Cryptocurrency is unlikely to ever become legal tender in Australia, a Reserve Bank of Australia (RBA) executive has concluded during a Parliamentary hearing exploring competition, data privacy and fintech innovation issues.

Despite watching the emerging cryptocurrency market for the past eight years, Dr Anthony Richards, head of the RBA’s Payments Policy Department said, “we just don’t see them being used as a means of payment in Australia.”

“Some people are investing in cryptocurrencies, and they do so at their own risk because they’re highly speculative and most of them are not backed by anything.”

And while Parliament could declare cryptocurrency as legal tender “if they wanted to” – a move recently taken by the government of El Salvador – Richards said for now “crypto for day-to-day use is something that we just haven’t considered to be an issue that we need to do anything about.”

The comments came during a recent Parliamentary Joint Committee on Corporations and Financial Services inquiry into mobile payment and digital wallet financial services, where a host of financial-services innovators fronted up to address recent innovations in payments technology and concerns about their competitive impact.

Differences in apps’ access to smartphones’ near-field communication (NFC) chips were discussed extensively during the hearing as Committee members considered whether Australia should follow Germany’s lead in forcing Apple to open up access to its chips.

Google allows app developers to use the HFC chips in Android phones to interact with payment terminals, but Apple – citing security concerns – has refused to allow app to access iPhones’ HFC chips in a policy that famously spawned competition action by Australia’s banks.

Their action was ultimately unsuccessful after a 2017 ACCC ruling, but the debate was revived this month through a host of submissions to the enquiry, which re-examined its impact in Australia’s rapidly-changing payments market as Dr Richards warned “there certainly are potential competition issues in respect of access to the NFC chip”.

Archrival Google stopped short of commenting on Apple’s approach, with Diana Layfield, the company’s vice president of product management and partnerships, saying that “it has been our experience that opening access to the NFC chip has made for substantial competition around the world – substantial competition for us and substantial competition in the environment.”

That competition was increasingly being seen as fintechs in Australia – where world-leading adoption of tap-to-pay terminals meant cashless payments are expected to comprise 98 per cent of all payments by 2024 – explored alternative payment methods that work on any device.

Most recently, the use of one-off QR codes by companies like PayPal and eftpos, which bought payments fintech Beem It to build a ‘national QR code payments utility’ to facilitate payments from any smartphone with a camera.

Innovate now, pay later

Widespread use of QR codes had become more acceptable for fintechs thanks to the COVID-19 pandemic’s climate of intense technological innovation, in which changes in consumer behaviour – such as QR-code contact tracing check-ins – had buoyed completely new forms of payment.

“We’re seeing our traditional versions of financial products, services and technology changing, which is being driven by customers’ demand to have seamless, one-stop-shop experiences,” Diane Tate, CEO of the Australian Finance Industry Association (AFIA), told the committee.

Rapid digitalisation had changed choice and access to products, competition and innovation, and partnerships and distribution channels so that “the end-to-end value chain is being disrupted and disintermediated”, Tate said.

Her comments came as Australia’s Buy Now Pay Later (BNPL) industry barnstorms the world stage, with world financial bodies watching the new BNPL industry code with interest as the $39b sale of Afterpay validates Australia’s culture of fintech innovation.

Introduced in March, the BNPL Code of Practice has been crucial “to keep ahead of this changing landscape”, Tate said, noting that “we are getting attention from other jurisdictions… other regulators and stakeholder interest groups [are] interested in what’s in the code because it does lift consumer protection.”

AFIA’s proactivity by the emerging industry had kept consumer complaints about BNPL providers low – between zero and 140 complaints for a provider over the first half of this year – and laid out a regular reporting framework that would, Tate said, improve visibility and compliance monitoring of the sector.

“We think the architecture of payments in Australia is world-class,” she said, “but we need to continue to augment based on what’s going on in markets.”