Australian Payments Network’s AusPayNet Summit 2024 delivered a payments punch in Sydney in December 2024. Colin Baines was in the room. Here’s his take on the Summit’s hottest topics.
A year closer to the scheduled 2030 retirement of Australia’s legacy account-to-account payments workhorse — BECS — announced by the Governor of the Reserve Bank of Australia at last year's event, the AusPayNet Summit 2024 served as a critical juncture for the Australian payments industry.
At Zepto, we have a crystal clear view of what the modernisation of account-to-account (A2A) payments looks like. The Assistant Governor's speech at the Summit resonated deeply, highlighting the challenges and opportunities that lie ahead as we transition to a more dynamic and efficient payments ecosystem.
While we can see the way ahead, the Assistant Governor shared feedback the RBA has received regarding the migration from BECS to the modern, always-on and real-time rails of Australia’s New Payments Platform (NPP) over the past year. Ultimately, the Assistant Governor boiled the emerging issue down to this:
“My colleagues at the RBA and on the Payments System Board see the central challenge as this – industry is yet to arrive at a shared vision of the desired features of account-to-account payments in Australia. This is a foundational issue. While the point of departure has been announced by industry – transitioning from BECS as we know it – establishing a common vision of the features underpinning a desired end state will be essential if a program of this scale is to succeed. Once a consensus has emerged here, a roadmap with milestones can guide industry progress toward the ultimate objective.”
Brad Jones
Assistant Governor (Financial System) Reserve Bank of Australia
MODERNISING A2A PAYMENTS: A SHARED JOURNEY
Treasury's enthusiasm for A2A innovation is encouraging. Replacing the limitations of BECS, with its business-day-only operations, slow settlement times and minimal data capacity, is long overdue. The NPP offers a clear path forward, enhancing the consumer experience through automation and richer data exchange.
- Improved Consumer Experience: The NPP empowers businesses to provide a more seamless and convenient payment experience for their customers. Faster transaction times and richer data enable businesses to automate reconciliation processes, reduce manual intervention, and improve cash flow.
- Enhanced Business Efficiency: By streamlining payment operations, businesses can free up valuable resources and focus on core activities. The NPP facilitates faster and more efficient payments for a range of use cases, including payroll, supplier payments, and bill payments.
- Increased Competition: The NPP fosters a more competitive environment by enabling new entrants and innovative solutions to challenge traditional payment methods. This increased competition can drive down costs for businesses and offer consumers more choice and flexibility.
However, transitioning to a new system presents its own set of challenges. Account reach remains an ongoing concern, and ensuring businesses and consumers are easily accessible through the platform is paramount. The framework described by Katrina Stuart (General Manager Business Payments, Australian Payment Plus) during The Future of Account-to-Account Payments in Australia panel discussion was compelling. Katrina posited that focusing on capability, capacity, reach, and resilience provides an excellent roadmap for navigating these challenges.
- Expanding Reach: Continued efforts are needed to ensure widespread adoption of the NPP across all sectors of the economy. This includes educating businesses and consumers about the benefits of the NPP and addressing any remaining barriers to entry.
- Building Resilience: Maintaining the reliability and security of the NPP is critical to its long-term success. Robust risk management frameworks and ongoing investment in cybersecurity are essential to ensure the platform remains resilient in the face of evolving threats.
The recent agreement on bulk payments and the adoption of ISO messaging standards are positive steps towards interoperability and streamlined operations. Additionally, ongoing work on transaction recoverability builds confidence in the NPP's reliability.
ADDRESSING PAYMENT COSTS FOR BUSINESSES
High interchange and scheme fees continue to burden merchants, impacting their profitability and competitiveness. The need for benchmarking and increased competition within payment networks is crucial to drive costs down. Ultimately, greater efficiency throughout the system should translate into savings for both businesses and consumers.
- Interchange Fee Reform: Continued efforts are needed to reform interchange fees, ensuring they are fair and reflect the true costs of processing transactions. This may involve exploring alternative pricing models and promoting greater transparency in the market.
- Scheme Fee Competition: Fostering competition among payment schemes can help to drive down costs and offer businesses more choice. This may involve exploring regulatory changes to encourage innovation and entry into the market.
- Improving Upstream Efficiency: Reducing inefficiencies in the payments ecosystem, such as manual processes and redundant checks, can help to lower costs for all stakeholders.
Transparency is another key area for improvement. Increased visibility into the costs associated with transactions benefits everyone. Addressing surcharging practices, through better regulation and transparency, will ensure consumers are aware of true costs and facilitate informed choices. However, careful consideration is needed to strike the right balance, ensuring that merchants can recover their costs while avoiding excessive burdens on consumers.
EXPLORING THE FUTURE OF DIGITAL MONEY
The Reserve Bank of Australia's focus on the future of money is a welcome development. While the exploration of a Central Bank Digital Currency (CBDC) is ongoing, a cost-benefit analysis suggests that exploring wholesale digital money, such as stablecoins and tokenised assets, may prove more immediately useful.
- Tokenisation and Wholesale Payments: Tokenisation can play a significant role in enhancing the efficiency and security of wholesale payments and settlements. By representing assets digitally, tokenisation can reduce operational risks, improve settlement times, and facilitate cross-border transactions more seamlessly.
- Benefits of Tokenisation:
- Increased Efficiency: Automates many manual processes, reducing operational costs and improving settlement times.
- Enhanced Security: Reduces the risk of fraud and counterfeiting by making it more difficult to replicate or counterfeit digital assets.
- Improved Interoperability: Facilitates cross-border transactions and interoperability between different financial systems.
- New Opportunities: Enables the development of innovative financial products and services, such as programmable money and decentralised finance (DeFi) applications.
It's also refreshing to see continued support for cash.
While digital solutions gain traction, there remains a clear demand for physical currency in certain segments of the market. Additionally, the upcoming consumer payments survey in 2025 presents a valuable opportunity to gain further insights into consumer preferences and tailor payment solutions accordingly.
The AusPayNet Summit provided a valuable platform for industry leaders and stakeholders to come together and discuss the future of Australia's payments landscape. Here at Zepto, we're committed to playing a leading role in this transformation, delivering innovative solutions that empower businesses and consumers alike. We believe that by embracing the opportunities presented by the NPP, fostering collaboration across the industry, and embracing emerging technologies like tokenisation, we can build a more efficient, inclusive, and resilient payments ecosystem for Australia.
The author
