The Albanese government wants to level the playing field for new payment technologies to drive down fees for small businesses and consumers.
The government will update payment system laws to better suit an increasingly complex modern payment system populated by a range of new providers and technologies.
It will also consider a new licensing regime for payment service providers to help eradicate some of the barriers new market entrants face, and put together a strategic plan for Australia's payments system that will be released in early 2023.
High-risk payment services may also become subject to additional oversight from regulators at the relevant minister's wishes.
Treasurer Jim Chalmers said regulation had not kept up with the fast pace of change in the financial sector.
"Our plan is about opening up space for further innovation while making sure we have the right regulatory approach in place to keep consumers, businesses and the system safe," he said.
Reserve Bank governor Philip Lowe echoed this sentiment at the AusPayNet annual summit in Sydney on Wednesday, noting that small businesses pay twice as much to process customer payments as their larger counterparts.
While the costs incurred by businesses to process payments have been trending down, Dr Lowe said there were a few forces working in the opposite direction, including the shift to online shopping which exposes merchants to higher payment costs.
The other forces are the greater use of mobile wallets such as Apple Pay, Google Pay and Samsung Pay and a shift to higher-cost international scheme debit cards over EFTPOS.
"Given these various developments, the RBA's focus is on increasing competition to help further drive down payment costs," Dr Lowe said.
He backed the notion of a licensing regime as well as reforms to the Payment Systems (Regulation) Act 1998 that would allow the RBA to regulate new technologies.
Setting up a regulatory environment for payment stablecoins is also on the RBA's agenda.
"We can envisage a possible future in which stablecoins are used for payments, as long as they are well-designed and well-regulated," he said.
Along with the payment reforms, the federal government announced further financial reforms on the to-do list for 2023, including regulating buy now pay later and the crypto sphere.
The government will also equip the RBA with powers to step in and resolve a crisis at a domestic clearing and settlement facility.
