What Is the Timeline for Australia's Payments Licensing Reform?

Key takeaways

• Australia is bringing payment service providers into financial services licensing administered by ASIC, with prudential oversight by APRA for the largest stored value facility providers.
• Treasury consulted on the design in December 2023, with submissions closing on 2 February 2024.
• A separate Treasury Laws Amendment (Payments System Modernisation) Bill 2025, introduced on 30 July 2025, updated the Payment Systems (Regulation) Act and passed in September 2025.
• Exposure draft licensing legislation followed on 9 October 2025, and a further package, including the Payment Entities (Prudential Regulation) Bill 2026, on 12 March 2026, with consultation to 9 April 2026.
• Key thresholds, including the size at which an SVF provider becomes a major SVF provider, are left to rules, so the regime's practical reach depends on subordinate legislation still to come.

What are the key facts on the reform?

The reform replaces a patchwork of exemptions and old definitions with one licensing framework for payment products and services, with obligations scaled to size and to whether customer money is held.

What has happened so far?

A consultation in 2023, a payments system act in 2025, and two rounds of exposure draft licensing legislation. Each step narrowed the design, from broad policy options to draft sections that providers can now test their products against.

We could not confirm from primary sources whether the licensing bills had been introduced to Parliament by the date checked. Firms should check the Parliament of Australia website for the bills' progress before relying on any date.

What did the 2023 consultation propose?

A functional licensing regime, a new stored value facility concept, and APRA oversight of the largest providers.

Treasury's December 2023 paper proposed defining stored value facilities by what they do: funds loaded onto an account or facility, which the customer can direct for payments, transfers or withdrawals. Its preferred option separated SVFs from banking business, repealing the purchased payment facility definition, and prohibited SVFs from paying interest on stored funds. Major SVFs, including major payment stablecoin SVFs, would be prudentially regulated by APRA and would need to be locally incorporated. The paper stated the Government's intention to introduce payments licensing legislation in 2024; the timetable later moved, with exposure drafts in 2025 and 2026.

What did the 2025 Act change?

It updated the Payment Systems (Regulation) Act, the RBA's main payments law, rather than creating the licensing regime.

According to the Parliamentary Library's Bills Digest, the Treasury Laws Amendment (Payments System Modernisation) Bill 2025 amended the Payment Systems (Regulation) Act 1998 to create a framework for designating special payment systems, add ministerial direction powers and update the Act's penalties, commencing three months after Royal Assent. It did not introduce SVF licensing or safeguarding of customer money; the Digest notes that the existing offence of holding stored value of a purchased payment facility without authorisation remained unchanged.

What did the October 2025 exposure draft cover?

The foundations of payments licensing and a graduated framework for stored value facilities.

The Assistant Treasurer's release of 9 October 2025 described a core licensing regime for payment service providers performing specific functions, and a graduated SVF framework covering products such as prepaid accounts, stablecoin issuers and wallets that hold customer funds, with obligations tailored to size and type. It said a further tranche would cover additional licensing obligations including safeguarding of payment-related money, exemptions and exclusions, a framework for unclaimed money, APRA supervisory powers and a rule-making power for a mandatory, revised ePayments Code.

What did the March 2026 package add?

The prudential framework for major SVF providers and detailed safeguarding rules for payment service money.

The exposure draft Payment Entities (Prudential Regulation) Bill 2026 defines a major SVF provider as one whose total stored value, with related bodies corporate, exceeds an amount specified in rules made after consulting APRA and ASIC. It treats relevant payment service money held for end users as held in trust, generally requires it to be paid into a covered account by the end of the next business day, and allows other safeguarding methods unless APRA determines otherwise. The bill would commence with a division of a Treasury Laws Amendment Act 2026, tying its start to the licensing legislation. Our guide to Australian stored value facilities explains the SVF rules in detail.

What applies until the reform commences?

The existing non-cash payment facility rules, ASIC relief and the purchased payment facility regime.

Until the new regime commences, issuers of non-cash payment facilities generally need an Australian financial services licence unless ASIC relief applies. The explanatory statement to ASIC Instrument 2016/211 describes relief for low-value facilities, where no person holds more than $1,000 and the class totals no more than $10 million, and for gift and prepaid mobile facilities, as made in 2016. Firms should confirm the current form of that relief, and plan for it to be replaced by the new licensing framework and its transitional arrangements.

Why is Australia reforming payments regulation?

Because the existing rules predate digital wallets, prepaid accounts and stablecoins, and many payment businesses rely on relief that was never designed for them.

The current framework treats many payment products as non-cash payment facilities under the Corporations Act, with a separate purchased payment facility concept in payments system law and a set of ASIC exemptions for low-value and specialised products. Treasury's 2023 paper and the 2025 release both describe the aim as a single, functional regime: the same activity attracts the same obligations whoever performs it, scaled to size and to whether customer money is held. For providers, that means the question shifts from which exemption applies to which function they perform.

What will change for customer money?

Safeguarding moves from a patchwork to an express statutory duty with a trust and a next-business-day deadline.

Under the March 2026 drafts, money held for end users would be held in trust and placed in covered accounts quickly, with APRA able to stop the use of other methods. Providers that currently leave customer money in operating accounts, sweep weekly or rely on general client money rules will need to change their flows and their reconciliation. Because these changes take time to build, providers should design them now rather than wait for commencement.

How does the group threshold test work?

Stored value is added up across the provider and its related bodies corporate, then compared with the amount in the rules.

Worked example. A payments group runs three SVF products through three related companies. The threshold has not yet been set, so the figures below show the test against two illustrative amounts only.

No single company would cross either illustrative line, but the group total would cross the first, because section 12 of the draft adds related bodies corporate. A group near any plausible threshold should model growth in each product and plan for APRA registration well before the total crosses the line set in the rules.

What comes next?

Introduction and passage of the bills, rules that set thresholds and detail, and transitional arrangements for existing providers.

• Introduction of the licensing and prudential bills to Parliament, and their passage.
• Rules specifying the major SVF threshold, made after consulting APRA and ASIC.
• Subordinate legislation on exemptions, safeguarding detail and transition.
• A mandatory, revised ePayments Code under the proposed rule-making power.
• A framework for unclaimed money held in SVFs.

Our comparison of customer fund protection across jurisdictions shows how Australia's direction aligns with regimes in Singapore and Hong Kong.

What should payment providers do now?

These steps reduce the work when the final dates are known. None depends on the final wording of the bills, and each produces information a provider will need for its licence application, its safeguarding design and any APRA registration.

• Classify each product as a stored value facility, payment instrument or payment service.
• Record whether each product holds customer money, and for how long.
• Measure stored value across the whole group, including related companies.
• Map money flows to accounts that could serve as covered accounts under the draft.
• Build daily reconciliation of customer balances to safeguarded money.
• Review current ASIC licensing and relief, and plan for the transition.
• Track the bills' introduction and the rules that will set thresholds.

How does Safeheld help?

Safeheld reconciles customer ledgers to collection and safeguarding accounts every day for each entity and currency, and produces prepared report packs for ASIC FS70 and FS71, which the licensee reviews and completes.

See daily reconciliation and MAS safeguarding of relevant money.

Frequently asked questions

What is Australia's payments licensing reform?

A programme to bring payment service providers, including stored value facility providers, into financial services licensing administered by ASIC, with prudential oversight by APRA for the largest SVF providers.

When were the exposure drafts released?

The core licensing exposure draft was released on 9 October 2025, and a further package including the Payment Entities (Prudential Regulation) Bill 2026 on 12 March 2026.

Is the payments licensing regime in force?

Not on the latest information we could confirm, which showed the licensing and prudential bills at exposure draft stage. Check the Parliament of Australia website for their progress.

What did the 2025 Payments System Modernisation Act do?

It amended the Payment Systems (Regulation) Act 1998 to allow designation of special payment systems, add ministerial direction powers and update penalties. It did not create the licensing regime.

What is a major SVF provider?

Under the March 2026 exposure draft, a provider whose total stored value, with related bodies corporate, exceeds an amount specified in rules made after consulting APRA and ASIC.

How would customer money be safeguarded?

The draft treats relevant payment service money as held in trust for end users and generally requires it to reach a covered account by the end of the next business day.

Do the reforms affect stablecoin issuers?

Yes. The October 2025 release names stablecoin issuers among the products covered by the graduated SVF framework, and the March 2026 prudential draft refers to tokenised stored value facilities.

Will SVFs be able to pay interest?

Treasury's December 2023 consultation proposed prohibiting SVFs from paying interest on stored funds; the final position depends on the legislation.

References

• Assistant Treasurer, New legislation to modernise the regulation of payment service providers (9 October 2025)
• Parliament of Australia, Bills Digest: Treasury Laws Amendment (Payments System Modernisation) Bill 2025
• Treasury, Payment Entities (Prudential Regulation) Bill 2026, exposure draft (PDF)
• Treasury, Payments System Modernisation: Regulation of payment service providers, consultation paper (December 2023, PDF)
• ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211, explanatory statement (legislation.gov.au, PDF)

About Safeheld

Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. For Australian payment and stored value providers it reconciles customer ledgers to safeguarding accounts every day and prepares the figures for ASIC returns, ready for the new regime as it is finalised. To discuss your safeguarding operations, contact us at safeheld.com/contact.

This article is general information on Australian payments regulation and is not legal or regulatory advice.