CEO’s corner

Making it Happen

Building on the last two AusPayNet Summits, it’s time to move beyond “paving the way” (2022) and “a turning point” (2023) to “making it happen”, this year’s theme.

This year’s Summit on 12 December will be our largest ever and will again be emceed by one of Australia’s most experienced news presenters, Juanita Phillips.

Highlights of the packed program include:

• An address by Assistant Governor and Deputy Chair of the Payments System Board of the Reserve Bank of Australia (RBA), Dr Brad Jones
   
• Interviews with James Kelly, Head of Treasury’s Digital, Competition and Payments Division, and Maha El Dimachki, Centre Head of the Bank for International Settlements (BIS) Innovation Hub in Singapore
   
• Panels on cheques, security, and account-to-account (A2A) payments
   
• Our ever-popular Big Debate, this time on artificial intelligence (AI) in payments.

The Assistant Governor’s address comes at an important time, given the first phase of the RBA’s review of retail payments regulation, as well as the tabling before Parliament of amendments to the Payment Systems (Regulation) Act, which underpins the RBA’s regulatory powers in payments, and when passed will enable the RBA to move onto the second phase of its review.

Also timely – given 2025 is expected to see both the first tranche of payments licensing reform and an update to Government’s Strategic Plan for Australia's Payments System – is the interview with James Kelly. This will be followed by an interview with Maha El Dimachki who will talk to the BIS Innovation Hub’s groundbreaking global projects in payments, covering central bank digital currencies, economic crime, cybersecurity and AI.

Our panels are where the payments industry is really making it happen. We will start with security in a quantum world, particularly relevant given the industry’s planned migration to the Advanced Encryption Standard to protect card data against the potential threat of quantum computing.

We will then move onto the wind-down of the cheques system and hear various perspectives including from New Zealand – who closed their cheques system in 2021 – and State government, represented respectively by Steve Wiggins, Chief Executive of Payments NZ, and Lynne Cardwell, Executive Director, Banking and Financial Services, NSW Treasury.

Representatives from the four key stakeholders in A2A payments – Treasury, RBA, Australian Payments Plus (AP+) and AusPayNet – will then discuss their future, following on from our announcement at last year’s Summit of a target end-date of 2030 – subject to further analysis of bulk payments – for the BECS framework.

The grand finale will, as usual, be our Big Debate. This year, our two teams of debaters will wrangle over whether AI presents more threats or opportunities in payments. The debate will no doubt be lively, given the opportunities AI presents in terms of data analysis and fraud management, but the threats given its use by bad actors. Questions around the responsible use of AI and how it can be regulated and governed while fostering innovation will no doubt also be debated.

An event like this is made possible through event partners and I’d like to thank: Thales, ACI Worldwide, Cuscal, Endava, Fitzgerald Jenkins Recruitment, MessageXchange, Monoova, Quest Payment Systems, Swift, and TNS.

Overall, the team has put together another impressive agenda complemented by several opportunities to network at what is the last major payments event for 2024. I look forward to seeing you there.
 

Cheques

The Australian Government announced this week a move aimed at ensuring an orderly phase-out of cheques as part of a strategy to modernise Australia’s payments system. Under the Government’s Cheques Transition Plan, cheques will cease being issued by financial institutions by 30 June 2028 and cease being accepted by them on 30 September 2029.

AusPayNet will lead an industry-wide transition coordination program, working with financial institutions in the lead-up to the closure of the cheques system. The program will be subject to an application for ACCC authorisation.

Our work in coordinating the cheques transition program will include workstreams on overall migration management, migration of use cases, and clear and consistent industry communications. This work will assist in ensuring cheque users continue to be supported in the transition. 

Payments reforms

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

The Scams Prevention Framework

In early October, AusPayNet responded to Treasury’s consultation on the exposure draft legislation for establishing a national Scams Prevention Framework (SPF). The Scams Prevention Framework Bill was subsequently introduced to Parliament, on 7 November. 
 

Senate Committee Inquiry into the AML/CTF Amendment Bill

Also in October, AusPayNet made a submission to the Senate Committee inquiry into the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024.

The Bill broadly aligned with the proposals in the Government’s preceding two consultations on reforms to the AML/CTF regime, as well as the key feedback provided in AusPayNet’s submissions to those consultations. Our submission to the inquiry therefore reiterated the feedback that AusPayNet, in consultation with our Policy Experts Group and other Members, provided to the Government on this topic in mid-2023 and mid-2024. This included highlighting the industry’s strong support for amending the tipping-off offence to enable appropriate private-to-private information sharing across the ecosystem, and the importance of ensuring that the obligations under the Privacy Act 1988 do not impede the implementation of such information sharing arrangements.
 

Consultation on mandatory guardrails for AI in high-risk settings

AusPayNet had also made a Management submission to the Government’s proposals paper for introducing mandatory guardrails for AI in high-risk settings. This built on the feedback AusPayNet provided in response to the Department of Industry, Science and Resources’ earlier consultation on safe and responsible AI in Australia in August 2023.

Our submission expressed general support for the proposed framework, and particularly its risk-based and principles-driven approach to AI regulation that seeks to balance the need for both consistency and proportionality in regulating the various potential AI use cases across different industries. We also welcomed the Government’s broad alignment with emerging international standards and best practice. The submission provided some further insights and considerations about the proposed guardrails from the perspective of the Australian payments industry, to help inform any further refinements to the governance framework.

Tokenisation

In June, AusPayNet convened the industry Tokenisation Standards Development Working Group (TSDWG) to support AusPayNet in the drafting of a standard to address some of the potential frictions encountered by merchants wishing to switch payment service providers (PSPs), and to assist the industry in meeting the RBA’s Tokenisation Expectations. The development of this standard is a test case for AusPayNet on its journey to becoming an authorised standards-setting body.

The TSDWG has held five meetings and a draft version of the Standard for PSP Porting of Merchant Payment Related Data (Standard) will be issued for wider consultation later this month. Parties invited to participate in the consultation include all entities that are, or potentially could be, involved in the provision or support of services that port/transfer merchant payment-related data either to or from a PSP. Consultation will run until the end of January 2025. Subject to the consultation feedback, AusPayNet is aiming to present the final Standard for approval by the AusPayNet Board in Q2 2025. 

Advanced Encryption Standard (AES) migration program

The technical blueprint, migration strategy and industry testing strategy are progressing well and due to be finalised this month. The focus will turn to further developing the plans for an industry pilot and supporting participants with their respective programs in 2025. Australia continues to be a leading jurisdiction in migrating to AES, with the mandate supported by government, regulators, and industry bodies. 

Bulk Electronic Clearing System (BECS)

The setting of a conditional target end-date of 2030 for the BECS Framework has generated positive and constructive discussions and initiatives in the industry. These discussions and initiatives will assist AusPayNet to assess the validity of the target end-date against the agreed industry readiness criteria:

• Viability of BECS alternatives
• Member readiness to transition
• End-use adoption  
• BECS membership and volume changes.

Some of these initiatives, such as Treasury's targeted consultation on bulk payments and the RBA's Account-to-Account Pricing Study, aim to further explore the challenges associated with a transition off BECS, particularly for end-users; other initiatives, by BECS members and providers of modern BECS alternatives, aim to facilitate BECS members' increased adoption of BECS alternative payment rails.

As the custodian of the BECS Framework, AusPayNet is closely monitoring these initiatives, in addition to performing our own:
 

Control the future of the framework

We will continually test the validity of the target end-date based on industry’s progress to transition BECS use cases off the BECS Framework. To support AusPayNet in this activity, an industry working group has been convened, with representatives of BECS Tier 1 and Tier 2 Members. The first output of this working group is a member information request that was issued to all BECS members this month, requesting data on our Members' readiness to transition off BECS. The aggregated findings from this information request and data obtained from BECS-related Payment System Market Share (PSMS) and other BECS-related industry initiatives, will inform AusPayNet's updates on the target end-date for the Framework to its Members and key stakeholders.
 

Collaborate with industry 

We continue to collaborate with regulators and industry participants on the BECS transition-related initiatives. In September, the RBA hosted a webinar with financial institutions (attended by AusPayNet) to provide the initial observations of the RBA’s BECS Transition Risk Assessment and next steps.
 

Coordinate the migration 

The process for transitioning away from BECS presents complex challenges for the industry, challenges that cannot be effectively or efficiently addressed by any one industry participant working alone. Recognising this, we have consulted with industry participants and regulators in relation to potential industry-wide coordination to work towards a desired end state for account-to-account payments in Australia. Subject to regulatory approvals, the scope of potential coordination and desired end state will be further discussed and developed in the early part of 2025.
 

Community of Interest Network (COIN)

The migration to the new COIN, provided by Transaction Network Solutions (TNS), was completed on Friday, 6 September. The new COIN connects its 20 members to a high availability, managed network for multilateral secure transmission of payment files between participants.

The migration involved significant collaboration between the COIN members, TNS and AusPayNet, and represents a positive uplift in the level of resilience for the payments supported by the COIN.

Cross-border payments

The Financial Stability Board (FSB) continues work on its G20 Roadmap for Enhancing Cross-border Payments: Priorities for the next phase of work and Priority actions for achieving the G20 Targets.

In October, the FSB released its Annual Progress Report on Meeting the Targets for Cross-border Payments: 2024 Report on Key Performance Indicators. The report shows limited progress towards achieving the targets across wholesale, retail and remittance market segments, but it also acknowledges that it will take time for results from work undertaken under the G20 Roadmap to materialise.
 

Interlinking fast payment systems

The cross-border payments evolution in the ASEAN Region is rapidly occurring. Significantly, in October, the European Central Bank (ECB) announced that its TARGET Instant Payment Settlement (TIPS) service is joining Project Nexus, subject to the live implementation of Nexus. ECB will also explore a bilateral link with India’s Unified Payments Interface, the world’s largest instant payment system. Together, these bring enormous scale to cross-border payments being made via domestic instant payment systems, which will help in delivering on the G20 targets.

Locally, on 1 October, AP+ announced that ANZ, Bendigo Bank, CBA, Citi, HSBC, ING, NAB, RBA, Westpac Bank, Bank of Melbourne, BankSA, St George Bank, Wise and several financial institutions sponsored by ANZ, ASL, Cuscal and Indue have joined the International Payments Service (IPS).
 

Cross-Border Payments Round-Up

In September, we published the latest edition of the Cross-Border Payments Round-Up, a biannual newsletter providing updates on the progress of the G20 Roadmap. Read the newsletter on our website.

ISO 20022 migration

AusPayNet’s 50 HVCS Participants are now fully migrated to the use of ISO 20022. With completion of the domestic HVCS migration, participants must now focus on the next phase of the program: the implementation of updated HVCS message specifications.

The final Migration Monitor newsletter will cover the migration completion in further detail. This newsletter will be published on our website in the coming weeks. 

Economic crime

Through our Economic Crime Forum, we continue to bring together a broad range of participants to share intelligence on emerging threats and collaborate on joint responses or tactical initiatives to prevent all types of economic crime. In preventing economic crime, we are better together. 

This week, to mark International Fraud Awareness Week, AusPayNet released Australian payment fraud statistics for the July 2023 to June 2024 financial year (FY24). You can access the latest data via our website and Member Portal. We have also published a blog post this week that takes a closer look at the figures.

Stakeholder engagement

Stakeholder Advisory Council

AusPayNet’s Stakeholder Advisory Council met in August. At this meeting, we sought the Council’s feedback and perspectives on our payment policy priorities, the Government's plan to wind-down the cheques system, the transition from BECS, and AusPayNet's corporate strategy review. 

The Council’s feedback from both the June and August meetings was presented back to the Board at their meeting in August.

At a time of significant regulatory reforms to the payments system and the continual refining of our governance structure, the Council members play a critical role in sharing their different views and perspectives. Our Board values our stakeholders’ views and we look forward to continuing to build strong relationships with you in 2025.
 

AusPayNet events

AusPayNet Summit

Tickets to our annual payments summit in Sydney on Thursday, 12 December have been selling fast, so if you haven’t booked yours, please do so quickly. You will find full event details including the event program, speaker profiles and registration form at the AusPayNet Summit website.
 

Economic Crime Roundtable

Economic crime remains a key strategic issue for our Members. On 15 October, we hosted a roundtable at our Sydney office to discuss economic crime themes and challenges with our non-bank PSPs.

We received excellent feedback on the roundtable from those in attendance. We would like to thank our guest presenters from the National Anti-Scam Centre, Cuscal, Monoova, the Australian Financial Crimes Exchange, AP+ and all participants for sharing their insights and perspectives. 

New members

AusPayNet is pleased to welcome EFTlab Pty Ltd as an Affiliate Member (effective 29 August 2024).

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