Australia’s payment service providers – first piece of draft legislation released for consultation

Australia is embarking on a major overhaul of its payment service provider (PSP) licensing regime.

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21 oct 2025 Insight

Article - By Alice Molan Charlotte Henry Devlin Greatbatch Murphy

On 9 October 2025, the Federal Government released draft legislation for consultation, marking the first concrete step in a multi-stage reform process aimed at modernising how payment services are regulated.

What’s Changing?

PSPs to be Regulated Under Chapter 7 of the Corporations Act:
The draft legislation proposes that PSPs will now fall under the same regulatory framework as other financial services, requiring most providers to hold an Australian Financial Services Licence (AFSL).
New Financial Products and Services Defined:
- SVFs include prepaid cards and digital wallets that store value.
- Payment Instruments cover tools like debit/credit cards and online payment platforms (e.g., BPay).
  The reforms introduce two new financial products—Stored Value Facilities (SVFs) and Payment Instruments—replacing the old “non-cash payment facility” concept.
Regulation of Stablecoins:
The legislation introduces “tokenised SVFs,” bringing certain stablecoins under direct regulation, with new disclosure and transparency obligations for issuers.

Expanded Definitions and Obligations:
New categories of payment services are defined, including payment initiation, facilitation, and technology/enablement services.
Adjustments are also proposed for retail/wholesale client definitions, sophisticated investor exemptions, and intermediary obligations.

We recommend that any business that is involved in Australia’s payments ecosystem is actively involved in the consultation process, whether directly or through relevant industry bodies.

For more details and in-depth analysis, read the full article below.

Please reach out to the authors if you would like to discuss what the Draft PSP Legislation means for your business.

Read the full article