CEO’s Corner

The Year Ahead

Welcome to 2022. We all hope it brings a return to normality after the last two years.

Payments will be in the spotlight in 2022 given their role as the cornerstone of the digital economy and the importance of that digital economy as we emerge from COVID.

This focus on payments will include the implementation of the recommendations – now endorsed by Government – from the Treasury Review of the Australian Payments System.

Those recommendations are important because they will:

• put consumers and businesses at the centre of payments policy;
• address a current licensing ‘gap’, in licensing some payment system participants who are currently unlicensed. This will be done in a way that ensures a ‘same risk, same rules’ approach to licensing, protects consumers, and makes it easier for payment service providers to access the payments system;
• prioritise the formulation of a strategic plan for Australian payments, which will provide direction and clarity on policy objectives, and therefore maximise end-user benefits while also providing much needed certainty for industry investment decisions; and
• future-proof payment system regulation, as payments continue to change, through designation powers for both the RBA and the Treasurer.

Next steps for AusPayNet will be to:

• align its new Payment Service Provider membership (which became effective on 1 January 2022) to the new licensing approach;
• commission an independent review to determine best practices for standards bodies, before the RBA establishes a process for authorising payment industry standard-setting bodies;
• provide strategic insights as inputs to the strategic plan for Australian payments.

These next steps will build on the changes we have already made to create a governance structure that:

• enables all of our 146 members to be directly represented on the AusPayNet Board;
• incorporates a Stakeholder Advisory Council to ensure that our Board decisions are informed by the views of wider industry stakeholders, including end-users; and
• adds the payment service provider membership category noted above, which gives PSPs – who play an increasing and critical role in payments – an opportunity to join us as members, and ensures that AusPayNet is representative of the entire payments value chain.

In 2022, AusPayNet will also lead major industry projects which will modernise Australian payments. These include:

• the industry high value migration to ISO 20022, which moves into test phase in April;
• commencing the transition of the technology underpinning the COIN network;
• continuing to support the customer-led decline in cheques;
• beginning the conversation on the eventual closure of the direct entry system; and
• specifying the timeline and work to migrate Australian card payments to the Advanced Encryption Standard (AES).

We will also continue to set industry standards in strategically important areas of payments such as:

• economic crime, including fraud and scams;
• device security, where we aligned to international standards late last year, and will launch in March a new process for assessing solutions where no international standards exist;
• QR Codes, which will, among other benefits, facilitate Australian Payments Plus meeting their undertaking to the ACCC to agree an industry-wide standard on QR Codes; and
• cross-border payments, on which the work associated with the Financial Stability Board’s enhancement roadmap continues to accelerate.

So, 2022 will be exhilarating. On behalf of AusPayNet, I wish you all the best for the coming year.

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Payments Summit

Thank you to our speakers and everyone who attended AusPayNet’s 2021 Summit on Thursday 9 December.

The virtual event began with the Governor of the Reserve Bank of Australia, Philip Lowe, delivering his annual address, entitled ‘Payments: The Future?”, highlighting trends in the system as well as regulatory challenges that have arisen because of rapid change in the world of payments.

Following the Governor’s address, a panel of payments experts from Deloitte contemplated the future of the digital wallet, from a consumer, competition, and regulatory perspective.

The event then culminated in a keynote speech by Senator Andrew Bragg, who discussed the need for reform in the payments system in Australia and shared his views on how that reform should look.

If you missed the summit or would like to view any of the sessions again, click on the links below to watch the recordings.

• Annual address by the Governor of the Reserve Bank, Philip Lowe
   
• Panel discussion on ‘the digital wallet in Australia’ led by Deloitte
   
• Keynote speech by Senator Andrew Bragg

AusPayNet’s 2022 Annual Summit will be held later in the year.

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New AusPayNet Chair

At the summit, we announced the appointment of Mr John Brogden AM as AusPayNet’s new independent chair, effective 1 January 2022.

Mr Brogden is an experienced Chairman, Non-Executive Director, Executive and former Member of Parliament with more than 30 years’ experience in the public sector, financial services, professional associations, and not-for-profit organisations.

Mr Brogden has been appointed to a three-year term and will chair his first meeting of the Board on 24 February 2022. We welcome him to AusPayNet’s Board and are delighted to have someone of his calibre and with his skills as our Independent Chair, as we work to build a new payments ecosystem.

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Payment Device Approvals

On 16 December 2021, AusPayNet introduced a new streamlined process for approving payment devices and solutions that meet the requirements of the Payment Card Industry Security Standards Council (PCI-SSC). The new approval process is designed to enable competition and innovation and promote efficiency, while managing risks within the payments acceptance ecosystem.

For more detailed information, click here to read a blog that outlines the new process for PCI-SSC approved devices and solutions. The blog also discusses the procedure for devices that do not meet the relevant standards.

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QR Code Interoperability

AusPayNet has worked with the Australian payments industry to establish a QR Code interoperability framework for payments, based on EMVCo Merchant Presented Mode (MPM), known as ‘Long QR’. While Long QR enables merchants to process payment transactions, further functionality is required to provide customers with additional services. A ‘Short QR’ is used to retrieve additional information from backend channels, such as digital receipts, loyalty, vouchers, and warranties.

The industry agreed on a two-phase approach with respect to Short QRs:

• Phase One (Frontend Interoperability): develop frontend guidelines for Short QR in the form of a framework.
• Phase Two (Backend Interoperability): develop backend guidelines for interoperability between industry participants.

In December 2021, the industry agreed on a Short QR framework for frontend interoperability. Based on market uptake, a framework for backend interoperability will be considered at a later date.

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Economic Crime Forum (ECF)

The ECF (the successor to the Fraud in Banking Forum) met on 17 November 2021. The Forum welcomed new members, reflecting its wider remit across economic crime.

Members received an update on the AusPayNet Scams Strategy and the five key pillars around which work items will focus. Much of this work will be undertaken in collaboration with the Australian Banking Association, Australian Financial Crimes Exchange and IDCARE.

Industry is coming together to implement this strategy to safeguard Australians, and to reduce the impact of scams on vulnerable businesses and individuals.

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Future State of Payments Action Plan

In August 2020, AusPayNet published its Future State of Payments Action Plan. The Plan was the outcome of a consultation process that sought to establish what action was necessary to modernise Australian payments.

In December 2021, we published the Future State of Payments Action Plan 2021 Update. This document outlines significant initiatives AusPayNet is leading to ensure the payments system remains efficient, resilient, adaptable and accessible.

Click here to read the Future State of Payments Action Plan 2021 Update.

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Regulatory Round-up

We welcomed the opportunity to respond to the following consultations in recent months.

Review of the ePayments Code

On 29 October 2021, ASIC issued a letter to stakeholders containing proposals for amendment to the ePayments Code. In our response to the letter, we advised that Member feedback indicated general support for most of the proposals, given that they were consistent with member feedback AusPayNet had previously provided to ASIC in its response to Consultation Paper 341, Review of the ePayments Code: Further Consultation. The response then focused on those proposals where industry consensus indicates there is a need for further discussion and consideration. These included proposals pertaining to Mistaken Internet Payments, extension of the Code to small business, clarification of the unauthorised transactions provisions, and modernisation of the Code.

The proposed draft Code is expected to be provided to stakeholders for feedback on technical aspects and format by early March 2022.

Response to the Australian Government Deregulation Taskforce’s consultation on ‘Modernising Document Execution’

In late 2021, we responded to the Deregulation Taskforce’s consultation on ‘Modernising Document Execution’. The aim of the consultation is to provide a common pathway for the digital execution of statutory declarations and deeds. In our response, we expressed support for one of the proposed options in the consultation paper, which is to leverage digital identity verification services as a viable alternative to the current in-person witnessing and execution requirements. We highlighted the alignment of this proposal with our own work to develop and support the TrustID Framework and digital identity initiatives generally. Further, we expressed our support for a streamlined and technology neutral regulatory environment. Read our submission here.

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Women in Payments Australia Symposium

Late last November, AusPayNet participated in the Women in Payments Australia 2021 Symposium. This annual event facilitates conversations between female leaders in the payments industry on a range of important and timely subjects.

AusPayNet took part in three sessions. Firstly, our Head of Policy, Siew Lee Seow, moderated a discussion that examined the benefits of central bank digital currencies (CBDCs) and their long-term impact on cross-border payments. The expert panelists conversed about the need for demonstrable advantages of a CBDC over existing payment methods, and the need for infrastructure and policies to enable the use of the currency.

Legal Counsel Daniela Fabiano then joined other industry experts for an insightful discussion highlighting consumer and corporate trends in payments, both in Australia and around the world.

AusPayNet’s Victoria Richardson also appeared on a panel, which contemplated the future of payments in Australia, canvassing possible developments in technology, business models and currencies. Scott Farrell, chair of the Government’s Review of the Australian Payments System, led this discussion.

AusPayNet looks forward to promoting and participating in critical payments conversations in 2022.

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Stakeholder Engagement Update

As outlined in the CEO’s Corner, we are excited to launch our new Payment Service Provider (PSP) membership category. We are looking forward to building strong relationships with PSPs in the market.

Member benefits for PSPs include Board representation, working group participation, relationship meetings, and member events.

If you are interested in having a seat at the table and shaping the payments regulatory landscape, please reach out to our Head of Engagement, Paul Anguita, at panguita@auspaynet.com.au.

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New Members

During the last quarter, AusPayNet was pleased to welcome the following five new members:

• Wise Australia Pty Ltd (a Tier 2 member of BECS, effective 29 November 2021), an organisation with a vision to make international money transfers cheap, fair, and simple
• Avenue Bank Ltd (Tier 2 member of BECS, effective 29 November 2021), one of Australia’s newest start-up banks, with a focus on small business banking
• Amazon Commercial Services Pty Ltd (an IAC Affiliate Member, effective 11 November 2021), a globally recognised technology company and world leader in e-commerce
• Stripe Payments Australia Pty Ltd (an IAC affiliate member, effective 27 January 2022), a global financial services and software company offering solutions for payment processing
• AXIS IP Pty Ltd t/a Paypa Plane (AusPayNet’s first PSP Member, effective 7 February 2022), a bank-grade platform where traditional scheduled payments and digital, data-rich and real-time payments work together

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