collaboration Archives - Page 3 of 4

Big ideas in a little province

I had the honour and pleasure of recently attending and participating in the Canadian Payment Association’s Payments Panorama 2014, held this year in beautiful Charlottetown, Prince Edward Island. Prince Edward Island is Canada’s smallest province, with a mere 0.5% of the Canadian population and a total area only twice that of the Australian Capital Territory. Yet on this postage stamp gem in the Gulf of St Lawrence, some big ideas concerning the future of Canadian payments were being discussed. By way of background, Canada and Australia share many features and our payment landscapes have some similarities. Both have a long-standing national payments body and a competitive national domestic debit card scheme. Australians and Canadians are enthusiastically embracing new ways of paying, including mobile and contactless. The Government and regulators in both countries have intervened on the fractious issue of interchange fees, though Canada has adopted a more disclosure-based approach than the harder caps found in Australia.

UK payments system self-regulation under scrutiny

Last month, the UK government published a consultation paper on “Opening up UK payments”. According to the paper, “the self-regulation of financial services…has been discredited.” Say what? The world over, payments systems have been almost entirely self-regulated, so this is a big call. The evidence cited in the paper for this includes the LIBOR-rate fixing scandal and the failed attempt to eliminate UK cheque clearing. And of course, there is enduring rancor over the public bailout of UK banks during the global financial crisis.

Evolutionary cycles in the payments system

The publication of the Reserve Bank’s Conclusions for its two year Innovation Review is shaping up as the catalyst for a new round of structural evolution in the Australian payments system. Payment participants have been set a challenge: establish a better long-term payments platform. Doubtless, effective coordination of industry participants is needed to meet the challenge. Nevertheless, it will be good old-fashioned competition that delivers the new products that ultimately benefit customers. Bluntly, new payment systems only take off when schemes and participants work out how to use them to offer stuff that customers want, and will pay for.

Payments system self-governance: striking the balances

"The payments system is built on networks, which means that a certain amount of coordination and collaboration is essential for it to function and develop over time. The challenge is to encourage stakeholder collaboration that supports innovation and competition while discouraging collective or individual behaviours that are detrimental to payments system users." No one at APCA wrote this paragraph - it comes from the final report of the Canadian Government's Payments System Review. The thing is, we could have written it. It expresses APCA''s philosophy as the payment system self-regulatory body.

The year ahead

Many of us are returning from the holiday break newly resolved on self-improvement – give up this, lose that, do better at the other thing. APCA too is resolved on self-improvement. Back in August 2011, we gave a public commitment to reform APCA’s own governance arrangements so as to make it a fit vehicle for more inclusive, stronger self-governance of the payments system. This is currently a hot topic for the Reserve Bank, and has been one for APCA for quite some time as well. So, next month, in February, we hope to be talking about a new model for how APCA works. This has to fit in with the views and needs of many different people and organisations, not least the public policymakers, so we know it probably won’t be a short conversation. But we hope it will be a successful one.