RBA Archives - Page 2 of 4

Of payment regulators and payments councils

Try Googling "Payments Council", at least from Australia, and the first entry you get is the UK Payments Council home page, trumpeting its Faster Payments service, its mobile to mobile payments facility "Paym" and its automated account switching service. The next four entries relate to the joint RBA/APCA consultation on, and establishment of, an Australian Payments Council, which is approaching completion with an inaugural meeting later this year. One might be forgiven for assuming that Australia is in the process of establishing the same kind of body that already exists, and appears to be doing quite a good job, in the UK. Now try Googling "Payment Systems Regulator". The first four entries relate to the UK development of a new regulator with extensive powers over retail payment systems. The fifth entry is the home page of RBA's Payments System Board, established more than 15 years ago with (rather less extensive) powers to regulate Australian payment systems. Again, one might be forgiven for assuming that the UK was in the process of establishing a regulatory framework on the long-standing and, according to the Financial System Inquiry (FSI), successful Australian model. Both these assumptions would be wrong. Beware the besetting sin of an information-rich age: analysis by search engine.

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.

Fast payments – the difference a year makes

This time last year, I reported on the lodgement of an industry proposal to develop new real-time payments architecture for Australia. Rashly, I suggested that: - The Payments System Board would back the industry proposal (they did); - APCA would publish the proposal in full, so everyone knew what we were on about (we did); and - Industry collaboration on the new architecture would need to get going quickly if we were to have a shot at meeting the challenging timeframes set by RBA (and that happened too!)

A health plan for the payment system

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.

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.