electronic transfer – APCA Blog

Apple Pay in Australia

Chris Hamilton — Mon, 10 Aug 2015 04:21:41 +0000

Here at APCA, one of our jobs is to ensure that the community is well informed about payments systems and their future evolution. We were therefore very interested in recent industry media commentary on the evolution of new payment technologies and, in particular, the progress of Apple Pay in Australia.

Australian payment institutions have been criticised by some in the local media for not getting together to make Apple Pay happen. I am not privy to any commercial discussions (of course), but that is a little surprising. There just might be legitimate pro-competitive reasons for that not happening – they are competitors and given Apple’s market weight, they will doubtless have a significant effect on competitive dynamics. This bears careful thought.

New research highlights an increasingly “banked” world

Brad Pragnell — Wed, 24 Jun 2015 05:55:02 +0000

Billions of people, primarily in developing countries, have historically had neither bank accounts nor access to electronic payments. When saving and making payments, they have had to rely on cash.

This is rapidly changing. According to the recently-released World Bank Global Findex, in 2014, 62 per cent of the adults worldwide had a formal account with a financial institution or mobile money service – a dramatic increase from 51 per cent in 2011.

This upswing in financial inclusion has been facilitated by a growing middle class in many developing countries and easily available technology, in particular the mobile phone. However this growth has taken a different path in different regions.

Why does it take up to a day to process my internet payment?

Chris Hamilton — Fri, 05 Jun 2015 02:21:31 +0000

The use of online banking websites and mobile banking apps has increased a lot in Australia. We have one of the fastest uptakes in the world of that sort of technology. One of the side effects of this is that people are now much more aware than they used to be of how quickly a payment they are expecting is going to hit their account. And that’s led to a lot of discussion and chatter about how quickly payments take place.

The times they are a ’changin’…

Chris Hamilton — Fri, 27 Mar 2015 03:49:32 +0000

We seem to be getting a lot of media queries at the moment about electronic payments, how they work, and how quickly they happen. Maybe this is a consequence of the increasing use of mobile banking – people can see things happening on their accounts wherever and whenever. This means that the mechanics of payments are more “in your face”.

In line with changing customer expectations, payments processing is speeding up, but doing this in a reliable and secure way itself takes time, given the size and importance of the system. Australia’s “direct entry” electronic payments system handles around 8 million payments a day, between about 35 payments organisations (banks and others). There are around 300,000 registered users – these are businesses that routinely use the system – and millions of account-holders. The system is the backbone of Australian business, supporting every kind of payment from big outlays, like commercial rents, through salary and wages (these days, nearly all of us get paid by direct entry) down to the little payments we make to each other on internet and mobile banking.

Fast is no longer enough

Chris Hamilton — Thu, 19 Feb 2015 23:02:46 +0000

The goal-posts are shifting in new "real-time" payments systems. It is safe to assume that if anyone, anywhere builds a new payment system, it will be real-time. That particular bar has been well and truly set by the UK's faster payments system, followed up by the Paym P2P mobile solution that started there last year. All round the world, countries that don't have a real-time alternative are working on how to get one. In the US, The Clearing House has announced its intention to develop a new real-time system, and the Canadian Payments Association is beginning its own debate on payment system modernisation. But the Brits are not resting on their laurels either - they have begun speccing out a new "world class payments system" as the next generation.

A health plan for the payment system

Chris Hamilton — Wed, 26 Jun 2013 06:15:48 +0000

Recent data shows Australian non-cash activity overtaking cash transactions for the first time. These days almost every economic act other than a small consumer purchase requires an electronic transfer of value through the payment system by card, direct credit, direct debit, BPAY or some other method. This means that the payment system has become to the economy what your arteries and veins are to you – critical for economic health. One might think, then, that keeping the payment system “fit” (that is, secure, efficient and competitive) would be the subject of a well-developed “health plan”. Curiously, in many countries this has not been the case.

Australia and the electronic payments leagues table

Brad Pragnell — Wed, 26 Jun 2013 03:11:56 +0000

Today electronic payments are the norm in Australia. In the direct entry system, there are about 7 million items per day equal to about $45 billion. Employers and governments use direct entry to pay wages and benefits, while individuals use direct entry to pay for goods and services through direct debits and internet banking.

These direct entry payments, which include direct credit and direct debit, account for 96 per cent of non-cash value (excluding high value payments) and about one-third of the number of non-cash payments.

From these figures, one would suspect that Australians are reasonably prolific users of electronic payments, which stands in contrast to some commentary that Australia is somehow “lagging behind” other countries in this respect.

New payments infrastructure: Caution, generational change ahead!

Chris Hamilton — Wed, 21 Nov 2012 01:33:43 +0000

The Real-Time- Payments Committee is on a mission. It has promised to deliver a proposal for new payments infrastructure to the Payments System Board at the Reserve Bank by the end of 2012, so that requirements, design and build can begin in earnest in 2013. The last time the industry did anything like this was in the early 90’s, when financial institutions worked with the Reserve Bank to set up the new infrastructure for high value payments in Australia: The Reserve Bank Information and Transfer System (RITS) and its feeder system, the High Value Clearing System.

Evolutionary cycles in the payments system

Chris Hamilton — Tue, 26 Jun 2012 05:10:20 +0000

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.

The future of money

Chris Hamilton — Sun, 15 Jan 2012 04:30:34 +0000

Believe it or not, the current US Presidential nomination process has thrown up a passionate debate about the nature of money, and particularly whether it is 'sound' or not. Voters are frustrated and fearful about the economy. Politicians (with no economics training) are arguing that in these uncertain times we need a currency backed by something 'real' like gold.

This seems oddly backward-looking in the era of the internet. It begs a question: what sort of money do we need to fuel the economy of the 21st century?