Review of Payments System Regulation Summary of Submissions to the Review of Payments System Regulation Issues Paper

3. Mobile Payments, Non-Designated Card Networks and Buy Now Pay Later

3.1 Mobile payments

Many stakeholders stated that the RBA should prioritise regulatory intervention in relation to mobile wallets, particularly Apple Pay, which account for a large and growing share of transactions. These stakeholders stated that:

Integrated providers of mobile devices and mobile wallets could control whether and how competing providers can access device functionality. Some stakeholders stated that where this control is applied to exclude third-party wallets from the device, this could limit competition between wallets.
Apple has offered restricted or commercially unattractive terms of access to near field communication (NFC) technology and other device-level functionality on Apple devices. Some stakeholders noted that third-party wallet providers in Australia can apply for access to the NFC technology through Apple’s NFC & Secure Element (SE) platform. However, these stakeholders pointed to limited uptake to date and stated the platform terms were too onerous or commercially unviable, limiting the ability of alternative wallet providers to compete. Some stakeholders highlighted that Apple has granted fee-free access to host card emulation (HCE) functionality on Apple phones in Europe, which has enabled the launch of third-party wallets that offered competitive and different functionality to the native wallet.
Fees charged for transactions on Apple devices are not reflective of costs and could rise in the future. Some stakeholders stated that fees charged for Apple Pay transactions have not changed since its launch in Australia despite transaction volumes increasing and unit costs decreasing, and stated these prices are not representative of fair and reasonable pricing. Some stakeholders stated even large issuers have been unable to negotiate the fees paid for transactions on Apple devices. Some stakeholders suggested that a lack of competitive pressure on Apple Pay fees may allow Apple to increase these fees in the future.
Apple Pay fees are generally not visible to, and cannot be passed directly onto, merchants or consumers.
Other restrictive commercial terms are difficult for issuers to negotiate or avoid. Some stakeholders indicated that other commercial terms, including strict confidentiality requirements, are additional impediments to competition, in conjunction with NFC access.
Mobile wallets have significant control over how payments are presented and processed. Some stakeholders stated that wallet providers can influence which payment methods are available to the consumer and the merchant, how they are presented, and how transactions are routed. Some stakeholders considered this has potential to influence a consumer’s ability to exercise choice in payment method, thereby impacting competitive dynamics between different payment rails. Some stakeholders provided examples of adoption of mobile wallet A2A payments in overseas jurisdictions.

A number of stakeholders proposed the RBA take a range of actions to address the concerns identified in the submissions:

To address the concerns relating to access to the NFC technology and related device functionality, most stakeholders supported access on fair, reasonable and non-discriminatory terms; some stakeholders proposed regulations granting access on terms similar to those in Europe; some stakeholders proposed granting access to wearable devices, in addition to phones; some stakeholders asked the RBA to consider additional terms of access that may in practice limit competition from third-party wallets, such as approval requirements, confidentiality obligations and technical conditions.
To address the concerns relating to fees, many stakeholders proposed the RBA collect and publish fee information and removing contractual restrictions on the disclosure of fees; some stakeholders proposed the RBA consider controls where fees are found not to be reflective of costs.
Some stakeholders proposed the RBA review Apple Pay’s contractual terms and consider appropriate intervention.
Some stakeholders proposed a phased approach to any regulatory intervention. Some proposed commencing with information gathering and monitoring, followed by other measures if material competition or efficiency problems are identified. Some proposed applying price controls as well as granting access to the NFC technology.

A few stakeholders did not support prioritising the consideration of mobile wallets.

Apple did not support wallet-specific regulation and stated that existing arrangements support competition, choice and security, stating that:
- Apple Pay is network-neutral and is available to all payment institutions in Australia, regardless of size, on the same terms and without preference, and that more than 125 Australian financial institutions support the service. The Apple NFC & SE platform has been available in Australia since October 2024, offering access to authorised developers.
- Apple’s fees reflect the value Apple Pay provides to card issuers, as well as the competitive and dynamic payments landscape in which it operates. It stated that their wallet fees have not increased since launch and that Apple Pay transactions have materially lower fraud rates than the broader industry average. Apple charges a uniform fee regardless of issuer, which promotes competition between issuers.
- Apple’s contractual terms do not have restrictions on issuers’ ability to offer, promote, or steer customers towards alternative payment methods. Additionally, Apple’s terms are set out in bilateral contracts agreed individually with each issuer and Apple has no contractual mechanism to increase its fees unilaterally.
Some stakeholders proposed the RBA undertake further assessment, rather than proceed to consider regulatory intervention. Some stakeholders stated that any access requirements should preserve features such as security, user authentication and liability controls, and should not require all mobile wallets to adopt identical architectures or commercial models.

3.2 Non-designated card networks

Many stakeholders stated that the RBA should consider regulatory action on American Express as a priority, particularly four-party networks and issuers, along with some other PSPs and merchants. These stakeholders stated that:

American Express is not subject to the same regulatory requirements as designated four-party networks despite competing for the same cardholders and transactions. As a three-party network, American Express has direct relationships with both cardholders and merchants and combines the issuing, acquiring and network functions performed by separate entities in four-party networks. As a result, there is no interchange payment between an issuer and acquirer, and American Express is not subject to interchange fee regulation. Stakeholders considered that this gives American Express greater capacity to use merchant revenue to fund rewards and other cardholder benefits, strengthening customer demand for its cards and, in turn, incentives for merchants to accept them. Stakeholders stated American Express had increased its merchant acceptance and cited RBA estimates that three-party networks accounted for almost one quarter of credit and charge card transaction value in 2024. Some merchants also provided evidence that American Express accounted for a significant share of transactions within their businesses or sectors.
American Express’ use of third-party acquiring relationships is functionally similar to four-party networks, but is not regulated equivalently. Some stakeholders noted that American Express increasingly relies on third-party acquirers to distribute merchant acceptance services, making aspects of its operation resemble a four-party model. They considered that regulation should have regard to the economic substance of these arrangements and pointed to the UK approach, where transactions involving an additional issuer or acquirer may be treated like four-party transactions. Some stakeholders also raised concerns that merchants acquired through a third party may be required to establish a direct relationship with American Express after meeting criteria such as specified transaction volumes. They suggested that these arrangements allow American Express to expand acceptance of its cards while limiting competitive pressure on the fees it charges the merchants that depend more heavily on American Express transactions.
It is generally more expensive for merchants to accept American Express cards than four-party credit cards. Stakeholders cited data from the RBA showing that merchant fees for accepting American Express cards are materially higher, on average, than for credit cards from designated networks. Several merchants provided evidence that American Express accounted for a higher share of their card acceptance costs relative to its share of transaction value and stated these higher costs may be embedded in general retail prices and partly borne by customers who use lower cost payment methods.
American Express cardholder demand increasingly incentivises merchants to accept American Express cards. Some merchants considered American Express to be a must-take payment method, particularly in sectors such as travel where American Express cards account for a material share of spending. Other merchants considered that these acceptance pressures have become stronger as American Express increased its cardholder base, transaction share and merchant acceptance, even while its acceptance costs remain materially higher than those of competing card networks.
The forthcoming changes to card interchange caps and surcharging may amplify these trends. Several stakeholders noted that, from 1 October 2026, designated four-party networks would be subject to lower interchange fee caps while American Express would not be subject to equivalent regulations. Some noted that American Express had announced changes preventing merchants from surcharging its cards from the same date. Stakeholders considered these changes may increase consumer demand for American Express relative to lower cost payment methods while limiting merchants’ ability to signal American Express’ higher acceptance costs to consumers, amplifying cross-subsidisation concerns.

These stakeholders generally supported functionally equivalent and proportionate regulation rather than applying identical rules to all card networks. Proposed initiatives include:

requiring greater transparency of merchant fees, cardholder rewards and network economics
applying interchange-equivalent or outcome-based regulation.

A small number of stakeholders, including American Express and associations representing the finance and technology sectors, did not support further regulation of American Express. They stated that:

Interchange regulation should not be applied to three-party networks because the policy concerns that interchange regulation was designed to address do not arise in the same way under a three-party model.
American Express provides meaningful competition to four-party networks. Stakeholders stated that three-party networks provide an alternative to the designated four-party credit card networks by offering merchants simpler pricing, a single relationship covering acceptance, settlement and disputes, and greater end-to-end visibility over service and fraud management. Stakeholders stated that imposing regulation designed for larger four-party networks would disregard important differences in the structures and business models of three- and four-party networks, could weaken an existing source of competition and reduce incentives to develop differentiated products.
American Express’ fees are already subject to material competitive pressure and may not require direct fee regulation. Some stakeholders stated that merchants generally can choose to decline or discontinue acceptance of American Express if the benefits do not justify the cost. They noted that American Express has lower merchant acceptance than the major four-party networks and is not a close substitute for those networks across all merchants or transactions.
Further monitoring of recent reforms is warranted. They stated that RBA should monitor the impact of the upcoming reforms and only consider further regulation if the RBA identifies a specific problem and there is evidence of harm contrary to the public interest that cannot be addressed through existing regulations.

There was some support for regulating other non-designated networks such as JCB and UnionPay:

Some card issuers and industry associations stated that payment networks performing economically equivalent functions should be subject to consistent regulation, regardless of their current scale or organisational structure. These stakeholders considered that not designating JCB and UnionPay could create scope for regulatory arbitrage and may require future regulatory reform. Some proposed applying consistent regulations to all card networks accepted in Australia, while others proposed that regulation should only apply when a card network reached pre-determined materiality thresholds.
Other card issuers, card networks, and industry associations stated small, non-designated networks do not have sufficient scale or market power to warrant regulation. Many stakeholders stated that these networks’ Australian operations were too limited to materially affect competition, efficiency or financial safety. Some stakeholders considered the cost of regulation could be disproportionate to the size of the networks’ domestic business. Some stakeholders stated that these smaller networks provided alternatives to larger card schemes, particularly in areas such as international travel and tourism. Some stakeholders stated that regulating these networks could discourage new entrants and innovation, and reinforce reliance on the designated card networks.

3.3 BNPL providers

There was some support for prioritising buy now pay later (BNPL), primarily from merchants and small-business representatives, and a small number of card issuers, other PSPs, card networks, and finance industry associations. These stakeholders stated that:

BNPL transactions have continued to grow and increasingly compete with credit cards for the same transactions. Such stakeholders cited RBA estimates of BNPL transactions more than doubling over the past five years and noted that BNPL services are increasingly common at both online checkouts and in-person environments, in part due to their increased integration with mobile wallets.
It is generally more expensive for merchants to accept BNPL than card payments. Several stakeholders stated that BNPL merchant fees remained materially higher than card acceptance costs despite recent declines. Some cited RBA estimates that BNPL fees were around 3 per cent on average in 2025, which is around three times higher than average four-party card payment fees. Several merchants stated that BNPL fees accounted for a disproportionately large share of their total payment acceptance costs relative to BNPL transaction volumes.
No-surcharge rules can weaken price signals and encourage cross-subsidisation. Stakeholders stated that merchants should be able to recover BNPL acceptance costs from customers choosing BNPL. They considered that the no-surcharge rules imposed by many BNPL providers result in BNPL’s higher acceptance costs to be embedded in general retail prices.
The lack of transparency of BNPL fees may limit the ability of merchants to negotiate with BNPL providers and reduce competitive pressure on these fees. These concerns were considered particularly relevant for small merchants, who may have limited bargaining power and may regard BNPL acceptance as necessary in sectors such as retail. Some stakeholders also pointed to the withdrawal of smaller providers and the resulting increase in provider concentration as potentially weakening competitive dynamics.
BNPL raised consumer protection, fraud and financial safety risks. A card issuer considered that these risks could be amplified if BNPL transactions were initiated by AI agents with reduced payment friction.

Stakeholders that supported action generally supported targeted measures rather than direct fee regulation. Proposed measures include:

reviewing BNPL no-surcharge rules
requiring publication of merchant fees and other data
mandating comparable consumer protections as four-party card systems.

A smaller group of stakeholders opposed further regulation of BNPL. They included BNPL providers, as well as some PSPs and industry associations. They stated that:

Additional regulation of BNPL is premature given recent regulatory changes. These stakeholders highlighted that the National Consumer Credit Protection regime has applied to BNPL arrangements since June 2025, and that existing regulation already addresses the principal public interest concerns.
BNPL may not be sufficiently material to warrant priority regulatory attention. One stakeholder stated that BNPL’s current scale did not justify regulation under the Payment Systems (Regulation) Act 1998 (PSRA), citing an RBA estimate that BNPL accounted for around 2 per cent of Australian retail payments in 2025. The stakeholder pointed to commercially negotiated pricing and declining merchant fees as indicators of a competitive market.

These stakeholders generally supported monitoring and transparency rather than designation or prescriptive rules.

Continue to ‘4. Account-to-account Payments’