarded as the economic equivalent of a transfer of funds (for example, debiting an amount from a person’s account and crediting an equivalent amount to another person’s account). | |
| funds | when used in connection with a transfer of funds, means:
| A digital token that does not fall within these elements is not intended to be covered, even if it has value. However, digital tokens which meet these definition are covered. For example, digital tokens connected to tokenised SVFs are intended to be 'funds', as they would represent, or have attached to it, a right to claim money from the tokenised SVF provider. |
Additional insights in the Explanatory Materials
Whilst not included in the Exposure Draft, the Exposure Draft Explanatory Materials include some additional information which is indicative of the parameters of who is captured by the framework and the requirements to safeguard funds.
Exclusions and exemptions
The Exposure Draft Explanatory Materials indicate that exclusions from the definition of ‘when a person makes non-cash payments’ will continue to apply, and, where appropriate, be extended to apply to payment services as well as to facilities that are financial products. This is likely to include:
- the ‘single payee facility’ exclusion; and
- the licensing exemption that covers the issue of facilities for making payments to the issuer of the facility and its related bodies corporate.
However, other existing exclusions and exemptions will be changed to limit or clarify their application, such as:
- the exclusion for electronic transaction facilities will no longer apply; and
- the application of the credit facility exclusion will be restricted to ensure that the new payment services apply to a non-cash funds transfer that is debited from a credit facility.
Wholesale and retail client
There is a proposal to adjust the definitions of ‘retail client’ and ‘wholesale client’ to ensure that these terms apply appropriately in relation to the new financial products and payment services.
Management of money
The Exposure Draft Explanatory Materials also propose the following will be included:
- requirements for safeguarding payments related money; and.
- a streamlined processes for managing unclaimed money.
We expect more detail regarding exemptions to follow in Tranche 1b.
What should you do?
This is only the beginning of the reform process. As each Tranche is intended to leverage the outcomes of the previous, we strongly encourage all in the payments industry to:
- familiarise yourself with the reforms and consider how this will apply to you;
- think through your activities and map out where you provide or interact with payments products; and
- engage with the reform process.
If you would like to discuss what this means for your business, please do not hesitate to contact us.
