Growth of digital wallet use shaking up payment regulations and benefits delivery

Digital wallets are transforming online, offline and cross-border payments around the world, prompting calls for regulatory change in Australis and modernizing Thailand’s pubic benefits delivery. They can also be used to enable Open Banking and Open Finance, and an article from the Tony Blair Foundation highlights an opportunity for the UK to do just that.

Payments regulation should cover wallet providers: Aussie banks

Australian banks are calling on the government to pass legislation that accommodates payments with digital wallets within the country’s regulatory framework.

A release from the Australian Banking Association (ABA) argues that with the country’s residents making $20 billion worth of payments across 500 million transactions each month with mobile wallets, all players within the payment ecosystem should be under the remit of the Reserve Bank of Australia. Apple and Google are

“The payments system has rapidly evolved, yet regulations have not been updated for over 25 years,” says ABA CEO Anna Bligh.

The reforms ABA is seeking were identified “over 1200 days ago,” she says, and are already on the table as part of the Treasury Laws Amendment (Miscellaneous Measures) Bill 2024. Bligh suggests they could be passed “this sitting fortnight.”

“With mobile wallets becoming a dominant force in Australia’s payments architecture – it’s only fair that global tech companies are subject to the same oversight and consumer protection laws as the rest of the payments system,” Bligh says.

Australia’s banks are exploring the use of the government’s Trust Exchange (TEx) to perform identity verification and accept digital IDs.

Usage grows in Israel and for cross-border transactions

The same trend is being witnessed all over the world, with American Express Israel reporting a 58 percent increase in transaction volume with digital wallets in the country from 2023 to 2024. As a share of overall transaction volume, digital wallets rose from 38 percent to 26 percent in a year, The Jerusalem Post reports. The increase for online transactions was even greater.

Digital wallets are by far the most popular method of making cross-border payments, according to a new report from Payments Cards & Mobile. The How Digital Wallets Are Transforming Cross-Border Transactions report shows digital wallets are chosen for international transactions by 42.1 percent. That makes them more people than the next two most popular methods, money transfer services (16.8 percent) and bank accounts (14.8 percent) combined.

Transactions with digital wallets are much faster than wire transfers, are available to people who don’t possess bank accounts, and have lower fees than bank transfers, the report says. Interoperability remains a challenge, and regulations and infrastructure limitations could pose barriers to adoption, but the report authors only expect the dominance of digital wallets to increase in the years ahead.

Thai benefits program approaches stage 3

Thailand is preparing for the third phase of its digital wallet program, the first which actually makes use of the digital wallet, according to The Bangkok Post.

Registration for the program was initially launched last July. The first phase involved welfare and disability benefits, and the second delivering social assistance to the elderly. Those two phases reached about 17.5 million people, combined, the Post says. In those phases, the funds were distributed through the Pao Tang app.

More than 99 percent of the earmarked aid reached its intended recipients.

The government plans to distribute funds for the remaining individuals registered to the “Tang Rat” (or alternatively “Thang Rath”) app during the second quarter of 2025, through an open-loop digital wallet payment system.

This payment system connects to financial institutions across the country, and is currently being tested. The digital wallet is still in development, and does not support cash withdrawals at this time.

Blair Institute suggests UK digital wallet to open finance, property transactions

The successes of Open Banking in the UK show the potential for Open Finance, Open Energy and Open Property reforms to boost the domestic economy by up to 27 billion pounds, according to a post by The Tony Blair Institute for Global Change.

The Data (Use and Access) Bill gives the UK government the ability to extend open data schemes to other areas of the economy, post author Alexander Iosad says.

“Open Finance would expand data-sharing to savings, investments, mortgages and pensions,” Iosad explains. “This would enhance financial inclusion and transparency, and spur another wave of fintech innovation.”

Smart data would also help reduce the number of duplicate checks during the home-buying process, while also reducing how many transactions are started but not completed, increasing transparency and cutting fraud.

The recently-unveiled Gov.uk digital wallet and app could be leveraged as a tool for open data exchanges, Iosad writes.

But to realize the full benefit of the opportunity, he urges fast and strategic action.

Article Topics

Australia  |  biometrics  |  digital identity  |  digital wallets  |  Israel  |  Thailand  |  UK