Australian fintechs warn of tougher AI & payments scrutiny

Australian fintech leaders marked World FinTech Day by warning that banks, merchants and payment providers face a new phase of scrutiny over artificial intelligence and digital payments. They cite rising regulatory pressure, fragile consumer confidence and a national push on account-to-account infrastructure.

Agentic AI is at the centre of many concerns for financial institutions. Executives argue that banks and insurers must move beyond experimental chatbot deployments as they introduce systems that act on customer data and trigger processes.

Dion Williams, Founder and Chief Executive Officer at Servicely, said institutions face a very different risk profile when systems begin to act autonomously in regulated environments.

"Financial institutions can't treat agentic AI like a consumer chatbot. The moment an AI agent takes an action rather than just answering a question, every action has to be permission-bound, auditable and reversible - and the data it reasons over has to stay where compliance requires. That isn't a barrier to adoption; it's the design brief. The firms getting this right are insisting on governance and control from day one, and choosing platforms that are independent and locally accountable rather than renting capability they can't govern."

Financial firms face strict rules on audit trails, data localisation and risk management. Williams said those constraints now shape the architecture of AI deployments, rather than being treated as an afterthought once pilots move into production.

Australia's broader payments agenda is also under review as policymakers and industry groups push for greater use of account-to-account (A2A) transfers. Local fintechs see this as a structural shift that depends on their software and integration work.

Chris Jewell, President and Co-founder at Zepto, said the country's ambitions for A2A systems rely heavily on private-sector execution.

He said World FinTech Day was a timely chance to recognise fintechs' role in delivering Australia's vision for A2A payments: a system that is safe, reliable, affordable, resilient, feature-rich and accessible.

Jewell said that vision would require more than principles. It depends on the innovators and providers that build, integrate and operate the underlying capability. He said fintechs help turn payment rails into practical outcomes businesses can use, including real-time settlement, richer data, cleaner reconciliation, stronger fraud controls, and payment experiences that work across the channels and platforms the modern economy depends on.

That applies to today's core functions, including payroll, superannuation, supplier payments, collections and refunds, as well as emerging areas such as digital identity, embedded finance, wallets and AI-enabled commerce. Jewell said each depends on fintechs closing the gap between capability being available and being genuinely usable and beneficial to businesses, governments and society. With the vision now in place, he said fintechs are essential to turning it into infrastructure Australians can rely on.

Industry participants also point to a wave of regulatory change in card payments that will alter how merchants assess their providers. The impending ban on card surcharging in Australia will force businesses to absorb more of their transaction costs.

Luke Fossett, Chief Revenue Officer at Fat Zebra, said many companies only examine their payment arrangements when outages or customer complaints arise.

He said most businesses think about their payment provider only when something breaks, but the coming regulatory changes in Australia leave far less room for error. From 1 October, the ban on card surcharging will take effect, meaning merchants will no longer be able to pass provider costs on to customers and will instead have to absorb them in their margins.

Fossett said that, with more reforms expected over the next few years, businesses need a payments partner that acts as an extension of their team rather than an unresponsive support line. He said the right provider responds quickly when issues arise, flags problems before customers notice, and offers direct human support.

When card payments account for most revenue, reliability is critical, he said. Businesses should ask providers how quickly they respond when revenue is at risk, whether they can identify pricing or performance problems before the merchant does, and whether they are equipped to support growth rather than quietly defaulting clients to standard pricing once the relationship becomes less active. Fossett said many finance leaders wait until problems accumulate before asking those questions.

Consumer sentiment adds another layer of pressure for online retailers and discretionary brands. Executives say checkout speed and clarity have become more important as households tighten spending.

Fossett pointed to the latest ANZ-Roy Morgan data, which showed consumer confidence fell to 71.2 in late July, down from a month earlier and 15.5 points below a year ago, likely reflecting escalating Middle East tensions and higher inflation risk. Headline inflation eased unexpectedly in June, but trimmed mean inflation remained well above the Reserve Bank of Australia's target range at 3.6%.

He said consumers are now value-conscious, not just price-conscious. For online retailers and other businesses selling discretionary goods and services, even small and unnecessary friction in the buying process can mean the difference between a sale and cart abandonment, even as confidence recovers.

Among the payment issues creating that friction, Fossett cited a lack of preferred payment options, transactions declining for unclear reasons, and merchants failing to use revenue optimisation tools available through networks such as Visa and Mastercard. He added that customer acquisition costs and churn are now board-level metrics at many companies, particularly those in growth mode and closely managing marketing spend. The more often teams work across departments to identify friction points and understand what tools are available to fix them, he said, the better those acquisition numbers are likely to look.