Treasury has announced that it is consulting on Tranche 1 of draft legislation to implement the new Payment Service Providers licensing framework. Background.
Tranche 1 will set the foundations for the new payments regulatory framework by introducing legislation to establish graduated obligations through:
- requiring PSPs that perform certain functions to get an Australian Financial Service Licence;
- APRA powers for majored stored value facility providers and designated PSPs; and
- a rule‑making power to allow introduction of a mandatory ePayments code
Tranche 1a Exposure Draft legislation is currently open for consultation. It covers core concepts underlying the new framework such as the payment functions that will be subject to the AFS licensing regime and APRA powers. It provides the framework for the application of core AFS licensing obligations and includes some additions to these obligations. Tranche 1a principally involves amendments to the Corporations Act 2001 (Cth)..
Tranche 1b will cover additional licensing obligations such as safeguarding payment-related money, licensing exemptions and exclusions, APRA powers, a framework for unclaimed monies, and the new ePayments Code rule-making power and transitional arrangements.
Treasury plans to consult on Tranche 1b in early 2026.
In Tranche 2, the Government will consider other reform elements, such as common access
requirements and an industry standard-setting body and will review and update the ePayments
Code.
Major stored value facility providers and certain PSPs that will be designated by the Minister will be subject to APRA regulation in addition to AFS licensing requirements that apply to these providers.
This replaces the existing Purchased Payment Facility (PPF) framework and the RBA’s role with respect to PPFs.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
