A Guide for Australian Fintech & Payment Platforms as a Non-Cash Payment (NCP) Facility

Introduction

Understanding the non-cash payment (NCP) facility is one of the most fundamental concepts within Australia’s financial services licensing framework. Under the Corporations Act 2001 (Cth), an NCP facility is broadly defined as any platform or arrangement that allows a person to pay without the physical delivery of currency, effectively covering most modern digital payment systems.

Because an NCP facility is legally classified as a financial product, any entity that operates one is considered to be carrying on a financial services business. This triggers a significant regulatory obligation, as the provider is generally required to hold an Australian Financial Services Licence (AFSL) to operate legally. This guide provides essential information to help fintech founders determine if these requirements capture their payment platform.

What Is a Non-Cash Payment (NCP) Facility?

Distinguishing the Facility & the Underlying Asset

Under the Corporations Act 2001 (Cth), it is crucial to understand that the regulated financial product is the “facility” or “arrangement” that enables a non-cash payment, not the underlying technology or asset itself. The legislation defines a facility as:

• Intangible property, or
• An arrangement, which can be a contract, agreement, or scheme (whether written or oral)

This distinction was clarified in the case of Australian Securities and Investments Commission v BPS Financial Pty Ltd [2024] FCA 457, which involved the Qoin crypto-asset. The court provided judicial guidance on what constitutes an NCP facility in the context of digital assets.

The court found that the regulated financial product was the Qoin Wallet arrangement between the provider and each user. This arrangement was the direct mechanism that allowed the user to make non-cash payments.

To illustrate, the court stated, “While the ability to make non-cash payments using a Qoin Wallet depends upon the existence of the Qoin Blockchain, it does not follow that the Qoin Blockchain is itself a financial product, or that it forms part of the financial product”.

Therefore, the regulatory focus is on the agreement or system that gives a person the ability to pay. The technology that supports this function, such as a blockchain network, is not considered part of the financial product, even though the facility cannot function without it.

Common Fintech Platforms Regulated as NCP Facilities

Digital Wallets & Stored Value Platforms

Applications that allow users to deposit, store, and spend money are classic examples of NCP facilities. If a payment platform operates as a wallet where customers can store funds for making and receiving payments, it will be regulated as an NCP facility.

This arrangement means the business is providing a financial product and will likely require an AFSL.

The regulatory approach applies to various business models, including:

Platform Type	Description
Standalone Digital Wallets	Services that function similarly to PayPal, allowing users to maintain a balance and pay multiple merchants or other users.
Embedded Wallets	Payment features integrated within larger “super apps” that allow customers to hold a balance for use across different services offered on the platform.
Prepaid & Stored-Value Cards	Reloadable cards that can be used at a wide range of merchants, also considered NCP facilities because they store value digitally for future payments.

Funds Transfer & Remittance Services

Platforms that facilitate the electronic movement of money between different parties are also considered NCP facilities. The Australian Securities and Investments Commission (ASIC) provides guidance that explicitly includes services designed for money transfers and bill payments under this definition.

Any fintech that enables users to send money directly to each other or to merchants without using physical cash is likely operating an NCP facility.

Common examples of these platforms include:

Service Type	Description
Peer-to-Peer (P2P) Transfer Services	Any feature within an application that allows users to send funds directly to one another.
Remittance Platforms	Services that facilitate cross-border payments, allowing users to send money internationally.
Electronic Bill Payment Services	Platforms that enable users to pay bills to various merchants electronically.

Crypto Wallets Used for Payments

A crypto wallet that enables users to make payments to merchants or other individuals is considered an NCP facility. This was firmly established in the legal case of Australian Securities and Investments Commission v BPS Financial Pty Ltd [2024] FCA 457, which involved the “Qoin Wallet.” The Federal Court determined that the wallet arrangement itself constituted a financial product requiring an AFSL.

It is important to distinguish the regulated product from the technology it uses. The court clarified that:

Component	Regulatory Status & Description
The Financial Product	The arrangement that allows a user to make a non-cash payment—in this instance, the wallet provided by the company.
The Underlying Technology	The blockchain or the crypto tokens themselves are not considered part of the financial product, even though the wallet depends on them to function.

Therefore, if a fintech provides the infrastructure for crypto-based payments, it is likely providing a regulated financial service.

Key Exemptions if Your Payment Platform Is Not an NCP Facility

The Single Payee Exemption

Under the Corporations Act 2001 (Cth), a significant exemption exists for payment platforms that restrict payments to a single recipient. This is known as the single payee exemption, outlined in section 763D(2)(a)(i).

If your facility is structured so that it only allows a non-cash payment to be made to one specific person or entity, it is not considered a financial product. This exemption is particularly useful for closed-loop systems where value is only redeemable with the issuer.

Examples of facilities that fall under this rule include:

Example Facility	Defining Characteristic
Transport Card	Valid only on one transport network.
Prepaid Photocopying Card	Redeemable at a single institution.
Gift Card or Voucher	It can exclusively be used at one specific retailer.

Low-Value Facilities & Other ASIC Relief

ASIC provides specific relief for certain low-risk products that would otherwise be classified as NCP facilities. This relief acknowledges that full compliance with the financial services regime can be disproportionately burdensome for simple, low-risk arrangements.

Key exemptions are granted through legislative instruments like the ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211.

ASIC has granted conditional relief for low-value NCP facilities that meet specific thresholds. This exemption applies if:

Condition	Threshold / Limit
Maximum Value Per Client	The total amount available for any single client across all facilities of the same class does not exceed $1,000 at any time.
Maximum Total Value Held	The total amount held across all facilities of that class does not exceed $10 million.
Product Structure	The facility is not a component of another financial product.

While this relief removes the need to hold an AFSL, operators must still comply with certain conditions, such as providing clear disclosure documents and maintaining an internal dispute resolution process.

Beyond low-value facilities, ASIC also provides unconditional relief or declarations for other specific products, including:

Exempted Product	Reason for Exemption / Description
Gift Facilities	Non-reloadable gift cards or vouchers marketed solely as gifts are exempt, provided they are not redeemable for cash.
Loyalty Schemes	Schemes where the main purpose is to promote the purchase of goods or services from the issuer or partners are declared not to be financial products.
Electronic Road Toll Devices	Facilities used exclusively for paying road tolls are declared not to be financial products under the Corporations Act 2001 (Cth).

Credit Facilities & BNPL Platforms

An important exclusion from the definition of a financial product is a credit facility. Under section 765A(1)(h) of the Corporations Act 2001 (Cth), any arrangement where non-cash payments are debited from a line of credit is not regulated as an NCP facility. This is because such arrangements are typically governed by separate consumer credit laws, often requiring providers to complete ACL applications.

This exclusion is the primary reason why many Buy Now Pay Later (BNPL) platforms do not require an AFSL for their core service. A standard BNPL model is structured as a credit facility, where the platform extends credit to a consumer for a purchase.

However, this exemption is sensitive to product design; if a BNPL platform were to add a wallet feature that allows users to store their own non-credit funds, that component would likely be considered a regulated NCP facility.

Why the NCP Regime Triggers AFSL Requirements

How an NCP Facility Is Classified as a Financial Product

Under the Corporations Act 2001 (Cth), any arrangement that allows a person to make a non-cash payment is explicitly defined as a “financial product.” This classification was intentionally established to bring modern digital payment systems into Australia’s financial services regulatory regime, including:

• Debit cards
• Online payment arrangements
• Other digital transfer mechanisms

The primary purpose of this regulation is to ensure consumer protection and maintain market integrity. By classifying NCP facilities as financial products, the legislation addresses several key risks:

Risk Category	Description
Consumer Financial Loss	The potential for consumers to lose value due to fraudulent or negligent conduct.
Provider Competence	The risk that providers may not have the competence or resources to deliver the financial service reliably.
Informed Consent	Ensuring consumers are adequately informed about the features and risks of the payment platform.

This framework ensures that any entity providing a mechanism for the transfer of value does so with competence and integrity. As a result, the risk of financial loss is minimised, and the reputation of the market for NCP facilities is protected.

The AFSL Requirement for Your Payment Platform

Because an NCP facility is legally classified as a financial product, any business that provides one is considered to be “carrying on a financial services business” in Australia. This status directly triggers a significant regulatory obligation under section 911A of the Corporations Act 2001 (Cth).

This section of the legislation mandates that a person carrying on a financial services business must hold an AFSL, unless a specific exemption applies. Therefore, fintech companies that develop and operate payment platforms are generally required to obtain an AFSL, including those offering:

• Digital wallets
• Funds transfer services
• Payment processing solutions

The licence provides authorisation for activities such as issuing or dealing in an NCP facility, and it is crucial to understand what requirements are needed for an AFSL to ensure the provider meets stringent conduct and disclosure obligations.

Navigating Hybrid & Emerging Payment Models

Crypto Wallets & Stablecoins As Payment Platforms

The rise of digital assets has created new regulatory questions for fintech platforms. A crypto wallet that enables users to make payments to merchants or other individuals is now clearly classified as an NCP facility, a position established in the case of Australian Securities and Investments Commission v BPS Financial Pty Ltd [2024] FCA 457.

The court determined that the regulated financial product is the wallet arrangement itself, not the underlying blockchain or crypto tokens. This means if your platform provides the infrastructure for crypto-based payments, you are likely providing a regulated financial service requiring an AFSL.

Furthermore, ASIC has indicated that non-yield bearing stablecoins—digital assets pegged to a fiat currency—are also highly likely to be considered NCP facilities when used for payment. Consequently, any entity issuing or dealing in these stablecoins for payment purposes is subject to AFSL obligations.

The “Super App” Challenge for Your Fintech

Integrated applications that combine payments with other features, often called “super apps,” can unintentionally become providers of NCP facilities. These platforms, which might blend social, commerce, and financial services, fall under the regulatory framework the moment they introduce a specific payment function.

A key risk arises when a super app includes features such as:

Triggering Feature	Description
Stored-Value Digital Wallet	A feature where users can hold a balance within the app.
P2P Transfer Function	A function that allows users to send funds directly to one another through the app.

Even if these payment features are only one component of a much larger platform, that specific function is regulated as an NCP facility. This creates a layered compliance challenge, as the payment component of the app will trigger the requirement to hold an AFSL, regardless of the app’s other non-financial features.

Conclusion

Fintech platforms that enable digital payments, such as wallets and transfer services, are generally considered NCP facilities under the Corporations Act 2001 (Cth). Since an NCP facility is a regulated financial product, any entity operating one is typically required to hold an AFSL unless a specific exemption applies.

Navigating the complexities of these requirements demand specialised guidance to ensure your fintech is built on a foundation of robust AFSL compliance and regulation. To leverage our trusted expertise and turn your regulatory challenges into strategic opportunities, contact the AFSL application lawyers at AFSL House for a consultation today.

Frequently Asked Questions (FAQ)