Understanding Payments System Modernisation

Australia is overhauling how payment service providers (PSPs) are regulated through Payments System Modernisation and new payments licensing reforms. The reforms amend the Payment Systems (Regulation) Act 1998 (PSRA) and introduce a tailored licensing framework so that regulation is based on the payment functions performed, not just traditional card and account schemes.

Under the modernised regime, a much wider set of providers may be captured, including:

Digital wallets and super-apps
Payment gateways and facilitators
Buy Now Pay Later (BNPL) providers and instalment products
Stored value facilities (SVFs) and prepaid instruments
Providers handling account-to-account payments, stablecoins and new payment rails

The reforms expand the powers of Treasury and the Reserve Bank of Australia (RBA) to designate, oversee and regulate payment systems, while a new PSP licensing framework aligns with the AFS licensing approach but is calibrated for payments risk.

Why Payments Reforms Matter

For banks, payment institutions, card acquirers, fintechs, super funds with member apps, platforms and large merchants, these reforms are strategic, not just technical:

Perimeter change – firms that previously did not require an AFSL or specific payments authorisation may now need one, or may face new obligations and conditions.
Activity-based regulation – obligations depend on what payment functions you perform (e.g. initiation, transmission, settlement, holding stored value), which impacts business models, outsourcing and fee structures.
Competition & innovation – a more consistent framework is intended to create a level playing field while maintaining safety, impacting pricing, surcharging, access to schemes and innovation pathways.
Ecosystem expectations – global partners, schemes and large merchants will expect PSPs to demonstrate strong governance, risk management and compliance with the new regime.

Key Challenges Facing Firms

Scoping payment functions and licensing needs
Mapping products, flows and entities to new PSP categories, and deciding whether to consolidate, restructure or ring-fence activities.
Interaction with existing licences
Managing overlaps between AFSL, ACL, ADI authorisation and new PSP licensing, including group structures and shared services.
Third-party and scheme dependencies
Managing risk and contract changes across card schemes, payment gateways, processors, wallet providers and cloud platforms, including new regulatory expectations on outsourcing and critical service providers.
Product, pricing and surcharging impacts
Understanding how reforms, RBA directions and related policy moves (e.g. surcharging settings, interchange changes, scam-related codes) affect economics and customer experience.
Data, technology and resilience
Ensuring that technology stacks, APIs, fraud controls, scams controls and operational resilience (including CPS 230) can support new obligations, reporting and supervisory scrutiny.
Implementation governance
Standing up a cross-functional programme (Risk, Compliance, Product, Technology, Legal, Treasury) with clear milestones, accountability and evidence packs for boards and regulators.

How OCG Can Help

Oceanic Consulting Group (OCG) helps banks, payments firms and fintechs translate payments reforms into practical operating models, licences and controls.

We support clients with:

Regulatory impact assessment & roadmap
Mapping current payment services to the new framework, identifying licence gaps, and sequencing changes across entities and products.
Licensing & perimeter strategy
Designing licensing, booking and entity strategies (including AFSL/ACL/ADI/PSP interactions) that align risk, capital, tax and commercial objectives.
Governance, risk & control frameworks
Policies, standards and control libraries for payments risk, outsourcing/third-party risk, scams, fraud, sanctions and AML/CTF alignment.
Product and customer-journey design
Aligning onboarding, consent, disclosures, surcharging, dispute handling and complaints with regulatory expectations and scheme rules.
Data, reporting & MI
Defining data requirements, metrics and dashboards for boards and regulators, including incident, outage, scam and dispute reporting.
Programme delivery & assurance
Standing up and running implementation programmes, providing independent review of readiness, and preparing supporting documentation for RBA/Treasury/regulator engagement.

FAQs

Which firms are likely to be captured by PSP licensing?
Beyond banks, the regime is expected to capture many payment gateways, digital wallets, BNPL providers, stored-value facilities, acquirers and other non-bank PSPs that move or hold customer funds or initiate payments.

How does PSP licensing relate to AFSL and ACL?
The intent is to leverage the AFS licensing architecture, with adjustments for payments-specific risks. Some providers that currently fall outside AFSL/ACL may come into scope, while others may see modified obligations. The exact mix will depend on your activities and structure.

What should we be doing now?
Firms should:

Conduct a payments functions mapping and perimeter assessment.
Identify licence options and structural decisions early.
Review and uplift outsourcing, resilience, scams and financial crime controls around payments.
Prepare board briefings and implementation plans that show clear ownership and milestones.

Strengthen Your Payments Compliance & Licensing Programme

Work with OCG’s Payments & Fintech Specialists

Position your organisation to thrive under Australia’s new payments regime. Contact OCG to assess your PSP perimeter, design a pragmatic licensing and operating model, and implement evidence-rich controls and MI that satisfy regulators while supporting innovation and growth.

Speak with OCG’s Risk Advisory team today