Payments Monitor Newsletter

May, 2022

CEO’s Corner

Post-election priorities in payments

Jim Chalmers’ immediate post-election priorities as Australia’s new Treasurer will include substantive payments issues.

A strategic plan for the payments ecosystem

First cab off the rank is likely to be the formulation of a strategic plan for Australian payments (per Recommendation 3 in the Payments System Review, “the Review”). We anticipate an imminent consultation on this topic. In that consultation, we will emphasise that to achieve its aims – maximising end-user benefits and providing much needed certainty for industry investment decisions – the plan needs to be holistic, with clarity on its policy objectives, and a comprehensive prioritisation of payment system and regulatory initiatives (through the lens of those policy objectives). We will run member roundtables as part of that consultation.

A new licensing framework for payments

A second priority will be the foundational steps towards introducing a single, tiered payments licensing framework (Recommendation 9 in the Review). These foundational steps will involve expanding the definition of a payment system in the Payment Systems (Regulation) Act 1998 (Recommendation 6) and introducing a list of payment functions that require regulation (Recommendation 8). They are important because they will enable not only the licensing framework for payments, but also the alignment of industry standards (Recommendation 12), whereby compliance with technical standards set by authorised industry bodies will be mandatory for payments. Taking these steps will ensure that participants within the payments ecosystem who run the same risk will be subject to the same rules.

As an aside, in support of Recommendation 1 (aligning industry standards), we have commissioned PwC to conduct an independent review of AusPayNet as an industry standard-setting body. We look forward to sharing the conclusions of that review (which will go to our Board next month) with members, as well as with Treasury and the Reserve Bank of Australia (RBA). In support of Recommendation 9 (payments licensing), as I’ve covered in previous editions, we introduced a payment service provider (PSP) membership category earlier this year. I’m pleased to say that four PSP Members have already joined us: Paypa Plane, Bleu, EzyPay, and PayOK.

Regulatory coordination

A third priority for the Treasurer will be to better align regulator approaches and regulatory requirements, including anti-money laundering and counter-terrorism financing (AML/CTF) issues. This is important given the number of submissions to the Review that pointed to complexity in the regulatory landscape of payments, and/or to a regulatory coordination “problem”. As explained above, our view is that including regulatory priorities in the strategic plan for Australian payments is a solution to this problem. There are good models for this approach elsewhere in the world, for example the UK’s Regulatory Initiatives Grid.

Digital currencies and wallets

Stepping away from the Review, the Treasurer will also need to act on the recommendations of the Senate Committee on Australia as a Technology and Financial Centre (“the Committee”), which focused on digital currency/assets. The most urgent priorities will be to establish both a market licensing regime for digital currency exchanges (Recommendation 1 from the Committee) and a custody/depository regime for digital assets (Recommendation 2). A token mapping exercise will also need to be conducted to determine the best way to characterise the various types of digital asset tokens in Australia (Recommendation 3).

Finally, the Treasurer will also need to consider the Parliamentary Joint Committee on Corporations and Financial Services report on mobile payments and digital wallets.

In these areas, we continue to emphasise that:

  • a) The “same risk, same rules” logic outlined earlier applies to digital currencies and wallets, in the same way that it applies to other payments
  • b) Our wider scam and fraud mitigation strategies also apply in these areas.
In conclusion

Together, these priorities will ensure that – alongside CPI of 5.1% and the first official cash rate increase for 11 years – payments will be a key part of the new Treasurer’s agenda. As the Sydney Morning Herald’s Clancy Yeates put it, “a technical policy area such as payments regulation is hardly the type of issue that grabs attention in a federal election campaign, and nor is it hugely politically divisive. But that doesn’t change the fact that once our next Treasurer has their feet under the desk, they’ll need to grapple with tricky questions on everything from Apple Pay, to Afterpay, to cryptocurrencies.”



Australian Payments Council winds up

On 28 February 2022, the Australian Payments Council (APC) met for the final time and agreed to discontinue its role as the strategic coordination body for the Australian payments industry.

This decision followed consultations between the APC, the RBA, and the RBA’s Payments System Board (PSB), in which it was recognised that arrangements announced by the Government in response to the Review of the Australian Payments System will largely supersede the role of the APC.

AusPayNet would like to thank APC Chairman Robert Milliner and all current and former Council members for their critical work over the past eight years.

In its final meeting, the APC agreed to allocate its work on systemic resilience and the decline of cash to AusPayNet.



Payments Summit

We're delighted to announce that our payments summit will be held at the International Convention Centre, Sydney on Wednesday, 14 December. Following our successful online events of the past two years, we’re excited to be holding an in-person event again this year. The Governor of the Reserve Bank of Australia, Philip Lowe, will once again open the summit with his annual address to the payments industry.

Our summit has become an important event in the industry’s calendar, and we look forward to announcing this year's theme and additional speakers in the coming weeks.

For further details and sponsorship opportunities, please contact us.



Economic Crime

In February, Toby Evans joined AusPayNet as Head of Economic Crime and has since been working with staff, members and stakeholders on several important initiatives.

Economic Crime Forum (ECF)

AusPayNet’s ECF met in March and April. Key outcomes of these meetings included the addition of AUSTRAC and ASIC (both have joined the forum moving forward) and the adoption of a reviewed Terms of Reference and scope to ensure the ECF remains outcomes focused. Additionally, the ECF welcomed Macquarie Bank and HSBC to the Electing Member group, with HSBC to provide its international expertise in this space.

Financial Coalition Against Child Sexual Exploitation

AusPayNet continues to support the vital work of this group. We facilitated their March 2022 forum, which included international representatives from law enforcement and academia, as well as our own members. Presentations were made on how to interrogate transaction activity, the interface between traditional financial payments and digital currencies, and behavioural insights obtained from a study on online child exploitation.

The next meeting of the Coalition will focus on the role of cryptocurrency in child sexual exploitation.

Payment fraud statistics

In April, the Australian Institute of Criminology (AIC) released a report, entitled Estimating the Costs of Serious and Organised Crime in Australia, 2020–21, which cites AusPayNet’s payment fraud data. According to our data, in 2020-2021, the estimated total value of all fraudulent transactions was $483.1m. The AIC report estimates that serious and organised crime (SC) involvement could account for up to $289.9m of that sum.

Work is currently underway on AusPayNet’s 2022 Payment Fraud Report, which will cover data for the 2021 calendar year.

Scams strategy

In November 2021, AusPayNet – together with the Australian Banking Association, the Australian Financial Crime Exchange, and IDCARE – released a joint strategy, as part of strengthened industry collaboration to counteract payment scams targeting Australian consumers and businesses. Underpinning this strategy, its implementation plan aims to deliver:

  • enhanced data reporting to drive insights and response strategies
  • knowledge and information sharing via the ECF
  • maximising payment end-user awareness by implementing a national advertising campaign
  • an industry public and regulatory policy to influence effective response strategies, and
  • setting industry standards and regulation by reviewing AusPayNet and IDCARE’s identity theft and scams response standards.



ISO 20022 migration

For a high-level update regarding the progress of the ISO 20022 Industry Migration Program, please see the recently published Migration Monitor on AusPayNet’s website.



Cross-border payments

In April, AusPayNet published the inaugural issue of the Cross-Border Payments Round-Up. Going forward, this biannual newsletter will provide updates on Australia’s progress in implementing the G20-agreed Financial Stability Board Roadmap for Enhancing Cross-Border Payments.

You can read the first issue on AusPayNet’s website.



QR codes

QR codes are fast-emerging as another option for merchants to offer a quick, efficient method of digital payment to consumers. Earlier this month, AusPayNet announced the publication of guidelines for QR codes as a payment method. The guidelines are voluntary for financial institutions, payment service providers, merchants and other payments industry participants and are designed to encourage consistency in how QR codes are used.

The QR code payment guidelines are set out in two separate documents, which outline an EMVCo Merchant-Presented Mode (MPM) QR Code Standard and a Short QR Code Standard. The guidelines are available on AusPayNet’s website.



Payment device approvals

In December 2021, AusPayNet’s new streamlined Registration process for approving payment devices and solutions meeting an Accepted Standard (such as the Payment Card Industry Security Standards Council) to be deployed in Australia went live. This is a simple process, requiring validation against a list of Accepted Standards – in the case of PCI, producing an Attestation of Compliance (AOC) – and then registration with AusPayNet. The approval period is linked to the expiry of the AOC.

In March 2022, the Structured Risk Assessment (SRA) process went live for approving payment devices and solutions not meeting an Accepted Standard and seeking approval to be deployed in Australia. AusPayNet undertakes an assessment of the solution using AusPayNet’s SRA and determines whether the solution should be:

  1. Registered
  2. Registered with conditions
  3. Accepted for pilot in Australia.

The approval period is five years or as determined by AusPayNet.



Regulatory round-up

Response to ACCC Digital Platform Services Inquiry – Discussion Paper for Interim Report No. 5

On 1 April 2022, AusPayNet responded to the Australian Competition and Consumer Commission (ACCC) Discussion Paper for Interim Report No. 5: Updating Competition and Consumer Law for Digital Platform Services, as part of the Digital Platform Services Inquiry. We support the ACCC’s review to improve consumer protection, including by requiring digital platforms to deal more effectively with online scams.

In our submission, we took the opportunity to share relevant insights from existing work in the payments industry, and we highlighted that several of the actions in AusPayNet’s industry scam mitigation strategy accord with options suggested by the ACCC.

AusPayNet is grateful for the opportunity to provide feedback to the ACCC and remains ready to assist them through its current work programme, including through the facilitation of cross-industry discussions to streamline existing requirements to mitigate scams. Read our submission here.



Stakeholder engagement update

We continue to engage stakeholders of the payments system via our Stakeholder Advisory Council. We recently held our fourth Council meeting and continue to build strong relationships with end user groups, regulators, government, technology associations, business associations and consumer advocates via this channel. Participants include Fintech Australia, the Tech Council of Australia, the RBA, Treasury, Financial Rights Legal Centre, Dr Jeannie Paterson, the Australian Retailers Association, the Council of Small Business Organisations Australia, the Australian Corporate Treasury Association, Australian Payments Plus and PayPal.

The Council is critical to our work in payments and ensuring we provide a convenient and secure payments system for all, providing valuable feedback for our governance review process, scams strategy, payments acceptance strategy and corporate strategy, among others.


New members

During the last quarter, AusPayNet was pleased to welcome the following new Payment Service Provider (PSP) members:

  • EzyPay Pty Ltd (effective 30 March 2022), an award-winning FinTech company that specialises in recurring and subscription payments
  • Bleu Australia Pty Ltd (effective 22 February 2022), providing innovative payment solutions for merchants and customers specialising in touchless payments
  • PayOK Holdings Pty Ltd (effective 12 April 2022), an Australian technology company providing solutions to combat payment fraud by verifying bank account information

Stripe Payments Australia Pty Ltd joined as an IAC affiliate member. Stripe Payments Australia Pty Ltd is a global financial services and software company offering solutions for payment processing.

Additionally, on 14 February, existing member Macquarie Bank Limited joined the IAC as an Issuer, while we also welcomed Payment Acceptance Australia Pty Ltd as an Acquiring Member of the IAC. Payment Acceptance Australia Pty Ltd is a partnership between ANZ and leading European payments provider Worldline.

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



Board changes

We would like to welcome Dr Michael Plumb to the AusPayNet Board. Michael took up his appointment as Head of Banking at the Reserve Bank of Australia in March 2022 and was appointed as an AusPayNet director in April. Michael replaces Stephanie Connors on the Board, with Stephanie appointed as an AusPayNet alternate director. We thank Stephanie for her contribution as an AusPayNet director over the last 12 months and extend a warm welcome to Michael.

Meet the AusPayNet Board here.



Executive Team update

On 1 June, Rajat Jain joins AusPayNet as our new Chief Strategy Officer. Rajat joins from Deloitte where he was a Partner and the National Sector Leader for Payments in Australia. Prior to his five years at Deloitte, Rajat worked with American Express for 12 years, including as Head of Strategy and Strategic Programs for Australia and New Zealand from 2012-2016.

On 5 July, Paula Gilardoni joins AusPayNet as our new General Counsel. Paula joins from Moneytech Group where she is Group General Counsel. Prior to Moneytech Group (which owns Monoova Payments), Paula was a KPMG Law Partner and the Legal Lead for their Payments Team, and prior to that was a Partner at Gilbert and Tobin. Over her career, she has advised a variety of key players in the payments ecosystem.

We are excited to welcome Rajat and Paula to the AusPayNet Executive Team.