By Paul Anguita, Head of Engagement, AusPayNet
The payments industry continues to be shaped by three drivers – technology, regulation, and customer expectations. Traditional payments are being transformed by technology, the associated use of data, the addition of new participants and business models, regulatory reviews, and significant changes in end-user expectations and needs.
Over the last few years, these drivers have accelerated growth in digital payments. This is evidenced by the decline in cheque use and cash payments, uptake of mobile wallets, increased card transactions, and rise of e-commerce.
As the payments landscape evolves and becomes more complex, relationships with stakeholders become increasingly important. AusPayNet will continue to manage key relationships with members, payment system operators, new participants, government bodies, media, technology providers and end-users (consumers and businesses).
The Federal Government’s Digital Business Growth Plan is designed to enable businesses to take advantage of technology, to grow, create jobs and support economic recovery in a post-COVID Australia. This plan includes elements associated with digital payments, including the Treasury Review of the regulatory architecture for the payments system. Some of the recommendations in this review, which Government has now endorsed, include:
placing consumers and businesses at the centre of policy design;
introducing a list of payment functions that require regulation;
introducing a single, tiered payments licensing framework for payment service providers (paytechs); and
educating consumers and businesses.
AusPayNet continues to review our governance model to ensure it is fit for purpose. This review includes membership, stakeholder engagement, Board structure, and our corporate objects.
Throughout this review, AusPayNet has been guided by the following principles:
Accordingly, AusPayNet recognises the need to formally engage stakeholders of the payments system not (previously or currently) represented in our membership and expand our membership base to ensure we represent all participants in payments.
One outcome of AusPayNet’s governance review has been to set up the AusPayNet Stakeholder Advisory Council (ASAC) that advises the Board on different stakeholder perspectives on current payments issues.
Stakeholders of the Australian payments system have been identified as end-user groups (consumers, businesses, retailers), government, regulators, new participants, and technology companies (large and small). These stakeholders are currently represented on ASAC, which met for the third time in February 2022. Their views are reported back to the Board for consideration, with outcomes presented back to the ASAC, creating an important and transparent feedback loop.
This is similar to the approach taken in Canada, where a Stakeholder Advisory Council has been set up to provide advice to the Payments Canada Board on payment, clearing and settlement matters. They contribute input on proposed initiatives, including by-laws, policy statements and rules that affect third parties. They also identify issues that might concern payments system users and service providers and suggest how they could be addressed.
In South Africa, Payments SA has identified System Operators, Third Party Payment Providers (TPPPs) and end-users (via their industry associations) as their key stakeholders or non-members. Their engagement model with these stakeholder groups includes bilateral engagement, representation on stakeholder and project committees, and ad hoc engagement with large corporates, retailers and TPPPs as required.
In all cases, such stakeholder representation meets emerging corporate governance best practice, for example AICD’s guide “Elevating Stakeholder Voices to the Board”.
In recent years the payments industry has expanded beyond organisations operating in the traditional clearing streams. The last few years has seen the emergence of new players that do not require traditional access to a clearing stream but still facilitate payments and activities in the payments system.
Because of this broadening of participants in payments, and in line with the recommendations of the recent Treasury Review, we have expanded our membership to include a category for Payment Service Providers (PSPs). In doing so, AusPayNet will be able to formally engage with this group and facilitate their participation in the development of payments industry self-regulation.
Similar to the membership review, it was determined that the structure of the Board should evolve to better represent the changing nature of the payments ecosystem and ensure that all AusPayNet Members have the ability to be represented.
To ensure that all our Members are represented on the Board, our Operator Members, who have not been represented at Board to date, will be welcomed into the Electing Member Group (EMG) this year, allowing them to participate in nominating and voting for Board directors. Our new PSP members will also be included in the EMG and granted the same participation rights.
AusPayNet’s governance review is ensuring our governance model is fit for purpose and inclusive of all participants and stakeholders of the payments system. Engaging with the whole industry drives the best outcomes for the entire payments ecosystem and its users. This journey is ongoing, as we continue to review our corporate objects, ascertain the appropriate action to become an authorised standards setting body, and launch the new PSP membership category to ensure we continue to promote innovation and cross-industry collaboration.