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Australia’s New
Payments Platform
Opportunities for Innovation
By Mark Hume-Cook
APRIL 2015
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disclosure of this information will be considered
Australia’s
new
payment
platform
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© Copyright Odecee Pty Ltd 2014 (ACN 126 302 869)
2
The Australian Payments Industry has long had the benefit of a
robust and mature set of national payment clearing and
settlement systems, provided and governed by the Reserve Bank
INTRODUCTION
of Australia (RBA) and the Australian Payments Clearing
Association (APCA). These systems facilitate the movement of
money via ͆payment instructions͇ and the eventual exchange of
value between financial institutions in Australia. It is these payment and settlement systems
that provide the pistons of the engine powering Australia̓s economy.
The maturity of these systems means they provide a widely used and very reliable
service; at the same time, the very fact that the technology underlying them was at the
forefront of global competition in past decades means the Payments Industry is now
suffering from this maturity. In the decades since the systems were first implemented,
global standards have evolved, consumer and business expectations have emerged
above the conceptual line the systems can attain, and threats of disruption are forcing
industry participants to consider both self-preservation and cooperative innovation.
Thus, the second decade of the twenty-first century provides motivation and incentive for the
Australian Payments Industry to create, promote and operate a new platform for electronic
payments. The goals of this New Payments Platform are quite specific, and the achievement
of these goals will open the payments landscape to a host of service providers and innovators,
providing opportunities to participate in the proposal and provision of new services for
business and consumer segments.
This paper provides an overview of what the New Payments Platform (NPP) is, and what it
proposes to achieve. The various players in the creation and governance of the NPP are
introduced, and some opinion on the implications for the Australian payments landscape is
offered. Finally, it is proposed that a rich field of opportunity is now to be presented to third
parties in the industry, and potential avenues for innovation are discussed.
Australia’s new payment platform
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WHAT IS THE NEW PAYMENTS PLATFORM AND WHY
NEW PAYMENTS
PLATFORM
DO WE NEED IT?
To begin with, it may be worthwhile to offer an overview of the “old
payments platform” - an understanding of the current state may
well assist in developing an appreciation for the target state.
The movement of monetary value through the Australian payments landscape as at early
2015 occurs via one of five systems, or “streams”, all of which are governed by the
Australian Payments Clearing Association (APCA). These streams could be described as
the five pistons of the engine underlying the Australian economy. The five systems or
streams are known by a number of names, acronyms and initialisms. These are presented
as follows:
Table 1 - Clearing Systems (Streams) in the Australian Payments Landscape
When a transaction is executed, the payment part of the transaction is conducted and
transmitted using whichever of the above systems is designated as the carrier of the
chosen payment instrument. These systems provide the payment clearing mechanism for
Australia’s new payment platform
4
the payment element of a transaction. ‘Settlement’ of the payment refers to the actual
transfer of ownership of monetary value by the financial institutions; this generally takes
place after the fact, and is operated and governed by the Reserve Bank of Australia (RBA).
The following diagram shows the separation of payment types through the various clearing
systems and how they interact with the RBA settlement process.
Figure 1 – Clearing and Settlement of Australian Payments*
* Please note that Figure 1 presents a simplified representation of clearing and settlement.
In actuality, there are many more information flows than are shown here.
Diagram 1 shows that while clearing (which is the exchange of payment instructions)
occurs via a number of different mechanisms, the settlement of exchanged value typically
goes through the RBA settlement environment. It is worth making note of two significant
points here.
Australia’s new payment platform
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1.
Financial Institutions have accounts at the RBA known as Exchange Settlement
Accounts (ESAs). The RBA is effectively the banks’ bank. Individuals, businesses
and governments have what can generically be named “product accounts” with the
Financial Institutions. Value is necessarily settled between ESAs before it is settled
to our product accounts; it is only after value is settled to our account that we get to
make our own use of that value.
2.
Two types of settlement are used between ESAs:
•
Deferred Net Settlement – some time after the clearing instruction is received, the
value is transferred across ESAs. Time periods in the deferred net settlement will
vary from CS to CS.
•
Real Time Gross Settlement – ESAs are debited and credited at the time of clearing.
Most of the time, product account holders will participate in a payment method that uses
deferred net settlement. This is why it takes a while for the receiver of value to get full
access it - the banks don’t get their value for some time, and we don’t
get access to it until some time after that.
The Australian Payments Clearing Association is overseeing the
design, implementation and use of the New Payments Platform.
THE NEW
PAYMENTS
PLATFORM
One significant goal of that platform is to increase the efficiency
of payments, thus reducing the amount of time between when an
electronic payment is sent and when the receiver finally gets access to
the value. The goal is to make payments near real time - to reduce the overall time
between payment send and value receipt to less than one minute. It must be noted that to
achieve this goal, two particular elements of the solution are necessary:
1.
The use of real time gross settlement across financial institutions for this clearing
system
2. The financial institutions to ensure that posting to product accounts is done in a
timely manner
To address the first point, the RBA is undertaking to provide a Fast Settlement Service for
the NPP to utilise. This will allow settlement to occur “line-by-line” as clearing instructions
Australia’s new payment platform
6
get processed, rather than requiring human input to settle based on the contents of a batch
file.
The second point is left as a challenge for the various financial institutions to address, and
may well be a defining point in terms of differentiation and competition.
The New Payments Platform will consist of “Basic Infrastructure” (BI) and “Overlay
Services”.
It has so far been articulated that the BI will consist of the following
components:
•
Networking services between platform participants
•
A switch or routing service
•
An addressing service
Towards the end of 2014, it was publicly announced that SWIFT would provide the
networking services and switching service, whilst Fiserv would be contracted to undertake
the delivery of the addressing service.
Overlay services are services that will use the BI to deliver functional value to the users of
the NPP. It is at this level that the industry is invited to contribute creativity and innovation.
To date, only one overlay service has been proposed: the Initial Convenience Service (ICS).
The ICS will be the service that permits the near real time funds availability; that is, the
fundamental message set that will send a payment instruction from one customer’s
financial institution to another. The ICS will be delivered as part of the initial offering, and a
service provider will be selected by the NPP governing body to implement this first service.
Australia’s new payment platform
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Figure 2 – Overlay Services and the NPP
As at March 2015, little is known regarding the interfaces to the NPP or its implementation.
One assumption is that the messaging used for the internal implementation of the overlay
services will be ISO20022 (variously pronounced “ISO Two Hundred Twenty-Two”, “ISO Two
Double-Oh Double-Two”, “ISO Twenty Thousand and Twenty-Two”). ISO20022 is a global
standard for financial services messaging, and is gaining broader acceptance across and
within geographic and political boundaries worldwide.
Development of overlay services may involve utilising and manipulating the internal
message set directly, or it may involve developing or controlling external stimuli that either
initiate messages within the BI, or are created as a result of messages from within the BI.
Will the NPP be a new clearing stream? Will it replace one or more of the current clearing
streams or systems?
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8
APCA has been quite explicit in stating that the NPP will be a new system, and will not be
an upgrade or extension of any existing systems. However, it is not yet clear whether the
NPP will be seen as a 6th clearing stream, or whether it will augment or replace one or
more of the other clearing streams.
As will be discussed later in this paper, it is clear that the introduction of this new platform
will displace some of the volume of the current clearing systems. In theory, the introduction
of the NPP could facilitate the retirement of the DE environment, but the intention of the
industry and regulator - where support of long-standing processes and
procedures is seen to be extremely important - has not been yet
revealed.
WHY DO WE
NEED NPP?
The current payment clearing and settlement environment serves
most of us mostly well, if we consider historical expectations and
what we have become used to.
In 2012 – as part of the Strategic Review of Innovation in the Payments System - the
Payment Systems Board of the RBA identified “gaps” in the Australian payments system
that needed to be addressed in order to continue to meet the needs of users over the
medium term.
The pace of commerce, as well as the pace of social interaction, has been enabled by
disruptive forces that allow commercial and social activity to approach the speed of some
of the most dynamic industrial environments. Demands on availability and demands for
richer information are emerging. The identified gaps were perceived as barriers to being
able to meet emerging needs of consumers and businesses.
The gaps identified by the RBA in 2012 can be articulated as follows:
•
The time taken for electronic transmission of monetary value from party to party is
too long
•
Electronic transmission of monetary value out of hours is not possible
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9
•
Electronic transmission of substantial and meaningful data to accompany
monetary value is not possible
•
The addresses currently used for electronic transmission of monetary value (BSB +
Bank Account Number) are not ideal for user convenience
We should note the role of the RBA in this landscape. Tony Richards, Head of Payment
Policy at the RBA told attendees at the Chicago Payments Symposium in September 2014:
“The Reserve Bank … is the principal regulator of the Australian payments system… The
Bank has powers with respect to both payment systems and clearing and settlement
facilities. In the case of payment systems, it has the power to ‘designate’ a system as being
subject to regulation if it is in the public interest to do so. It can then impose an access
regime for any designated system or set standards that apply to participants in that
system... (the Payments System Board will) only use its powers where it judges it to be
necessary to ensure stability, manage risk, or promote efficiency or competition, or where
the industry has not been able to reach an acceptable self- or co-regulatory solution”.
The RBA has also pointed out that if financial institutions do not provide customers with the
services they want, other players are bound to innovate in that space in order to satisfy the
market.
The RBA can therefore induce industry behaviour based on threat of intervention for public
interest. It can provide motivation for compliance (fear of increased competition), or
disincentive for non-compliance (potentially financial penalties for non-participation).
With the providers of payment services for customers in this landscape, the RBA has
decided to foster “coopetition” (cooperative competition) in the industry, drawing on the
attraction of innovation in a competitive marketplace while simultaneously requiring the
competitors to establish an initially level playing field. So, in order to achieve its strategic
objectives, the regulator induces desirable behaviour in the industry participants.
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There are a number of interested parties already playing in this
WHO ARE THE
PLAYERS IN THE
NPP?
space. I attempt to explain their positions and relevance in the
following table.
Table 2 - Interested Parties in the NPP
* NPP Australia Limited is a newly established Australian Public Company, registered with
ASIC as of August 2014. The entity is effectively a joint venture company comprised of 12
Australian financial institutions:
•
ANZ
•
Australian Settlements Ltd
•
Bendigo and Adelaide Bank
•
Citigroup
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•
Commonwealth Bank of Australia
•
Cuscal
•
Indue
•
ING Bank (Australia)
•
Macquarie Bank
•
National Australia Bank
•
RBA
•
Westpac Banking Corporation
Throughout the earlier stages of the definition of the platform, five other financial
institutions were involved, but have since retracted their enthusiasm and commitment to
the venture. Those financial institutions are as follows:
•
Bank of Queensland
•
Suncorp
•
PayPal
•
Bank of America Merrill Lynch
•
HSBC
Whilst the “founding members” of NPP Australia listed above hold a strong stake in the
venture, it must be pointed out that this is not the exclusive list of financial institutions that
will eventually participate in the platform usage. The intent of the PSB, APCA and the APC
is that all Australian financial institutions will connect to the platform, either directly or via
an enabling agent or aggregator. This will ensure absolute
WHAT ARE THE
IMPLICATIONS
OF THE NPP ON
THE AUSTRALIAN
PAYMENTS
LANDSCAPE?
penetration of the infrastructure to the marketplace.
The introduction of a significant piece of infrastructure and its
associated services, governance, marketing and hype is expected
to impact the payments landscape in no small fashion. As can be
seen from the previous section and the description of the relevant
stakeholders, there is a significant amount of governance and oversight involved.
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IMMEDIATE AND OBVIOUS IMPLICATIONS
Faster payments 24/7
Addressing the strategic objectives of the regulator will, in itself, impact consumers and
businesses using payments services. A successful and complete implementation will see
electronic transfer of monetary value at a faster pace and at times outside standard
banking hours. This immediately adds convenience to payers and payees.
Richer payment information
A successful and complete implementation will see richer payment information
accompany payments transactions. The depth of this richness is not yet fully articulated,
but when we consider the current state (a maximum of 18 alphanumeric characters in
Direct Entry payments), a significant increase in utility will not be difficult to achieve. We
can imagine that both structured and unstructured information may be available to payers
and payees, and that perhaps even encoded documents may be able to be transmitted.
Structured information will facilitate an increased level of straight-through processing for
businesses, while unstructured information will allow for consumer-to-consumer (personto-person, peer-to-peer or P2P) flexibility. The ability to attach encoded documents will
bring a significant benefit to end users, but will introduce both technical complexity and
issues in “appropriate use” of document transmission.
Easier addressing of payments
The final stated strategic objective of the RBA in terms of the NPP is delivering a simpler
addressing mechanism for payments. At present, payments are “addressed” to the payee’s
bank product account. In order for a payment to be delivered successfully to the intended
recipient, the initiator of the payment must have access to the receiver’s BSB and account
number, which can be a string of up to 16 characters (coincidentally matching the size of a
credit card number).
Australia’s new payment platform
13
Bank account owners rarely commit their own “payment address” to memory, and most do
not carry a record of the address on their person. Further, many consumers are reluctant to
offer others their bank account details, being extremely conscious of security warnings
regarding scams, phishing and other fraud activity. Thus, it can be difficult for a payer to
get a payee’s payment address in the first instance. Once the payment address is
obtained, the “uncommon format” of the address can lead to transposition errors due to
mistyping.
The lack of an easily accessible payment address, combined with the complex structure of
the address, means the current payment addressing mechanism does not lend itself to
customer convenience. The stated objective of the NPP to provide a simpler addressing
mechanism means offering customers the opportunity to send payment instructions to a
more readily available address that has a simpler structure.
Candidate alternative address types have been proposed, which have varying perceived
benefits and risks. For example, it has been proposed that a payment could be “sent to an
email address”, or a payment could be “sent to a phone number”.
Such language has the potential to produce misconception in the customer, and this risk
will need to be managed by stakeholders. It should be stressed that “sending a payment to
an email address” will not (necessarily) result in your Google wallet being credited, or your
Hotmail account being in credit. Sending a payment to your phone number will not
(necessarily) reduce your liability to your telecommunications provider. These address
types will merely be used as an alias for, or an abstraction of, your plain old BSB plus bank
account number - a “lookup-key” to find your bank details.
The concept of alternative addresses has already been presented to the payments industry
by early innovators with mechanisms to notify intended recipients to “come and collect” a
payment from one of their customers.
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It is important to note here that the movement of monetary value for the foreseeable future
will ultimately be from bank account to bank account, and disintermediation of financial
institutions is not a palatable or feasible suggestion.
FURTHER IMPLICATIONS
Financial institution obligations
With financial institutions now offering faster, easier electronic payments with more
information, customer expectations will likely alter. At the outset, financial institutions will
be expected to credit product accounts in near real time. Some financial institutions are
already approaching such a capability when processing “on us” payments. An “on us”
payment is when a customer of Bank X sends an electronic payment and the recipient is
also a customer of Bank X. Bank X systems realise the payment does not have to go
through industry clearing and settlement, so the payment can readily be processed using
inter-account posting. The speed of such payments can be almost instantaneous; such a
service may now be expected by customers when receiving any payment.
In the event of mistaken payments (e.g. payments sent to the incorrect address), financial
institutions will need to have a mechanism for recovery. It is difficult to imagine that
offering speedier payments and simpler addressing will result in the eradication of
mistaken payments, and an obligation will exist to assist in the remediation of resulting
disputes.
Further operational obligations of the financial institutions may extend to a greater depth
of customer reporting offerings, extended channel access and greater ease-of-use, as well
as added value in terms of payment information management.
With the provision of a new service enabled by new national infrastructure, it is to be
expected that financial institutions will pass on the costs of establishment and operation to
the customers and end users of the platform. The financial model is not yet finalised at the
time of publication of this paper, but it only makes good financial sense that the model will
Australia’s new payment platform
15
be expected to contribute to an ongoing sustainable revenue for the owners and operators.
It remains to be seen how the costs will be recouped, whether the community at large
deems the initial model “fair” and whether that model will sustain regulated readjustment.
As has been mentioned, the pace of commerce and the pace of social interaction has
increased with the advent of ubiquitous access to “devices”. The expected increases in
speed and ease of payments provided by the NPP has the potential to fuel the rate of
increase of that pace. Accompanying pace there may be elements of risk - threats aimed
at exploiting the rapidity and ease of making payments. The financial institutions and other
stakeholders will be responsible for addressing the mitigation of such risks.
Changing payments behaviour – consumers and businesses
Once the NPP is established and adopted we might expect to see some alterations in
payments behaviour in the Australian populace. This does not necessarily imply more or
less monetary value changing hands, but rather a change in the way we as a nation initiate
payments and process received payments.
Some observations can be made regarding recent innovations in the payment landscape
that appear to have altered the payments behaviour of Australians.
•
Contactless payments such as Visa payWave and MasterCard Paypass have seen
the speed of credit and debit card payments at point of sale increase, with a
corresponding increase in the use of credit or debit card as a method of payment.
•
The introduction of “Direct Charging” for ATM fees (where cardholders are charged
by ATM operators directly) resulted in a 25% proportional decrease in the overall
number of ATM transactions that were charged a fee between 2010 and 2013. This
was attributable to cardholders using “home network” ATMs or point of sale cash
withdrawals in preference to “foreign” ATMs†. This was not, strictly speaking,
innovation; it was industry self-regulation responding to the threat of RBA
regulation. Nonetheless, it shows how behaviour can change in response to a small
change in the landscape.
†
http://www.rba.gov.au/speeches/2014/sp-so-040614.html
!
Australia’s new payment platform
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Contrary to this, it may be interesting to note that other areas of innovation have not had
the impact that may have been designed or expected. Technology innovations such as
“near-field communications” (NFC) and closed-loop environments (e.g. electronic wallets or
mobile wallets) have not significantly impacted payments behaviour or displaced
significant payments revenues.
An observation of behavioural trends involving cash and cards may be beneficial.
Cash as % of Payments <$10k
Figure 3- Declining Use of Cash (Source: RBA)
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Cash used to be ‘King’ in the payments landscape. RBA payment statistics indicate
that in 2013 (the most recent comprehensive payments behaviour survey), cash
made up 47% of the number of payments, but only 18% of the value of payments
(where individual payment value is less than $10,000). In 2007, these values were
69% and 38%, respectively2. This tells us that cash is increasingly used mostly for
low value payments.
Those same statistics point to debit and credit cards
displacing the majority of the King’s share, as indicated in Figure 4.
Displacement of Cash Payments 2010 - 2013
Figure 4 - Displacement of Cash by Cards (Source: RBA
.
Cards can generally be used for purchases at the point of sale (with contactless
driving greater use) as well as remotely (e.g. internet shopping). Previous consumer
reluctance to the “card-not-present” payment method is being overcome with
advances in security and consumer protection by the card schemes.
Some readers may express surprise at the mention of cheques in a whitepaper such
as this. Payment statistics from the RBA indicate that while cheque use continues to
diminish, that use appears to have a very long tail. Payment by cheque is the most
costly method of payment by instance, involves the longest clearing times, and is
2
!
http://www.rba.gov.au/publications/rdp/2014/pdf/rdp2014-05.pdf
Australia’s new payment platform
18
one of the least secure methods of payment. Nonetheless, the payment method has
a dedicated collection of entrenched consumer users, and some business payment
scenarios still cannot be executed in the absence of a paper instrument. While
much of the entrenched consumer users remain resistant to cheque abandonment
primarily due to a given demographic, the relevant business scenarios can be seen
to be constrained to a large degree by the need to transmit printed material along
with the payment instrument. Should the NPP offer a credible alternative to the
printer and a licked stamp, it may assist in hastening the demise of the use of
cheques.
Displacement of payment revenue
The selection of a given payment method is influenced by many factors. Such
factors include:
•
acceptance of the method by the payee
•
the ease of use by the payer
•
the level of reserves available to the payer to fund the payment method
•
the associated costs of the payment method
•
the speed with which the settlement can be conducted
•
the security associated with the payment method
Most of these factors have demonstrated a level of dynamism over the recent
history of the Australian payments system. The result of this is a shifting set of
statistics with respect to time. Where the majority of payment activity was once
concentrated in two or three payment methods, the activity has been displaced and
other payment methods have enjoyed greater popularity. Such displacement is
occurring right now, as the factors above bring the choice of payment method
towards technology-centred methods.
Some questions that payment initiators are likely to ask themselves when choosing
a payment method are as follows:
•
How urgent is it that the payee receives settlement right now?
•
Am I using “my own funds”, or am I using credit that I must repay?
•
What other fees and charges is this payment method going to attract?
•
How likely is it that this payment will result in a mistake of some sort?
•
How will I know if everything went right?
Australia’s new payment platform
19
•
Can anybody get hold of personal, private or secret details as I make this
payment?
The changing answers to these questions will affect how people pay each other,
and therefore where displacement of activity will occur. Displacement of activity
affects revenue attributable to that activity, so financial institutions will be keen to
follow displacement trends and refine models where necessary.
Current
perspectives seem to indicate that, by design, the NPP is heading to displace activity
from the following payment methods:
•
Cash
•
Cheque
•
Direct Entry (Pay Anyone)
•
BPAY
•
Debit cards
•
Credit Cards
This indicates that the significant impacts on the Australian payments landscape
are likely to be in terms of consumer and business behaviour, on changes in revenue
for financial institutions across various payment products, and
perhaps a change in the revenue for card schemes (e.g. Visa,
Mastercard).
Earlier sections of this paper have described where the NPP
OPPORTUNITIES
FOR INNOVATION
will fit in the Australian payments landscape, who the
stakeholders are, and what the implications of a successful
and complete implementation may be.
The strategic objectives of the RBA and the initial scope of the NPP are necessarily
limited. Both are limited to delivering a piece of national infrastructure, bringing with
it an initial utility service that will benefit many parties. A stated responsibility of the
PSB is “promoting competition in the market for payment services, consistent with
the overall stability of the financial system”.
It is in the satisfaction of this
responsibility that numerous third parties are encouraged to bring innovation to the
platform.
To begin with, we might consider slicing innovation opportunities along the following
axes:
Australia’s new payment platform
20
•
Innovation in the core of the infrastructure
•
Innovation in the initiation of payments
•
Innovation in the processing of received payments
We might then consider two further axes along which innovation might take
place:
•
Within financial institution environments
•
External to financial institution environments
Innovation in the core of the infrastructure
The initial delivery of the NPP is expected to build out a core set of messaging that
will deliver the capability to carry the Initial Convenience Service. No other Overlay
Services have yet been publicly discussed; no open speculation on this matter has
yet been facilitated. The breadth and depth of what might be possible in this space
is therefore incalculable.
Without insight as to what might be possible in terms of other Overlay Services, it is
not possible to suggest the initial delivery of the NPP will include a broad enough
message set for our complete purposes.
Our forays into this area may bring
opportunity to suggest expansion or enhancement to the core message set of the
infrastructure. This would be innovation at a fundamental level, opening yet further
opportunities for innovation and competition.
Innovation in the initiation of payments
From the outside of the “Payments Industry Box”, the business of payments may
seem to many simply about the sending of monetary value to another party. In
catering to the needs of the masses outside, a direction for innovation may present
itself as:
Simplifying, even further, the way we send money
Such a direction may involve racing to reduce the number of clicks/taps to send a
sum, building simpler or more intuitive methods of attaching information to a
payment, or incorporating payment origination in the threads of our evolving social
fabric.
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21
Innovation in the processing of received payments
For others outside of the “Payments Industry Box”, (e.g. merchants, billers, artisans
and tradespeople) the business of payments may seem to be simply about the
receiving of monetary value from another party. Another direction for innovation
may present itself as:
Further enabling straight-through payments processing with rich payment information
Business and corporate users may identify opportunities to integrate with billing
systems, book-keeping/ledger systems, ordering systems and CRM/ERP systems.
Innovation within financial institutions’ environments
The financial institutions’ environments are expected to be amongst the early
adopters of some form of innovative stance or other. These players are to be
expected to drive the behaviours affecting the adoption of the platform, thereby
displacing their own revenues from other payment methods. Some areas that will
emerge presenting opportunity for innovation are:
͌
Bank payment apps and applications
͌
͆Other channel͇ innovation
͌
Routing of payments, timing of payments, reporting on payments
͌
Influencing the core message set
͌
Digital Identity and Payments
Innovation external to financial institutions’ environments
The financial institutions will be the first parties of privilege to utilise the NPP. The
‘shop’ will initially be closed to other access, and it is yet unclear as to which other
parties might ever get access to the infrastructure directly.
As has been noted above, the movement of monetary value for the foreseeable
future will ultimately be from bank account to bank account, and so in this
environment we would only ever expect to see an entity that will:
•
Invoke or create some stimulus to move monetary value between bank
accounts
Australia’s new payment platform
22
•
Respond to some event that has occurred as a result of monetary value
moving between bank accounts
Parties seeking avenues of innovation separately to and distinct from financial
institutions may seek to direct efforts in the areas of:
•
Initiation of payments (e.g. new devices, new technology “device bridges”,
social media integration)
•
Processing of received payments separate to financial-institution-provided
services
•
Focus on industry verticals and product or service niches
•
Focus on demographic horizontals and product or service niches
•
Digital identity and payments
However, innovation in payments may still seek to establish mechanisms aimed at
disintermediation of the financial institutions. Payments outside of RBA regulatory
authority including closed loop systems (e.g. mobile wallets, loyalty or local
marketplace schemes) and digital currencies are two such mechanisms. We may
not see such players participating in the platform, except where entry or exit of value
from/to local currency value is executed.
Opportunities for influence
As yet, no extended end-user stakeholder group has been identified or formulated.
This is not an unreasonable situation given the current state of progress on the
program, and the fact that very little has been communicated to the wider audience
regarding the details of the design and operation of the platform.
We would expect broader aspects of governance to emerge whereby requests for
scope alteration, access to facility and reasonable changes to operation would be
entertained. As such aspects of governance are revealed, it may be worth
considering formulating, facilitating, sponsoring and/or
participating in something akin to a “product development
forum” or “industry advocacy group.”
The New Payments Platform is coming to Australia this
Conclusion
Australia’s new payment platform
decade, and is set to bring efficiency and information to
23
the electronic payments experience for consumers and businesses. Much detail is
yet to be released regarding the platform and the program, and so at present we
can only begin to speculate on the full depth and breadth of the opportunities that
will be presented to financial institutions and payment industry third parties. What is
known at present only allows us to begin to position ourselves for the (level) green
(playing) field ahead of us.
The regulators and the financial institutions have completed a sizeable piece of
work in this area, ostensibly driven by strategic goals of the regulator. The work to
date has been around the architecture and governance of the platform; another
sizeable piece of work in the development and launch of the platform is to be
undertaken. Somewhere along the road in this current piece of work, we would like
to see details begin to emerge as to where and how we can contribute to the
evolution of this industry. The commencement of our contributions in the form of
innovative developments will assist the regulator’s stated goal of “promoting
competition in the market for payment services, consistent with the overall stability
of the financial system”.
The increasing penetration of mobile devices filling our pockets and handbags sees
a growing focus on mobile apps to assist us in our daily lives. Most of the behaviour
in payments today involves the physical action of ‘reaching for our wallet’, ‘reaching
for our purse’, or even ‘reaching for the chequebook’. Future physical behaviour will
likely see us ‘reaching for a device’, which will potentially see an instruction pass
through the NPP.
Australia’s new payment platform