Australia is preparing for the most significant reform to its payments and financial systems in more than two decades. In late 2025, Treasury released the first draft of new legislation under the Payments Systems Modernisation Bill, often referred to as Australia’s version of the “GENIUS Act”. While much of the media attention has focused on cryptocurrency and stablecoins, these reforms are broader than that. At their core, they aim to modernise how payments are regulated in Australia and to bring newer digital payment systems into a clear and consistent regulatory framework.
For business owners, the changes are not about immediate disruption – but they do signal where the financial system is heading.
Why Are the Rules Changing?
The way money moves has evolved rapidly. Businesses and consumers now rely on:
- Digital wallets
- Prepaid cards
- Online payment platforms
- Faster and cross-border payment solutions
- Emerging blockchain-based payment tools
Many of these systems have been operating under regulations designed for traditional banks and older payment methods. The new framework is intended to:
- Modernise outdated payment laws
- Clarify who is regulated and how
- Support innovation while protecting users
- Reduce uncertainty for businesses adopting new payment technologies
What Is a Stored Value Facility (SVF)?
One of the key concepts introduced by the new legislation is a Stored Value Facility (SVF). In simple terms, an SVF is a system where money is paid in upfront, stored electronically, and then used later to make payments.
Common examples include:
- Prepaid gift and travel cards
- Digital wallets such as PayPal
- Transport cards (e.g. Opal)
- Certain fintech payment platforms
- Stablecoins used for payment purposes
The defining feature is that the provider stores value on behalf of the user and enables payments from that stored balance. Importantly: SVF providers do not lend money or create credit – they hold and move prepaid funds.
How Are Stablecoins Being Regulated?
Under the new framework, payment-related stablecoins are treated as “tokenised stored value facilities”.
This means:
- The digital token itself is not regulated as a traditional financial product
- Instead, regulation focuses on the entity holding the funds backing the stablecoin
- Those backing funds must be properly safeguarded and redeemable
This approach provides clarity without forcing stablecoin providers into a banking-style regulatory model.
How Is This Different From a Bank?
The reforms clearly distinguish between banks and payment providers.
Banks:
- Accept deposits
- Lend money
- Create credit
- Are covered by the government deposit guarantee (up to $250,000 per account)
Stored Value Facility providers:
- Hold prepaid funds
- Facilitate payments and transfers
- Do not lend or create credit
- Must safeguard customer funds, but are not banks
This distinction is deliberate and reflects how businesses actually use these services in practice.
What This Means for SMEs vs Large Businesses
While the framework applies to all participants, its practical impact will differ depending on business size and complexity.
For Small and Medium Enterprises (SMEs)
For most SMEs, the reforms will be gradual rather than disruptive.
In the near term:
- Existing banking arrangements will continue unchanged
- Accounting and bookkeeping processes will remain familiar
- Traditional banks will still be central to lending and finance
Over time, SMEs may benefit from:
- Greater choice in payment providers
- Faster settlement times, improving cash flow
- Lower transaction costs as competition increases
- More efficient cross-border payment options, particularly for online or service-based businesses
For SMEs, the key consideration is not adoption speed, but understanding and governance – ensuring payment platforms used are regulated, funds are safeguarded, and systems integrate cleanly with accounting and tax reporting obligations. In most cases, SMEs will adopt these changes indirectly as banks, payment providers, and accounting software embed new infrastructure behind the scenes.
For Large Businesses and Growth-Focused Enterprises
For larger organisations, these reforms are strategically more significant.
Clear regulation enables larger businesses to more confidently:
- Explore alternative payment and settlement methods
- Use tokenised payment solutions for cross-border transactions and liquidity management
- Integrate payment infrastructure into ERP and treasury systems
- Assess payment choices alongside risk management, controls, and compliance frameworks
For these businesses, regulatory clarity removes a major barrier to adoption. It allows informed decision-making around:
- Counterparty and custody risk
- Safeguarding of funds
- Accounting and tax treatment
- Regulatory exposure across jurisdictions
At this level, payment systems are no longer just operational tools — they form part of broader financial strategy and governance.
Is This a Threat to Banks?
No – but it is a signal that the payments landscape is becoming more competitive.
Banks remain central to the financial system, particularly in lending and credit creation. However, the reforms recognise that payments no longer sit exclusively within the banking sector. Faster, digital, and programmable payment solutions are increasingly expected. Banks that adapt and integrate with new payment infrastructure are likely to remain well positioned as the system evolves.
What Happens Next?
This first release of legislation (known as Tranche 1a) focuses on definitions and structure. Further rules covering:
- Safeguarding arrangements
- Regulatory oversight
- Consumer protections
- Updated payment codes
are expected in Tranche 1b, likely in 2026.
These reforms are not about chasing trends – they are about bringing modern payment systems into a clear, regulated framework. For businesses, the takeaway is straightforward:
- No immediate action is required for most
- Payment options will expand gradually
- Understanding risk, compliance, and structure will become increasingly important
As the framework develops, we will continue to assess what these changes mean from a business structuring, tax, and risk management perspective, and how businesses can adopt new payment solutions confidently and compliantly.
If you’d like to discuss how evolving payment systems could affect your business operations, cash flow, or reporting obligations, our team is available to assist – get in touch with us today!