CEO’s Corner

Year in Review: FY24

The end of FY24 seems an appropriate time to review our performance against our strategic goals. 
 

Transformation

In leading the transformation of Australian payments to drive efficiency, innovation and choice:

• On cheques, we have worked with Members and Government on a simplified, improved proposal for the orderly wind down of cheques with coordination of activities and communications to minimise disruption for end users. We will be engaging with the ACCC to ensure compliance with competition laws and we expect more on this to be publicly announced by the Government soon.
   
• On BECS, we announced the target end-date of June 2030 for the BECS Framework and have started gathering information and insights on industry readiness for the migration away from BECS. In so doing, we recognise that a successful decommissioning of BECS may benefit from industry coordination, designed in a way that ensures compliance with competition laws. AusPayNet is assessing the benefits and potential timing of coordination and will have more to share on this by the end of 2024.
   
• The COIN migration continues to make good progress: 71 per cent of the transition to the new COIN is now complete, with the remainder planned for completion in mid-September.
   
• Progress on ISO 20022 migration also continues, with Members scheduled to fully migrate to the new message format by the end of 2024, a year ahead of the global deadline. The program has also demonstrated global leadership on ISO 20022 harmonisation, which is scheduled for HVCS and cross-border payments by the end of 2025, two years ahead of the global target. AusPayNet is also assisting AP+ with harmonisation.
   
• On AES, work on the technical blueprint and migration approach is progressing, with the migration to begin next calendar year (subject to ACCC approval). We are proud to say that Australia is now seen as a leading jurisdiction in this upgrade of the card payments system to mitigate threats from quantum computing.

Standards

On 22 December 2023, the RBA issued final Expectations for the Tokenisation of Payments Cards and Storage of Primary Account Numbers, aimed at improving security, efficiency and competition for online card payments. The RBA’s Payments System Board requested that AusPayNet coordinate the industry’s response to meeting these Expectations, including leading the drafting of any new standards that may be required. AusPayNet is using this request as a test case for the development of technical standards, prior to any authorisation as an Authorised Standards Setting Body (ASSB) and continuing to set and enforce industry standards for a safe, reliable and effective payments system.
 

Insights

In terms of AusPayNet delivering strategic insights to its Members and key stakeholders:

• The policy space remained incredibly active. We continue to have strong relationships with Government (Commonwealth and State), RBA and relevant regulators, and made submissions to a myriad of consultations, leveraging input from Members, including the second round of payments licensing consultation, industry scam codes, and the future of the cheques system.
   
• In the events space, we delivered our 2023 Annual Summit, our largest and most successful to date, and introduced both a member webinar series and a Melbourne Member event.
   
• I personally spoke at Pay360 (UK), the BIS Innovation Summit (Switzerland), the Payments Canada Summit, PIPC (South Africa) and Global Fintech Fest (India).
   
• Our revamped Emerging Technology Experts Group published an industry point-of-view (POV) on sustainability in payments and has produced an industry POV on AI in payments, which will be released in the second half of the calendar year.

Update on payments reforms

AusPayNet continues to engage with regulators and Government stakeholders on the broad range of payments reforms currently underway, including the following consultations.

Response to the consultation on modernising Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime

In June, AusPayNet responded to the Attorney-General’s Department’s second consultation on modernising Australia’s AML/CTF regime. The AML/CTF regime is a critical part of Australia’s efforts to prevent criminals from receiving the proceeds of their illegal activity and to stop funds from falling into the hands of terrorist organisations. In line with AusPayNet’s commitment to working with Members, Government and other stakeholders to defend the payments system from economic crime, our submission welcomed the review of the AML/CTF regime to ensure that it remains clear, fit-for-purpose and meets international standards and best practice.

In line with our submission to the first consultation in June 2023, we expressed particular support for:

• Simplifying and modernising the AML/CTF regime, including by adopting a risk-based approach that would enable more effective identification and mitigation of ML/TF risks relevant to each business
   
• Clarifying the scope of services subject to AML/CTF regulation and considering greater alignment in definitions between the AML/CTF regime and Treasury’s proposed payment service provider (PSP) licensing framework
   
• Adopting further changes to the tipping-off provisions to better enable collaboration across the ecosystem to help facilitate the detection and disruption of economic crime
   
• Improving the efficiency and effectiveness of regulatory reporting frameworks, including by ensuring that regulators and law enforcement have the tools and resources required to effectively analyse and act on the intelligence acquired
   
• Futureproofing the regime by only including the overarching, principles-based obligations in the AML/CTF Act, supported by clear and comprehensive Rules and Guidance that help businesses better understand how to meet these obligations
   
• Ensuring that reporting entities are given sufficient time for effective implementation of any changes, given the significant technological and procedural uplift that is likely to be required.

We welcomed the additional information provided by the Department in the second consultation, although further detail will be required to fully understand and assess the scope and impact of some of the proposed changes. We therefore look forward to further engagement with the Department as additional detail on the proposed reforms, including the draft Bill and Rules, becomes available in the coming months.
 

Response to the Parliamentary Joint Committee on Law Enforcement’s Inquiry into the capability of law enforcement to respond to cybercrime

In July, AusPayNet made a submission to a Parliamentary inquiry into the capability of law enforcement to respond to cybercrime. Given AusPayNet’s remit and expertise, our submission focused on the key challenges and opportunities for law enforcement in countering cyber-enabled economic crime, particularly online scams, fraud, and money laundering, including:

• The importance of cross-agency coordination and public-private partnerships (such as AusPayNet’s Economic Crime Forum) in enhancing law enforcement's ability to detect and respond to cybercrime. We encouraged the Government to continue prioritising the removal of any barriers to appropriate information sharing arrangements, which are critical to providing law enforcement with quality intelligence leads across all areas of cyber-enabled crime
   
• The need for international collaboration to support law enforcement’s ability to effectively investigate and respond to cybercrime, since many criminal syndicates are located offshore
   
• Ongoing challenges related to the quality and availability of cybercrime intelligence, and the potential to significantly improve law enforcement's ability to identify and respond to cybercrime by addressing the current fragmentation of reporting channels, and improving the effectiveness of reporting processes
   
• The role of the financial sector in intercepting and recouping proceeds of cybercrime, including through initiatives such as the AFCX Fraud Reporting Exchange.

Authorised standards-setting body (ASSB) program update

On 23 May, the Payments System Board decided to adjust and clarify the RBA’s Tokenisation Expectations for the industry and endorsed AusPayNet to undertake further work to develop potential technical standards to support token portability. This was based on feedback from the Tokenisation Industry Working Group convened by AusPayNet.

AusPayNet has now convened the Tokenisation Standards Development Working Group (TSDWG) to support us in drafting a potential standard on the porting of tokens and PAN-related data either to or from a payment service provider. The TSDWG comprises 18 entities involved in the porting process, and the output of the TSDWG is expected to be presented for public consultation in Q4 2024.

Advanced Encryption Standard (AES) migration program update

Progress on Phase 1 (Initiation and Mobilisation) deliverables in 2024 for the program is tracking well, particularly in the Standards and Requirements, Migration Planning, and Industry Testing Working Groups. Delivery of the AES Technical Blueprint Handbook and Migration Strategy are tracking ahead and to schedule, respectively.

To provide further detail:

• The Migration Planning Working Group held their fifth meeting in July. Version 1.0 of the Migration Strategy has been released, following approval by the Issuers and Acquirers Forum (IAF)
   
• The Standards and Requirements Working Group (SRWG) held their sixth meeting in July
   
• The Industry Testing Working Group (ITWG) held their inaugural meeting in June.

Consultation with the IAF on a change of governance for the program and the establishment of an AES Migration Steering Committee (delegated from the Board) has commenced. Feedback is due from IAF Members in August.

Bulk Electronic Clearing System (BECS) update

As the custodians of the BECS Framework, AusPayNet is committed to ensuring that the transition away from the framework is managed responsibly, with no disruption to the efficient and secure flow of essential payments. To achieve this outcome, AusPayNet is leading several activities that have been categorised into three dimensions: 'control', 'collaborate', and 'coordinate'.
 

Control the future of the framework

AusPayNet will continually test the validity of the target end-date based on the industry’s progress on transitioning BECS use cases off the BECS Framework, and intends to provide an update on the target end-date for the framework to its Members and key stakeholders on a half-yearly basis.
 

Collaborate with industry

AusPayNet is collaborating with regulators and industry participants on a number of initiatives to facilitate the migration away from the BECS Framework. These include:

• Treasury’s engagement with relevant government agencies and other key users of BECS bulk payments on their needs and readiness to transition away from BECS
   
• The RBA’s risk assessment for the decommissioning of BECS, monitoring of NPP readiness (covering account reach, cost, capabilities for direct debit and bulk payments, capacity and reliability) and FSS readiness to take on BECS volumes, and Account-to-Account Pricing Study
   
• Initiatives or programs established by providers of modern alternatives to BECS for the migration of BECS use cases to their platforms
   
• BECS members’ own transition plans.
   

Coordinate the migration

AusPayNet recognises that a successful decommissioning of BECS may benefit from collaboration between industry participants (including those that may be considered competitors). As such, any potential coordination plan would need to be designed in a way that ensures compliance with competition laws (which, in some cases, is best achieved by seeking authorisation from the ACCC). AusPayNet is monitoring industry developments and continually assessing whether there might be a need for wider coordination (and ACCC authorisation, if appropriate).

Cross-border payments update

Interlinking fast payment systems

The evolution of cross-border payments in the ASEAN Region is rapidly occurring. The central banks and fast payment system operators of Malaysia, the Philippines, Singapore and Thailand, along with the Bank for International Settlements, have agreed to work towards Phase 4, the live implementation of Project Nexus. The Nexus platform will connect multiple domestic fast payment systems globally for cross-border payments. Moreover, the Reserve Bank of India and India’s fast payment system, Universal Payments Infrastructure (UPI), have also joined Phase 4. UPI is currently the world’s largest fast payment system. Other ASEAN members who are party to the Regional Payment Connectivity MoU (Brunei, Laos and Vietnam) will likely join Phase 4 at a later stage, while Indonesia is also an observer on the project.

When fully implemented, the Nexus platform will enhance cross-border payments in line with the G20 cross-border payments programme, which aims to deliver faster, cheaper, and more transparent and inclusive cross-border payments. Connectivity tests have also been successfully completed with the Eurosystem’s TARGET Instant Payment System (TIPS).
 

Technical assistance

The inaugural Pacific Banking Forum, hosted by the Australian and US governments, was held in Brisbane in July. It brought together Finance Ministers, Central Bank Governors, regulators, international financial institutions, multilateral development banks, policy makers, Financial Intelligence Units and commercial banks to discuss the critical decline in correspondent banking relationships that support the remittance, trade and investment flows into and out of the Pacific region.

All parties to the Forum agreed to work together to grow correspondent banking relationships in the Pacific region. Additionally, the parties agreed to promote coordination in operationalising AML/CTF frameworks, and to identify practical and innovative solutions to maintain access to and growth of correspondent banking relationships available to Pacific Island states. Significant commitments were put in place by the US, Australia, New Zealand, the World Bank, Asian Development Bank, and International Monetary Fund, as well as the private sector.
 

Cross-border payments

In July, the Financial Stability Board released a series of consultations related to its recommendations, which are designed to promote greater alignment in data frameworks related to cross-border payments, and consistency in the regulation and supervision of bank and non-bank PSPs. These reports take forward priority actions under the G20 Roadmap to address legal, supervisory and regulatory frictions in cross-border payments to help achieve the quantitative targets in 2027.

AusPayNet will coordinate responses from industry by 9 September 2024.

ISO 20022 migration update

Rob Magee, Program Director of the Australian ISO 20022 Industry Migration Program and Co-Chair of the High Value Payments Plus (HVPS+) group, recently penned an article for The Paypers, entitled ‘Enabling the evolution and interoperability of cross-border and domestic high-value ISO 20022 payments’. In this article, Rob highlights the important ongoing work to ensure that Financial Market Infrastructures around the world will be able to leverage the benefits and significant opportunities of the ISO 20022 messaging format as the standard continues to evolve. You can read the full article on The Paypers’ website.

For a high-level update on the progress of the ISO 20022 Industry Migration Program, please refer to our recently published issue of Migration Monitor on our website.

Economic crime update

Toby Evans, AusPayNet’s Head of Economic Crime, recently attended the inaugural Global Anti-Scam Summit in Brussels. The Summit challenged industries, governments, and law enforcement agencies to collaborate and find the ‘golden eggs’ to mitigate scams.

Toby participated in the Global State of Scams panel, chaired by Glen Prichard, from the United Nations Office on Drugs and Crime’s Chief of Crime and Money Laundering. The panel included representatives from Brazil, Nigeria, the Netherlands and Singapore.

In describing Australian trends, successes and challenges, Toby shared insights on the whole of ecosystem approach to mitigating scams through public-private partnerships, including the National Anti-Scam Centre, Economic Crime Forum, Open Intelligence Loop and the upcoming Scam Codes. Australia is the only country to observe an overall reduction in scams, and Toby outlined key initiatives, including stronger onboarding, risk-based friction, targeting mule accounts, telecommunications blocking, website takedowns, and recent action by law enforcement. He stressed the importance of expanding on the recent Communique and building global collaboration, specifically data sharing and disruption.

Toby also participated in a session on developing global best practices, and presented on Australian initiatives. Australia is now a world leader in tackling scams by promoting hygiene across the digital economy, rather than regulating one sector alone.

There were important learnings shared by other participants:

• New Zealand continues to lead the way in advertising consumer awareness, using humour to achieve cut-through. Also in New Zealand, Netsafe has developed an AI-driven bot that engages with scam emails to waste scammers’ time. Their data suggests they wasted five years of scammers’ time in six weeks
   
• The Dutch Banking Association described their money laundering watch list of known mules. Identified mules are added to a watch list for eight years. The list allows identified entities to be banked while ensuring adequate monitoring and safeguards. This is an initiative that could be considered for future anti-money laundering (AML) submissions.

Register now: AusPayNet Summit 2024

Following on from the sell-out success of our 2022 and 2023 Summits, we are excited to announce that tickets are now on sale for the 2024 Summit, to be held at the International Convention Centre (ICC), Sydney on Thursday, 12 December.

The theme of this year’s Summit is ‘Making it Happen’. Having reached a turning point in 2023 (with the announcement of the Strategic Plan for Australia’s Payments System), numerous industry initiatives are now underway that will help realise Australia’s vision for a modern, world-class and efficient payments system.

We are assembling a stellar program featuring a cross-section of the ecosystem including regulators, innovators and international guests, including:

• Dr Brad Jones, the Reserve Bank of Australia’s Assistant Governor and Deputy Chair of the Payments System Board
   
• Maha El Dimachki, Centre Head, BIS Innovation Hub, Singapore.

We are thrilled to welcome again one of Australia’s most experienced television news presenters, Juanita Phillips, as MC.

Be sure to take advantage of our early bird offer by Friday, 4 October to save up to $150 on individual, group and table registrations.

See our website or follow us on LinkedIn or X (formerly Twitter) for ticket and event updates.

Stakeholder engagement update

Stakeholder Advisory Council

Our Stakeholder Advisory Council met in June. At that meeting, we celebrated the fact that the Council was three years old and acknowledged the importance of the Council to AusPayNet’s work. It was also a time to review the composition of the Council, ensuring it focuses on engaging with and getting feedback from end-user groups and peak industry bodies. As a result of the review, NSW State Government and CHOICE have been added to the Council. We look forward to hearing the views of these important stakeholders on topical payments issues. 

At the same meeting, we sought feedback on the following topics:

• The winding down of the cheques system
• Industry's transition away from the BECS Framework
• AusPayNet's role in cash
• Our payments policy priorities.

The Council’s feedback and perspectives will then be presented back to AusPayNet’s Board in August.
 

Member events

The AusPayNet team recently hosted two Member events.

The first was an online webinar in June, providing insights and Members’ views on the potential role of the payments industry when it comes to environmental sustainability. Ninety-four attendees joined the webinar, which was followed by the publication of the AusPayNet insights paper, ‘Reducing the Environmental Cost of Payments’.

The second was our first in-person event in Melbourne, which was hosted at ANZ Docklands in July. More than 50 Members attended the session, which focused on providing insights on Treasury's transformation initiatives and the proposed PSP licensing regime.

We look forward to offering more Member events in the coming months, with our next interstate event to be held in Q1 next year.

AusPayNet recognised as an ‘Employer of Choice’

We pride ourselves on being a people-focused organisation, and we’re delighted to be a finalist in the ‘Employer of Choice (less than 100 employees)’ category at the 2024 Australian HR Awards. The Australian HR Awards recognise and celebrate the achievements of teams and employers around the country. The winners will be announced at a gala awards ceremony on Friday, 13 September in Sydney. Read more.

New members

AusPayNet is pleased to welcome Nium Pty Ltd as a PSP Member (effective 5 July 2024).

For more information on AusPayNet membership, please visit our website.