Digital wallet providers like Apple Pay will soon face oversight from the Reserve Bank, opening the door to breaking the digital wallet monopoly and allowing banks to enter that market.

The central bank will also get powers to intervene to keep the stock exchange trading in a crisis under government changes to modernise the country’s financial systems.

The government wants to give the central bank regulatory oversight of digital wallets.Credit:iStock

Amid rapid growth in tap-and-go payments made on smartphones, there have been calls from banks, financial technology firms and Labor and Coalition politicians for greater oversight of new players in payments, such as Apple and Google.

The government wants to give the Reserve Bank the ability to regulate any new or emerging payment systems, which includes digital wallet providers. The move would allow more competition and aims to boost confidence in the new systems.

Banks have repeatedly warned of Apple’s growing power in payments, after its digital wallet service Apple Pay grabbed a bigger share of the market recently as consumers ditched cash.

Commonwealth Bank chief executive Matt Comyn last year launched a public attack on the tech giant, saying it controlled up to 80 per cent of the market for tap-and-go payments made through smartphones, but it made no contribution to the cost of sustaining payment infrastructure.

The government also said on Tuesday night that the Reserve Bank will get powers to intervene in the Australian Securities Exchange to ensure clearing and settlement, which the government said played a crucial function in the financial system, could continue in an emergency.

The government will consult on creating a new ministerial power to make sure nationally significant payment platforms like the ASX system can be subjected to additional regulatory oversight.

The move to beef up the central bank’s powers and introduce more oversight comes after the ASX last month dumped a long-running technology upgrade of its trading system, following repeated delays.

For years, ASX had been working on a project to replace its clearing and settlement system, known as CHESS, with blockchain-based technology. But last month, the ASX scrapped the project, sparking blunt criticism from the country’s top financial regulators.

The CHESS system allows the ownership of financial products including bonds, equities and futures to be exchanged, and digitally registers the ownership of shares of listed companies.

In the week to December 9, an average of $6.5 billion was traded through the ASX each day.

Treasurer Jim Chalmers said the government was committed to making the financial system safer for businesses and consumers.

“The one constant in finance is change. It’s fast-moving, dynamic and our regulatory frameworks haven’t kept up,” he said.

Assistant Treasurer Stephen Jones said Australia “punches above its weight” in financial technology.

“The government wants this to continue and to establish regulatory settings which foster innovation, new businesses and provides consumer safeguards,” he said.

The government is also set to introduce legislation that would support competition to the ASX’s CHESS system in the clearing and settlement of cash equities.

“We will introduce legislation to facilitate competitive outcomes, should a competitor emerge and in the event of ongoing monopoly provision, in clearing and settlement by providing ASIC and the ACCC with additional powers,” Chalmers and Jones said in a media release.

The government wants to finalise a plan for the future of the country’s payments system early next year, and will release a consultation paper on Wednesday to get feedback from regulators, industries, consumer groups and businesses on priority areas, including the regulation of new payment systems.

In the work on modernising the country’s financial systems, the government has already started consulting on regulations for By Now, Pay Later products, and it will also keep working with the Reserve Bank on the case for a central bank digital currency.

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