Australia’s proposed payments licensing framework - what it means for the industry

In October 2025, Treasury released draft legislation for Australia’s long-anticipated payments licensing regime: a reform that will reshape how payments companies operate, govern, and safeguard customer funds.

For years, payments infrastructure has been a critical yet largely unregulated part of Australia’s financial system. The proposed framework brings payments closer in line with global standards seen in the UK and EU, aiming to build greater trust, resilience, and consistency across the industry.

What’s being proposed?

The draft legislation proposes a new licensing regime that would cover:

• Stored-value and payment services providers, such as digital wallets and merchant acquirers, and
• ‍Technology and infrastructure providers who facilitate payments — including APIs, software platforms, and processors.

Depending on their scale and complexity, companies would be supervised by either:

• ASIC for smaller or low-risk payment service providers; or ‍
• APRA for larger or systemically important entities.

Licensees would need to demonstrate:

• Robust governance frameworks, including risk and compliance oversight; ‍
• Financial and liquidity standards to ensure consumer protection; and ‍
• Transparent dispute and complaints management processes.

Why is this happening?

Payments are the backbone of the digital economy — moving billions every day between consumers, businesses, and institutions.

While the sector has operated safely, regulators globally are recognising that payments deserve the same oversight and consumer protection as other financial services.

Treasury’s move is part of a global trend toward payments licensing, ensuring providers meet standards for security, operational resilience, and governance.

What should payment companies do?

For payment companies or software platforms helping facilitate payments for their customers, they should:

1. Review the draft rules and confirm whether their activities fall within the new regime.  ‍
2. Assess readiness for licensing — particularly around governance, risk management, and compliance functions. ‍
3. Plan early for obtaining an Australian Financial Services Licence (AFSL) if required, as approvals can take several months, and overall governance uplift.  ‍
4. Engage with Treasury’s consultation process, as this is the best chance to shape how the framework will operate in practice. Fat Zebra has submitted a formal response, focusing on changing the Responsible Person eligibility to reflect the inclusion of payments providers and their capabilities.  

For larger payments companies, this is an opportunity to set the industry standard by adopting strong governance early.

For smaller firms, it may mean partnering with licensed sponsors or adjusting business models to align with new expectations.

What’s next?

Treasury’s consultation period is open now, with feedback expected to inform a final bill in early 2026 and (hopefully) commencement later that year.

While the timeline is ambitious, the message is clear: payments licensing is coming, and preparation starts now.

At Fat Zebra, we welcome this move toward stronger governance and consumer trust, and we’ll continue working closely with industry and regulators to support a modern, secure payments ecosystem for Australia.