PayPal Australia claims that major tech players such as Apple and Google threaten confidence in electronic payments (e-payments) as they have not signed up to fraud codes of conduct.
“All financial services providers should be obliged to subscribe to the e-payments code,” PayPal senior director for customer experience and delivery, Kareem Al-Bassam, told The Australian Financial Review.
PayPal made its comments in its final report to the financial system inquiry (FSI), which, under its chairman, David Murray, will decide Australia’s future financial system. This will update previous FSIs, such as the Campbell Report in 1981 and the Wallis Report in 1997.
PayPal called on the government to require participants in the payments system to abide by the e-payments code administered by the Australian Securities and Investments Commission (ASIC). This was also recommended by the final report of the Murray FSI.
“In the spirit of trying to future-proof the economy for digital and mobile, we recommend the e-payments code be extended to digital wallets,” stated PayPal. “A real simple example would be authenticating and paying with your fingerprint. Three years ago it is not something anybody would have thought about.”
The e-payments code governs allocation of liability when there is a fraudulent e-payment. Generally, when someone uses a stolen or lost credit or debit card in person, the bank takes the liability. If it is an online payment, the bank will reimburse the customer but then look to the merchant to reimburse it for the loss.
Al-Bassam said that PayPal is concerned that as new players come in and replace a physical wallet that facilitates the payment and holds multiple payment options, the liability for fraud is unclear and could make consumers shy away from using new payment methods.
“PayPal is a digital wallet provider and an [authorised deposit-taking institution]. But there are a number of digital-wallet-only providers who are not regulated from a consumer perspective in real way,” he added.
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