Australian Payments Council 2019 Consultation - Payments in a global, digital world

 
Australian Payments Council 2019 Consultation - Payments in a global, digital world
Australian Payments Council
2019 Consultation
Payments in a global, digital world

                                      Review of the Australian Payments Plan
Australian Payments Council 2019 Consultation - Payments in a global, digital world
Contents
                        About the Consultation                                                             3

                        Australian Payments in Global Context                                              4
                        • Since 2015, Australia’s payment landscape has continued to rapidly evolve
                        • Australian payment trends are part of a broader global evolution
                        • Global platforms have also become a significant force in payments

                        Objectives for the Australian Payments system                                      9
                        • The Payments Council is renewing its strategic agenda
                        • Your insight will help shape the future of payments
                        • The payments system must support a diverse range of users
                        • An effective payments system is reliable, efficient, accessible and adaptable
                        • Digitisation is changing the way we pay

                        Collaborative Industry Work Since 2015                                            14
                        • The 2015 plan provided a strategic vision for the payments industry
                        • This vision has helped shape collaborative industry work
                        • Other industry initiatives are also driving change

                        A Renewed Vision for Payments                                                     17
                        • Areas for industry collaboration
                        • How to have your say

                        Appendices                                                                        21
                        • Glossary
                        • What is ‘fintech’?
                        • References

  2 / Australian Payments Council
Australian Payments Council 2019 Consultation - Payments in a global, digital world
About the
Consultation

           The payments system plays a foundational role in our
           economy, as part of our financial system infrastructure. It
           includes the instruments, rules and systems that govern
           the way people transfer funds to and from each other.

           With globalised commerce requiring a global payments system, other countries
           provide glimpses into possible futures, suggest alternative paths forward and
           influence our own payments system. The future of Australian payments has local,
           regional and global dimensions.
           In 2015, the Australian Payments Plan identified that the way we pay was rapidly
           evolving. Since then, these trends have accelerated.
           Alongside evolving technology and customer expectation, regulation plays a key
           role in shaping the payments system. Recently, the Australian Government has
           explored areas such as:
           • O
              pen Data: The Government has announced open banking will commence
             1 July 2019, as part of an economy-wide Consumer Data Right;1
           • A
              New Framework for Stored Value: Government is reviewing how it regulates
             stored value facilities. A simplified regime may encourage more service providers
             to enter the payments industry;2
           • T
              he Role of Cash in the Economy: The Black Economy Taskforce recommended
             a cash payment limit of $10,000 for many transactions. If adopted, this may
             impact the payments mix in the economy;3
           To renew our strategic vision for the payments system, we are seeking views from
           a range of stakeholders – businesses, NGOs, government and consumers. Your
           feedback will help ensure the payments system continues to meet the changing
           needs of Australians.
           We welcome written responses and will also be facilitating consultation workshops in
           Sydney and Melbourne.
           The deadline for written submissions is 5pm, Friday 22 February 2019. Information
           on how to make a submission is provided on page 20.

                    Australian Payments Council 2019 Consultation Payments in a global, digital world / 3
Australian Payments Council 2019 Consultation - Payments in a global, digital world
8.8
                                                                                                                                                                                                                                                                                                                AMOUNT

                                                                                                                                                                                                                                                                                                                                                                   CHEQUE                               DATE

                                                                                                                      2015
                                                                                                                                                                                                                                                                                                                PURPOSE

                                                                                                                                                                                                                                                      Direct Entry

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                2018201
                                                                                                                                                                                                                                                                                                                                                                   ADDRESS / CITY / STATE / ZIP CODE
                                                                                                                                                                                                                                                                                                                0152 - 635486565 - 4526589 -60045

                                                                                                                     152.5
                                                                                                                                                                                                                                                                                                                                                                   FROM

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Billion
                                                                                                                                                                          -47%
                                                                                                                                                                                                                                                                                                                                                                   AMOUNT

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         8.8
                                                                                                                                                                                                                                                                                                                                                                   PURPOSE

                                                                                                                                                                                                                            2018
                                                                                                                                                                                                                                                                                                                                                                   0152 - 635486565 - 4526589 -60045

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       2015
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          6.2        Billion
                                                                                                                      Million
                                                                                                                                                                                                                           80.3                                                                                                                                                                                                                                                                                          Billion

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    2015
                                                                                                                                                                                                                                                                                                                                                                                                                                                   CREDIT
                                                                                                                                                                                                                                                                                                                                                                                                                                                          CARD                                                            6.2
                                                                                                                                                                                                                           Million                                                                                                                                                                                                                                                                                       Billion

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 ➧ ➧
                                                                                                                                                                                                                                                                                                                                                                                                                DEBIT CARD CRED
                                                                                                                                                                                                                                                                                                                                                                                                                               IT                                     CARD
                                                                                                                     CHEQUE                                 DATE
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   42%

     Australian Payments   in    Global Context
                                                                                                                                                                                                                                                                                                                                                                                                                  DEBIT CARD
                                                                                                                     ADDRESS / CITY / STATE / ZIP CODE

                                                                                                                                                                                                                                                                                                                                                 18
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   42%
                                                                                                                     FROM

                                                                                                                     AMOUNT

                                                                                                                                                                                                                 CHEQUE                                DATE

                                                                                                                                                                                                                                                                                                          15

                                                                                                                                                                                                                                                                                                                                               20
                                                                                                                     PURPOSE

                        Direct Entry
                                                                                                                                                                                                                 ADDRESS / CITY / STATE / ZIP CODE
                                                                                                                     0152 - 635486565 - 4526589 -60045

                                                                                                                                                                                                                 FROM

                                                                                                                                                                                                                                                                                                        20
                                3.9
                                                                                                                                                                                                                 AMOUNT

                                                                                                                                                                                                                 PURPOSE

                       3.1
                                                                                                                                                                                                                 0152 - 635486565 - 4526589 -60045

                                                                                                                                                                                                                                                                                                        Billion                                     Billion
                                                                                                                                                                                                                                                                                                                                                                                                               Cash Usage

                                                                                                                                                                                                                                                                                                                              ➧
                                                                                                                                                                                                                                                                                                                                                                                                                Cash Usage

                                                                                                                                                                                                                                                                                                                                                                 18
     Since 2015, Australia’s payment landscape
                                                                                                                                                                                                                                                                                                                                25%

                                                                                                                                                                                                                                                                                                                                                      15

                                                                                                                                                                                                                                                                                                                                                               20
                                                                                                                                                                                                                                                                                                                                                    20
                                     3.1    3.9                                                                                                                                                                                                                                                                                                                                                                                                              2013
                                                                                                                                                                                                                                                                                                                                                                                                                                                               2013
                                                   Cheques
     has continued to rapidly evolve
                                                                                                                                                                                                                                                                                                                                                                       Billion
              Direct Entry                               47
                                                          47
                                                                                                                                                                                                                                                                                                                                                    Billion
                                                                                                                                                                                                                                                                                                                                                                                                                                                                          %%

                                                                                                                                                                                                                                                                                                                                                              ➧
      Cheques
                                         25     -21.3
                                                 -21.3%%                                                                                                                                                                                                                                                                                                       %                                                    2015
                                                                                                                                                                                                                                                                                                                                                                                                                   152.5
                                                                                                                                                                                                                                                                                                                                                                                                                       2016-47%
                                                                                                                                                                                                                                                                                                                                                                                                                        2016                                                                    2018
                                                                                                                                                                                                                                                                                                                                                                                                                    Million
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               80.3
        2015                                                                                                                                                                                                                                                                                                                                                                                                                                                          37
                                                                                                                                                                                                                                                                                                                                                                                                                                                                       37%%                    Million
       152.5                                            -47%

                                                                                                                                                                                                             18
                                                                                                                                                                                                                                                                                                                                                                                                                   CHEQUE                                     DATE

                                                                                 2018
                                                                                                                                                                                                                                                                                                                                                                                                                   ADDRESS / CITY / STATE / ZIP CODE

                                                                                80.3                                                                                 15
                                                                                                                                                                                                                                                                                                                                                                                                                   FROM

                                                                                                                                                                                                           20
                                             Card Payments
        Million
                                                                                                                                                                                                                                                                                                                                                                                                                   AMOUNT

                                                                                                                                                                                                                                                                                                                                                                                                                   PURPOSE
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     CHEQUE                               DATE

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     ADDRESS / CITY / STATE / ZIP CODE
                                                                                                                                                                                                                                                                                                                                                                                                                   0152 - 635486565 - 4526589 -60045
                                                                                                                                                                   20
     Australians continue to adopt digital payment methods
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     FROM

                                                                                                                                                                                                                            3.9
                                                                                Million
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     AMOUNT

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     PURPOSE

                                                                                                                                                                   3.1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     0152 - 635486565 - 4526589 -60045
       CHEQUE                                  DATE

       ADDRESS / CITY / STATE / ZIP CODE

       FROM

       AMOUNT

                                                                      CHEQUE                                           DATE

                                                                                                                                                                                                                     Billion
       PURPOSE

                                                                      ADDRESS / CITY / STATE / ZIP CODE
       0 1 5 2 - 635486565 - 4526589 - 60045

                                                                                                                                                                   Billion                                                                                                                                     Card Payments                                                                                    Australians who hold
                                                                                                                                                                                                                                                                                                                                                                                                                                 hold no
                                                                                                                                                                                                                                                                                                                                                                                                                                      no cash
                                                                                                                                                                                                                                                                                                                                                                                                                                         cashat
                                                                                                                                                                                                                                                                                                                                                                                                                                              ataagiven
                                                                                                                                                                                                                                                                                                                                                                                                                                                   giventim
                                                                      FROM

                                                                                                                                                                                                                                                                                                                                                                                                               Australians
                                                                                                                                                                                                                                                                                                                                                                                                                Direct entrywho                           ti
                                                                      AMOUNT

                          Cheque use continues Cheques
                                                                      PURPOSE

                                               to drop                                                                                                                                                                                                                                                                                                                                                                       transactions
                                                                      0152 - 635486565 - 4 5 2 6 5 8 9 - 6 0 0 4 5
                                                                                                                                                                                                         ➧
                                                     25%                                                                                                                                                                                                                                                                                                                                                        continue to grow
                                                                                                                                                                                                                                                                                                                                                                                                                  Direct Entry

                                                                                                                                                                                                                                                                                                                                                                                                                     2018
                                                                                                                                                                      2015                                                                                                                                                                                                                               8.8
      Direct Entry                                                                                                                                                   152.5                                                       -47%                                    2018                                                                                                                          Billion

                                                                                                                                                                                                                                                                        80.3

                                                                                                                                                                                                                                                                                                                                                                                                                                                                20 2018
                                                                                                                                                                      Million                                                                                                                                                                                                                                                            8.8

                                                                                                                                                                                                                                                                                                                                                       2015
                                                                                                                                                                                                                                                                                                                                                               6.2

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   18
                                                                                                                                                                                                                                                                                                                                                                                                                                Billion

                                                                                                                                                                                                                                                                                                                                                                                                                                                                  15
                                                                                                                                                                                                                                                                                                                                                              Billion

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 20
                                                                                                                                                                                                                                                                        Million
                                                                                                                                                                                                                                                                            CREDIT

                                                                                                                                                                                                                                                                                                                                                                                              2015
                                                                                                                                                                     CHEQUE                                                                                                        CARD
                                                                                                                                                                                                                                                                                                                                                                                                          6.2                                                                                   3.9
                                                                                                                                                                                                                                                                                                                                                                                                                                                                     3.1
                                                                                                                                                                                                          DATE

                                                                                                                                                                     ADDRESS / CITY / STATE / ZIP CODE

                                                                                                                                                                                                                                                                                                                                                                                               ➧
                                                                                                                                                                                                                                                                                                                                                                                                        Billion
                                                                    18

                                                                                                                                                                                                                                                        DEBIT  CARD
       Source: RBA
                                                                                                                                                                     FROM

                                                                                                                                                                                                                                                                                                                                               CREDIT
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Billion
                                                        15

                                                                  20

                                                                                                                                                                     AMOUNT

                                                                                                                                                                                                                                                          CHEQUE
                                                                                                                                                                                                                                                                                                                                                      CARD
                                                                                                                                                                                                                                                                                                                                                                                                  42%                                                                Billion
                                                                                                                                                                                                                                                                                                        DATE
                                                                                                                                                                     PURPOSE
                                                      20

                                                                                                                                                                                                                                                              ADDRESS / CITY / STATE / ZIP CODE

       Payment
                                                                                                                                                                     0152 - 635486565 - 4526589 -60045

                                                                                 3.9

                                                                                                                                                                                                                                                                                                                                                                                                                 ➧

                                                                                                                                                                                                                                                                                                                                                                                                                                                                               ➧
                                                                                                                                                                                                                                                                                                                  DEBIT CARD
                                                                                                                                                                                                                                                              FROM

       Statistics3.1
                                                                                                                                                                                                                                                              AMOUNT

                                                                                                                                                                                                                                                              PURPOSE

                                                                                                                                                                                                                                                                                                                                                                                                                  42%                                                          25%
                                                                                                          Card Payments
                                                                                                                                                                                                                                                              0152 - 635486565 - 4526589 -60045

                                                      Billion             Billion
                                                                ➧

                                                                25%                                                                                                                                                                                                                                                                                                                                             Mobile Payments
                          Card transactions are still growing                                                                                                                                                                                                                                                                                                                                                  Mobile Payments

                                                                                                                                                                                                                                                                                                                                                                                                                   2018
                                                                                                                                                                               Cash Usage
                                                                                                                                                                                      Cash Usage

                                                                                                                                                                                                                                                                                                                                                                                                                2018
                                                                                                                                                                   Direct Entry                                                                                                                                                                                                                                 Source:PAYRBA Payment Statistics
                                                                                                                                                                                                                                                                                                                                                                                                                  Card Payments
                                                                                                                                                                                                                                                                                                                         2018

                                                                                                                                                                                                                                                                                                      8.8                                                                                                                                              PAY
                                                                                                                                                                                                                                                                                                   Billion                                          2013
      Card Payments                                                                                                                                                                                                                                                                                 2013
                                                                                                                                                                                                                     2015

                                                                                                                                                                                                                                                         6.2                                                                                           47%                                                      More people are
                                                                                                                                                                                                                                                      Billion                                               47% %
                                                                                                                                                                                                                                                                                                           -21.3
                                                                                                                                                                                                                                                                18

                                                                                                                                                           CREDIT
                                                                                                                                                                                                                                                                                                                                                                                                                shopping online
                                                                                                                                                                                                                                                     -21.342%
                                                                                                                                                                  CARD

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   2018
                                                                                                                                                                                                                   15

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          8.8
                                                                                                                                                                                                                                                              20

       Source: RBA                                                                                                                                                                                                                                                                                                                                  2016
                                                                                                                                                                                                                 20

                                                                                                                                                                                                                                                                                    ➧

                                                                                                                       DEBIT CARD
                                                                                                                                                                                                                                                                                                                                                                                                                Internet Commerce                                                                                                        Billion
       Payment
                                                                                                                                                                                                                    3.1                                                  3.9                      %
                                                                                                                                                                                                                                                                                                        2016

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                2015
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            6.2
                                                                                                                                                                    2018

                                                                                                                                                           8.8
       Statistics                                                                                                                                        Billion
                                                                                                                                                                                                                                                                  Billion                                                                              37%                                                                                                                                                                Billion
                                                                                                                                                                                                                                                                                                                                                                                                               Internet Commerce
                                                                                                                                                                                                                                                                                                                                                                                                                                                             CREDIT
                                                                                                                                                                                                                 Billion                                                                                                                                                                                                                                            CARD

                                                                                                                                                                                                                                                                                                               37%
                                                                                                 2015

                                                                                                                          6.2

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   ➧
                                                                                                                                                                                                                                                                                                                                                                                                                     DEBIT CARD
                                                                                                                                                                                                                                                     ➧

                                           CREDIT                                                                    Billion                                                                                                                                                                                                                                                                                                                                                                                                        42%
                                                  CARD
                                                                                                                                                                                                                                                      25%                                                                                                                                                                                2016
                                                                                                                                                   ➧

         DEBIT CARD
                                                                                                                                                     42%
                                                                                                                                                                                                                                                                                                                                                                                                                                            $20 Billion
                          Cash continues to fall
                                                                                                                                                                                                                                                                                                                                                                                                                          2016

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  32
                                                                                                                                                                                                                                                                                                                                                                                                                            2018
                                                                                                                                                                                                                                                                                                               Australians who hold no$20
                                                                                                                                                                                                                                                                                                                                       cash       at a given time
                                                                                                                                                                                                                                                                                                                                                               %
                                                                                                          Cash Usage                                                                                                                                                                                                                   $26.5
                                                                                                                                                                                                                                                                                                                                          Billion
                                                                                                                                                                                                                                                                                                                                              Billion

                                                                                                                                                                                                                                                                                                                                                                                                                  Cash
                                                                                                                                                                                                                                                                                                                                                                                                                   2018 Usage

                                                                                                                                                                                                           1 inAustralians
                                                                                                                                                                                                                 5
       CONSUMER PAYMENTS
      Cash
       MADEUsage
            IN CASH                                                                                                                                                                                                        who hold no cash at a given32
                                                                                                                                                                                                                                                      time
                                                                                                                                                                                                                                                         %                                                                                                                                                         $26.5 Billion
                                                                                                                                                                   2013                                                                                                                                                                                                                                                                                              2013
                                                                                                                                                                          AUSTRALIANS
                                                      2013
                                                                                                                                                                          OVER THE AGE                                                                                                                                                                                                                                                                                  47%
                                                                                                                                                                   Card
                                                                                                                                                                      47%Payments
                                                                                                                                                                          OF 18 HOLD NO                                                                                                                                                                                                                         -21.3
                                                                                                                                                                                                                                                                                                                                                                                                                 Source:%NAB Online Retail Sales Index
                                                         47%
    -21.3%                                                                                        -21.3%                                                                  CASH AT ANY
                                                                                                                                                                                                                                                                                                                                                                                                                (June 2016, June 2018)
                                                                                                                                                                                                                                                                                                                                                                                                                          2016
                                                                                                                                                                                                                                                                                                                                                                                                                Australians using fintech
                                                      2016                                                                                                         2016   GIVEN TIME                                                                                                                                                                                                                                      37%basis
                                                                                                                                                                                                                                                                                                                                                                                                                on a regular
                                                         37%
                                                                                                                                                                                  37%                                                                                                                                                                                                                          Australians using fintech
                                                                                                                                                                                                                                                                                                                                                                                                                Fintech is maturing 4
                                                                                                                                                                                                                                                                                                                                                                                                                                  2017
                                                                                                                                                                                                                                                                                                                                                                                                               on a regular basis
                                                                                                                                                                                                                                                                                                                                                       2018

                                                                                                                                                                                                                                                                                                                                             8.8
       Source: RBA 2016 Consumer
                                                                                                                                                                                                                                        Billion
                                                                                                                                                                                                                                    Mobile Payments
                                                                                                                                                                                                            Source: RBA 2016 Consumer
                                                                                                                                                                                                                                                                                                                                                                                                                  Australians who hold no cash at a given tim                                                            37%
                                                                                                                                                                                                                                                                                         2015

       Payment Survey
      Australians who hold no cash at a                                                                                                                                                                  given   time
                                                                                                                                                                                                            Payment  Survey      6.2                                                                                                                                                                                                                                                                                     2017
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         37%
                                                                                                                                                                                                                                Billion
                                                                                                                                                                                                          CRED       IT CAR                                                                                                                                                                                                                                                                                              2015
                                                                                                                                                                                                                                                                                                                   2018

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         13%
                                                                                                                                                                                                                           D
                                                                                                                                                                                                                                                                                                                          ➧

                                                                                                          Australians who hold no cash42%atPAYa given time
                                                                                                                                                                       DEBIT CARD

                                                             Mobile
                          Consumers are starting to adopt mobile     Payments
                                                                 payments
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         2015
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         13%
                                                         11.5%
                                                                                                                                                                                                                                                         2018

                                                                    OF AUSTRALIANS                                                                                                                                                                                                                                                                                                                              Source: EY 2017 Fintech Adoption Index
                                                         HAVE USED CARDLESS/MOBILE
                                                                       Cash Usage
                                                         CONTACTLESS PAYMENTS
                                                                                                                                                                                                                                                                                                  PAY

                                                                                                                                                                                                                                                                                                               Internet Commerce                                                                                  Mobile Payments
      Mobile  Payments
      Source: Roy Morgan, Digital Payment Solutions Currency Report
                                                                                                                                                                                                                 2013
                                                                                                                                                                                                                                                                                                                                                                                                                        2018
            2018

                                                                                                                                                                                                                                         47%                                                                                     2016
                                                                                                                                                                                                                                                                                                                                                                                                          Note: RBA Payment Statistics are for Financial Years
                                                                                                                                                                                                                                                                                                                                                                                                                                                             PAY
4 / Australian
             PAY Payments Council
                                                                                                                                                             -21.3%                                                                                                                                                                $20 Billion
                                                                                                                                                                                                                 2016                                 Internet Commerce
                                                                                                                                                                                                                                                                                                                                                                                                       32%
                                                                                                                                                                                                                                                                 2018

                                                                                                                                                                                                                                                                                                                              $26.5 Billion
Australian Payments Council 2019 Consultation - Payments in a global, digital world
Technological developments and new business models are underpinning this consumer shift

  New Payments Platform                                           Smartphones

                                                                                                                                                                         65+ 65+
                                                                                                                                                                   78%
                                                                                                                                                                   78%
      LAUNCHED IN 2018, AUSTRALIA’S
      FAST PAYMENTS SYSTEM IS ALREADY
      SEEING

      400,000                                                                                                                       IN 2017, 88% OF AUSTRALIANS
                                                                                                                                    OWNED A SMARTPHONE
      transactions a day.                                            UP 80%
                                                                                                                                    INCLUDING 78% OF
                                                                                                                                    AUSTRALIANS OVER 65
                                                                            In 2017, 88% of Australians owned a smartphone including 78% of Australians over 65.

                                                              in 2017-18
Source: NPP Australia Limited                                                                                                Source: Deloitte 2017 Mobile Consumer Survey
                                                                  In 2017, 88% of Australians owned a smartphone including 78% of Australians over 65.

  Fintech Investment                                              Contactless

                                Over                                                                             CRED
                                                                                                                     IT CA
                                                                                                                          RD

                      $              UP 80%
                                $US830min 2018
                                WAS INVESTED IN
                                                             UP 80%
                                                             in 2017-18

                                AUSTRALIAN FINTECH
                                BETWEEN 2016 AND                      82% OF AUSTRALIANS
                                JULY 2018.                            USE CONTACTLESS AT
                                                                      LEAST ONCE A WEEK

                                                                  UP 80%
Source: KPMG5                                                   Source: Publicly reported card scheme data 2017
                                                             in 2017-18

  Wearables                                                       5G

                                                                       COMMERCIAL 5G SERVICES
                                                                       ARE SCHEDULED TO COME
IN THE FIRST HALF OF 2018,
                                                                       ONLINE IN AUSTRALIA IN 2019.
SMARTWATCH SALES

grew 80%
                       $                                                                                                          5G
                                    UP 80%                  UP 80%
YEAR-ON-YEAR,                        in 2018                in 2017-18
TO 680,000 UNITS.

Source: Telsyte6                                                        Source: Telsyte7

                                          Australian Payments Council 2019 Consultation Payments in a global, digital world / 5
Australian payment trends are part
     of a broader global evolution

                                                     European Union
     Scandinavia                                     •	Sectoral direction heavily influenced by regulation.8
                                                     •	PSD2 has introduced open data with payment initiation.
     •	Cheques accounted for
                                                     •	GDPR provides a high-level of privacy protection.
        less than 0.1% of non-cash
        payments in 2014.9
     •	In Sweden, cash is used
        in less than 20% of
        in-store transactions.10
        Given the decline of cash,
        the Riksbank is exploring a
        digitally-issued eKrona.11

     United Kingdom
     •	World first open banking
        system debuted in 2018.12
     •	Card payments surpassed
        cash payments in 2017.13
     •	The Bank of England is
        consulting on adopting
        ISO 20022 for UK payments.14

                                                        India                                    South-East Asia
                    Africa
                                                        •	Leading world adoption of             •	Chinese tech firms are
                    •	The imperative to address           non-cash payment methods.16              establishing their presence in
                       under-banking is driving                                                     retail payments.
                       mobile payments innovation.      •	Second highest rate of fintech
                                                           adoption, at 52%.17                   •	MAS has released a new law
                    •	M-PESA is available in ten                                                   to simplify and consolidate
                       markets with around 29.5m        •	Demonetisation in 2016 sought
                                                                                                    payments regulation.18
                       active customers.15                 to reduce the black economy
                                                           and shift consumers to electronic     •	HKMA has issued guidelines
                                                           payments.                                for virtual banks.19

6 / Australian Payments Council
Global Trends
                                                                                         •	Mobile operators are projected to
                                                                                            invest $500bn worldwide in 2018-
                                                                                            2020, increasing 5G coverage to
                                                                                            11% of the world’s population.24
                                                                                         •	Led by developing markets, global
                                                                                            non-cash transactions rose from
                                                                                            438bn in 2015 to a projected
                                                                                            597bn in 2018.25
                                                                                         •	Cash-in-circulation continues to
                                                                                            rise, indicating it may be used as a
                                                                                            value store rather than a payment
                                                                                            instrument.26
                                                                                         •	While crypto-currencies have not
                                                                                            seen wide adoption, blockchain
                                                                                            continues to be explored.
                                                                                         •	Global fintech investment reached
                                                                                            $US58bn in the first half of 2018,
                                                                                            up from $US11.6bn in the first half
                                                                                            of 2017.27
                                                                                         •	SWIFT is leading payment system
                                                                                            upgrades to ISO 20022.
                                                                                         •	FATF continues to develop
                                                                                            best-practice anti-terrorist
                                                                                            laws and regulations.
                                                                                         •	ISO/PCI continue to evolve
                                                                                            standards for payments.

                                                                United States

China                                                           •	Comparatively high reliance on cheques.

•	Retail payment innovation is driven by tech firms,           •	Private sector offerings, such as Venmo,
   which are replacing cards and cash with mobile                  are driving innovation in retail payments.
   app payments.                                                •	US tech firms are entering the payments space.
•	China possesses 42% of global e-commerce and                 •	Adoption of ISO 20022 for high-value clearing
   11 times more mobile payments than the US.20                    systems to be completed by 2023.23
•	First half of 2018 saw over $14.4bn fintech
   investment, principally Ant Financial.21
•	China has the highest global fintech adoption
  rate, at 69%.22
                                                 Australian Payments Council 2019 Consultation Payments in a global, digital world / 7
Global platforms have also become
     a significant force in payments

                              eCommerce        Accommodation

            Transport
                                                               Entertainment
                                         Payments

                 Devices
                                                           Social Interaction

                                       Cloud and
                                    Business Services

   Source: AusPayNet, A.T. Kearney 28

                                        Consultation Questions
                                        1.	What are your views on the trends outlined on pages 4 to 8?
                                             Are there other factors or issues to consider?
                                        2. What are some other interesting international trends?
                                        3. Is digitisation changing the way we view payments?

8 / Australian Payments Council
Objectives for the Australian
Payments system
The Payments Council is renewing its strategic agenda

The Australian     The Australian Payments Council (APC) was formed in 2014 as the strategic
                   coordination body for the Australian payments industry. Our role is to help ensure
Payments Council   the Australian payments system continues to meet changing customer needs with
                   innovative, secure and competitive payment services.
                   The APC provides a forum for the Payments System Board (PSB) to consult directly
                   with industry. The PSB is one of two boards of the Reserve Bank of Australia (RBA),
                   and is responsible for the RBA’s payments system policy. This arrangement is
                   formalised in a Memorandum of Understanding established in August 2015.29 The
                   direct engagement with the PSB is an important part of the Council’s role and the
                   two parties convene a meeting in August each year.

The Australian     The Australian Payments Plan was released in December 2015. Created in
                   consultation with consumers, government bodies, academics and business, the
Payments Plan      plan outlined a roadmap for industry collaboration to ensure that our world-class
                   payments system continues to meet the changing needs of Australians. Over the
                   last three years, the plan has guided the strategic thinking of the APC in areas such
                   as digital identity, open data and the changing payments mix.

                   The Consultation Process
                   The current plan recommended a triennial review, the first to take place in 2018.
                   Given the pace of change, a new strategic agenda will help ensure our payments
                   system continues to effectively support the needs of all users. We are seeking
                   written submissions, and will facilitate roundtable sessions in the first half of 2019.
                   This consultation is your opportunity to help shape the next stage. Information on
                   how to make a submission is contained at the end of this document.

                   Concurrent Consultations
                   In the first half of 2019, the RBA and Australian Payments Network (AusPayNet)
                   will be consulting on specific aspects of the payments system’s future. These
                   consultations will run at the same time as this review. AusPayNet’s work will create
                   a vision and roadmap for Australia’s payment rails, while the RBA will be seeking
                   feedback on the timing, scope, approach and other strategic decisions for migrating
                   the RITS ecosystem to ISO 20022.
                   The intention of this review is not to duplicate the work of other bodies, but look to
                   identify common strategic issues. We will share any submissions received during
                   this review which relate to those reviews.

                             Australian Payments Council 2019 Consultation Payments in a global, digital world / 9
Your insights will help shape
     the future of payments

                                      Your insights and perspective will help us shape our new strategic vision and help
                                      ensure our payments system continues to meet the changing needs of Australians.
                                      We welcome feedback from all users of the payments system, including both
                                      general feedback on issues related to our strategic coordination role and specific
                                      responses to the consultation questions within this document:

                                   Australian Payments in Global Context
                                   1.	What are your views on the trends outlined on pages 4 to 8?
                                       Are there other factors or issues to consider?
                                   2. What are some other interesting international trends?
                                   3. Is digitisation changing the way we view payments?

                                   Objectives for the Australian Payments System
                                   4.	Within the four user-groups (individuals, business, community groups and
                                       government), what sub-groupings have special needs or requirements that
                                       we should consider?
                                   5.	Do Resilience, Efficiency, Accessibility and Adaptability remain appropriate
                                       characteristics for our vision of an effective payments system?
                                   6.	Should digitisation change our vision for an effective payments system?
                                       If so, how?

                                   Areas for Industry Collaboration
                                   7.	Do the identified topics represent appropriate focus areas for the APC, given our
                                       vision of an effective payment system?
                                   8. Are there other potential focus areas that we have not identified?
                                   9.	How do you think we should prioritise our work within these focus areas?
                                   10.	Can you provide any information on emerging technologies that may impact
                                       our work?
                                   11.	Can you provide any information on any other ongoing strategic work within
                                       these focus areas? Including industry, government, academia, NGOs, etc.?

10 / Australian Payments Council
The payments system must support
a diverse range of users

                Users of the payments system are grouped into four categories:

                                        An individual’s habits and needs may vary based on
                 Individuals            the basis of age, location, language spoken at home or
                                        disability.

                                        Community groups include charities, education institutions
                 Community
                                        and recreational clubs. They may include large non-
                 Groups
                                        governmental organisations, or small local sporting clubs.

                                        Business range in size from micro-businesses through to
                                        large multinational corporations. Businesses may operate
                 Businesses
                                        onshore or internationally. Increasingly, B2B and B2C are
                                        both moving online.

                                        Local councils, state and federal governments each need
                 Government
                                        to accept payments and distribute entitlements.

                In turn, these users are supported by four groups of stakeholders:

                                        Banks and other payment organisations who offer services
                 Service Providers
                                        to payment users.

                                        Operators provide the payment networks that link service
                                        providers and users with each other. Examples include
                 Operators
                                        American Express, BPAY, Diners Club, eftpos, Mastercard,
                                        Union Pay and Visa.

                                        Infrastructure providers administer common elements of the
                 Infrastructure         payments system, often used by multiple payment networks
                 Providers              and services, such as the Reserve Bank of Australia and
                                        the New Payments Platform.

                                        The Australian Government has reponsibility for the banking
                 Regulators and         and financial system. The RBA is the primary regulator of
                 Government             the payments system, with ASIC, APRA and the ACCC also
                                        holding responsibility for some elements.

             Consultation Question
             4. Within the four user-groups (individuals, business, community groups and
                 government), what sub-groupings have special needs or requirements that
                 we should consider?

                         Australian Payments Council 2019 Consultation Payments in a global, digital world / 11
An effective payments system is resilient,
     efficient, accessible and adaptable

                                       To accommodate this diverse set of needs, the APC is guided by a vision of a
                                       payments system that demonstrates four desirable characteristics:

                                                               Payments infrastructure is certain and predictable and
                                                               provides a basis for delivery of well-defined and valued
                                       Stability
                                                               payment services to users through operators and service
                                                               providers.
               Resilience                                      Payment services are available when users and service
                                       Reliability
                                                               providers want them, and outages are minimised.
                                                               The system is structured to protect against unauthorised
                                       Security
                                                               access to value and data.
                                       Resource                Finite system resources are allocated for maximum
                                       Allocation              stakeholder value.
                                                               Operators and service providers are able to develop and
                                       Sustainability
                                                               maintain sustainable business models.
               Efficiency
                                                               Standardised, automated processes and straight-through
                                       Integration
                                                               processing minimise cost and risk.

                                       Liquidity               Money circulates rapidly at minimal friction cost.

                                                               Consumers and businesses have access to a range of
                                       Ease of Use             user-friendly payment services so they can choose how to
                                                               make and receive payments.
                                                               The payments system is widely accessible amongst users,
             Accessibility             Reach
                                                               so that payers can reach payees.
                                                               Payment service providers and operators have equitable
                                       Competitiveness         access to underlying infrastructure so as to promote
                                                               competition.
                                                               The payments system is flexible to accommodate new
                                       Openness
                                                               business models, business strategies and technologies.
                                                               Innovation in payment networks and payment services is
                                       Innovation
                                                               encouraged, so that changing user needs are met over time.

              Adaptability                                     Where there are strong network effects, governance
                                       Collaboration           frameworks encourage operators and service providers to
                                                               cooperate to bring about payments system improvements.
                                                               Regulation (including self-regulation and industry
                                       Regulatory
                                                               standards) is clear, up to date and supportive of both
                                       Certainty
                                                               cooperation and competition.

                                   Consultation Question
                                   5. Do Resilience, Efficiency, Accessibility and Adaptability remain appropriate
                                       characteristics for our vision of an effective payments system?

12 / Australian Payments Council
Digitisation is changing the way we pay

                 As the payments system becomes more digital, new challenges and opportunities
                 will emerge:
                 •	The resilience of the payments system will become more dependent on
                    electronic systems and people will continue to move away from traditional
                    payment methods that once served as ‘back-ups’
                 •	Digitisation will improve efficiency through innovation and replacing physical
                    processes
                 •	While accessibility will be enhanced, it is important to ensure appropriate
                    payment options are retained in the transition to digital payments
                 •	To maintain adaptability, regulation and self-regulation will need to accommodate
                    and support the pace of innovation

              Consultation Question
              6. Should digitisation change our vision for an effective payments system? If so, how?

                          Australian Payments Council 2019 Consultation Payments in a global, digital world / 13
Collaborative Industry Work Since 2015

     The 2015 plan provided a strategic
     vision for the payments industry

                                   In 2015, the APC identified that industry was already responding well to Australia’s
                                   changing payment needs. Globally, Australia has an advanced payments system
                                   and initiatives (such as the then-recently announced NPP) were underway to ensure
                                   we continued to lead international best practice.
                                   Within three themes, the APC identified areas not covered by existing initiatives
                                   that required further exploration, where there was capacity to complement existing
                                   industry work:

                                   The APC committed to ensure that the consumer-led decline of cash and cheques
                                   is appropriately managed, by developing strategies on The Transition Away from
         Managing the              Cheques and A Less-Cash Society.
         Payments Mix              The changing payments mix may require changing existing payments system
                                   frameworks, with the APC identifying a need to Review the Future of Existing
                                   Payment Systems.

                                   Given the rapid rise in online transactions, collaborative industry efforts to develop
                                   and implement effective anti-fraud measures were already advanced.
                                   Progressing work in Digital Identity and Data Management would see the APC
                                   take an active role in the development of a national identity framework that builds
         Security and Trust        on the industry’s expertise and payments innovation.
                                   Given that the Financial System Inquiry had recently recommended formal
                                   mechanisms be developed for public-private information sharing, the plan
                                   suggested that the APC Lead Work on Cyber-Security, representing the
                                   payments industry in discussions with Government.

                                   The plan found the APC was in a strong position to assess developments in
                                   payments and to promote an environment where innovation and community
         Enabling the Future       benefits can flourish. The APC recommended that it Enable Technology
                                   Innovation by regularly assessing the state of innovation, assessing impacts and
                                   recommending areas for further strategic consideration.

14 / Australian Payments Council
This vision has helped shape
collaborative industry work

                       The APC researched community attitudes towards the decline of cheques. We
                       spoke to dozens of consumer groups, representative organisations, industry,
                       regulators and individuals; and facilitated industry workshops to consider these
                       findings.
                       In a speech in November 2018, the RBA Governor noted this trend, stating “it
 The Transition Away   will be appropriate at some point to wind up the cheque system”.30 The APC’s
 from Cheques          research found that cheque use is in long-term decline and, at a point in the future,
                       cheques will not be part of the payment landscape.
                       The resulting report31 made recommendations to help ensure appropriate payment
                       services are available to users of the Australian payments system, prior to the
                       removal of cheques. Following acceptance of the report, implementation passed to
                       the AusPayNet.

                       The APC researched global approaches to digital identity and created an Action
                       Plan to create a trust framework that will support portable, economy-wide digital
                       identity.
                       Eighteen organisations from the APC and the wider community including the
 Digital Identity      Digital Transformation Agency (DTA) are now delivering on this Action Plan and
                       have selected a model that will lead to the creation of an open and contestable
                       framework to support a wide range of interoperable identity services.
                       We anticipate that the development of a digital identity trust framework will be
                       finalised by mid-2019.

                       The APC developed a set of high-level principles for data-sharing, facilitated
                       international learnings and held an open data hackathon.
                       On 9 May 2018, the Australian Government announced it will introduce an economy-
 Data Management       wide ‘Consumer Data Right’.
                       The APC is pleased to have led early strategic thinking. Given Government’s
                       announcement, this has moved from strategic policy development to operational
                       implementation and the APC is no longer taking an active role.

                       Working with members of the APC and payments community, we identified the
                       core needs of the payments community as: (1) awareness generation, (2) timely
                       sharing of actionable intelligence, and (3) development and testing of incident
 Cyber-Security        management procedures. We have worked closely with government on how we
                       can jointly address these needs.
                       The APC is in the process of agreeing requirements for an information sharing
                       framework, which will form the basis of future collaboration.

                               Australian Payments Council 2019 Consultation Payments in a global, digital world / 15
Other industry initiatives are also driving change

                                   Other bodies are progressing important initiatives within payments. Some of this
                                   work includes areas identified in the 2015 Plan and includes work by by industry
                                   and Government.

                                   Industry:
                                   •	The Australian Banking Association is leading industry technical work on the
                                      CDR standards.
                                   • AusPayNet is undertaking work to create a vision and roadmap for Australia’s
                                      payment clearing systems, and is investigating the impact of new technologies.
                                   •	NPP Australia and SWIFT, in collaboration with a number of participating
                                      financial institutions, are partnering to trial Australia-bound cross-border real-time
                                      payments.

                                   Government:
                                   •	The Productivity Commission Report, Data Availability and Use, recommended
                                      the creation of the CDR.
                                   •	Following on from this, a Treasury Review, Open Banking in Australia, explored
                                      and recommended an appropriate regulatory model, and the Government has
                                      announced a phased implementation date starting in July 2019.
                                   •	Treasury investigated the taxation implications of the decline of cash, through the
                                      Black Economy Taskforce.
                                   •	The Final Report of the Productivity Commission inquiry into Competition in
                                      the Australian Financial System investigated and made recommendations into
                                      financial sector regulation, including the payments system.
                                   •	The Council of Financial Regulators has commenced a Review of Retail
                                      Payments Regulation: Stored Value Facilities.
                                   •	The Digital Transformation Agency is delivering a digital identity program, which
                                      includes a trusted digital identity framework and the creation of a digital identity
                                      provider, myGovID, to support convenient and secure access to government
                                      services. The DTA is also collaborating with the Payments Council on this topic.

16 / Australian Payments Council
A Renewed Vision for Payments

Areas for industry collaboration

                       This section outlines challenges that have emerged or intensified over the last three
                       years, and suggests new ideas for industry collaboration. We want to identify areas
                       that provide the greatest strategic value, whether in the form of project work or
                       ongoing strategic discussion. In doing so, we will take into account:
                       •	Is there potential for strategic collaboration that supports market competition and
                          innovation?
                       • Would the APC be duplicating work already underway elsewhere?
                       •	Is the area suited to industry collaboration, rather than market competition?
                       The following pages outline some initial thoughts on new focus areas. We welcome
                       your feedback on these areas, and also your views on any other areas.

                       The 2015 plan identified the decline of cash as a focus area, most recently
                       highlighted in November 2018 by the RBA Governor.32 There is scope to explore
                       the broader strategic implications of the decline of cash as a retail payment
                       method.
                       A paper by the International Monetary Fund (IMF)33 explored the concept of central
                       banks creating a ‘widely accessible digital form of fiat money that could be legal
                       tender’. This considered how digital currencies could extend the attributes of
                       cash to the digital world. While the paper concluded it was too early to draw firm
                       conclusions, it suggested that this may vary given the circumstances of individual
 Decline of Cash       countries. Potential benefits of a central bank digital currency may include
                       mimicking the benefits of cash in privacy and resilience.

                       Potential Output:
                       •	Examine alternatives to cash that fulfil a similar role in the payments system
                       • Examine the role of cash in payments system resilience
                       •	Examine the impact of the decline of cash on remaining cash-users in Australia
                       •	Create an index to measure the decline of cash and payments system
                          digitisation

                       As more payments become more digital and fewer Australians carry cash, the
                       retail economy is becoming more reliant on electronic payment systems. There
                       is both an operational and strategic component to payments system resilience.
                       Strategically, in a world where the economy is ‘digital by default’, how should we
                       conceptualise systemic resilience?
 Systemic Resilience
                       Potential Output:
                       •	Assess stakeholder expectations of systemic resilience
                          and international best practice
                       •	Develop high-level principles to guide industry and regulators

                               Australian Payments Council 2019 Consultation Payments in a global, digital world / 17
Globally, we are now approaching 31 billion internet-connected devices. The
                                      Internet of Things represents a vision where these devices have a level of
                                      autonomy, including making purchases, which may present new challenges for
                                      the identification and authentication of devices, as well as payment initiation and
                                      confirmation.
         5G, Hyper-Connectivity
         and the Internet of Things
                                      Potential Output:
                                      •	Examine the implications of these emerging trends on the payments system
                                      •	Examine privacy implications in a world of autonomous payments

                                      While face-to-face card fraud has almost disappeared, the rise in internet
                                      commerce has seen fraud migrate online, rising from $323m in financial year
                                      2015 to $478m for the same period in 2018 on Australian cards. As advances in
                                      payment systems make it quicker and easier to transfer money internationally, it
                                      may become easier for fraudsters to move funds offshore, and harder for banks to
                                      recover it.
                                      AusPayNet has developed a draft framework to mitigate card-not-present (CNP)
                                      fraud, and is consulting with the e-commerce community. The Australian Financial
                                      Crimes Exchange (AFCX) is an independent Australian body that coordinates
                                      efforts to combat financial and cyber crime.

         Financial Crime              Internationally, the G20 has positioned the Global Legal Entity Identifier (GLEI) as
                                      an option to combat money laundering.
                                      While there is already ongoing work within this space, there may be a strategic
                                      element for further exploration.

                                      Potential Output:
                                      •	Assess international trends to identify potential areas of financial crime that may
                                         affect Australia in future
                                      •	Assess what payments system developments are providing opportunities to help
                                         combat financial crime
                                      •	Develop a strategic industry policy to proactively respond to these areas

18 / Australian Payments Council
Consumers and business increasingly expect that payments will operate across
                              borders, across platforms, across devices and across the physical/digital divide.
                              Global systems are needed to underpin a global economy. Historically, payments
                              systems were constructed on a national basis with international bodies such
                              as ISO, PCI and SWIFT providing standards and interoperability. However, the
                              WEF has identified that ‘different regulatory priorities, technological capabilities
                              and customer conditions are challenging the narrative of increasing financial
                              globalisation’.34 In an extreme case, after the introduction of the GDPR, it was
                              reported that some US websites blocked visitors from the EU.
                              New business models are emerging, with remittance providers offering new
Payment Interoperability:     products to customers. As real-time payment systems come online globally,
Global and Domestic           there may be scope to explore greater levels of interoperability, for example with
Dimensions                    countries in the South Pacific.
                              Concurrently, global platforms are becoming a significant force. Social media
                              platforms are ubiquitous throughout the world and seamless payment experiences
                              through social media are becoming more common.

                              Potential Output:
                              •	Research international regulatory trends in financial services and privacy, to
                                 identify if regionalisation poses risks for interoperability of Australian payments
                              •	Assess the role for APC in establishing common data standards to ensure
                                 payments can be easily integrated to platforms and user experiences outside of
                                 existing banking channels

                              In many countries, digital innovations in payments system have helped improve
                              social inclusion outcomes, by bringing more people into the banking system.
                              Introduced in Kenya in 2007, M-PESA has proven highly effective in bringing more
                              people within the banking system.35
                              To date, much of this potential has been realised in countries with large unbanked
                              populations. While virtually all of the Australian population is banked,36 there
Social Inclusion              may be an opportunity to explore other aspects of financial inclusion through
                              the payments system. Alternatively, the impact of certain trends – such as the
                              increased use of data analytics – could be examined.

                              Potential Output:
                              •	Assess the potential for the Australian payments system to address underbanking
                                 and financial inclusion, and identify appropriate collaborative programs

                        Consultation Questions
                        7.	Do the identified topics represent appropriate focus areas for the APC, given our
                             vision of an effective payment system?
                        8. Are there other potential focus areas that we have not identified?
                        9. How do you think we should prioritise our work within these focus areas?
                        10. Can you provide any information on emerging technologies that may impact our work?
                        11.	Can you provide any information on any other ongoing strategic work within these
                            focus areas? Including industry, government, academia, NGOs, etc.?

                                      Australian Payments Council 2019 Consultation Payments in a global, digital world / 19
How to have your say

                                   Written submissions should be emailed to:
                                   submissions@australianpaymentscouncil.com.au

                                   Alternatively, submissions can be posted to:
                                   Review of the Australian Payments Plan
                                   Australian Payments Council
                                   Level 23, 3 International Towers
                                   300 Barangaroo Ave
                                   SYDNEY NSW 2000

                                   Submissions received will be reviewed by Council Members and posted on the
                                   APC website (www.australianpaymentscouncil.com.au), though the APC reserves
                                   the right to not post a submission it deems inappropriate. If you do not want your
                                   submission posted on the APC website, please ensure it is clearly marked ‘non-
                                   public’.
                                   The deadline for written submissions is 5pm, Friday 22 February 2019.
                                   During the consultation period, stakeholder forums will be held to discuss the issues
                                   raised in the Consultation Paper. For more information or to discuss any aspect of
                                   the consultation process, please email info@australianpaymentscouncil.com.au.

20 / Australian Payments Council
Appendices

Appendix 1:
Glossary

              ABA		           Australian Banking Association
              ACCC 		         Australian Competition and Consumer Commission
              AFCX		          Australian Financial Crimes Exchange
              APC		           Australian Payments Council
              APRA		          Australian Prudential Regulation Authority
              ASIC		          Australian Securities & Investments Commission
              AusPayNet       Australian Payments Network
              BAT		           Baidu Alibaba Tencent
              BIS		           Bank for International Settlements
              CDR		           Consumer Data Right
              CHIPS		         Clearing House Interbank Payments System
              COBA		          Community-Owned Banking Association
              DTA		           Digital Transformation Agency
              EMV		           Europay Mastercard Visa
              FATF		          Financial Action Task Force
              FIDO            Fast Identity Online
              GAF		           Google Apple Facebook
              GDPR		          General Data Protection Regulation
              GLEI		          Global Legal Entity Identifier
              HKMA		          Hong Kong Monetary Authority
              ISO		           International Organization for Standardization
              MAS		           Monetary Authority of Singapore
              NPP		           New Payments Platform
              NPPA            NPP Australia
              PCI		           Payment Card International
              PPF		           Purchased Payment Facility
              PSB		           Payments System Board
              PSD2		          Payment Services Directive 2
              RBA		           Reserve Bank of Australia
              RITS		          Reserve Bank Information and Transfer System
              SWIFT		         Society for Worldwide Interbank Financial Telecommunications
              TCH		           The Clearing House
              W3C		           World Wide Web Consortium
              WTO		           World Trade Organization

                     Australian Payments Council 2019 Consultation Payments in a global, digital world / 21
Appendix 2:
     What is ‘fintech’?

     There is no single            •	Many definitions agree that fintech refers to firms that focus on applying
                                      technological solutions to financial products. Traditional financial institutions are
     agreed meaning                   rarely included, even where they have sophisticated technological offerings. The
     but most definitions             term was traditionally applied to small start-ups but, as the fintech industry has
                                      matured, larger firms are also included.
     of ‘fintech’ share
                                   •	FinTech Australia, the industry association, provides a short and expansive
     commonalities                    definition, noting that fintech is short for ‘financial technology’ and ‘part of the
                                      worldwide innovation boom’.
                                   •	The Financial Stability Board defines fintech as ‘technologically enabled financial
                                      innovation that could result in new business models, applications, processes or
                                      products’.
                                   •	The World Economic Forum Report Beyond Fintech defines a fintech as ‘a small,
                                      technology‐enabled, new entrant to financial services’ and excludes ‘large
                                      technology firms that enter financial servies’ and ‘incumbent financial institutions
                                      who increase their focus on technology’.
                                   •	The EY 2017 FinTech Adoption Index defines a fintech as ‘an industry that
                                      includes not only early-stage start-ups and new entrants, but also scale-ups,
                                      maturing firms and even non-financial services firms’.
                                   •	Some definitions of fintech include large tech firms. The Roy Morgan Digital
                                      Payment Solutions Currency Report describes Apple, Samsung and Google as
                                      fintechs.
                                   •	Although the KPMG 2018 Fintech 100: Leading Global Fintech Innovators does
                                      not include Google or Apple, it does list Chinese tech giant Ant Financial.

     Fintechs encompass            •	Given the expansiveness of the definition, the fintech industry encompasses a
                                      diverse range of services to consumers and business. Fintechs can offer entirely
     a diverse range of               new experiences, or can use technology to automate and enhance existing
     business models                  business models.
                                   •	Fintechs range from automated financial advice software, budgeting and financial
                                      management tools, lending marketplaces, payment solutions, micro-savings tools
                                      through to challenger digital banks.
                                   •	Fintech includes several emerging specialised sub-fields. ‘Regtech’ focuses
                                      on helping businesses utilise technology to fulfill regulatory and compliance
                                      obligations while ‘suptech’ assists supervisory agencies in their regulatory
                                      functions. ‘Insurtech’ focuses on the insurance industry.

22 / Australian Payments Council
References

1
     T
      reasury (May 2018), Government Response to the Review into Open Banking
2
     C
      ouncil of Financial Regulators (September 2018), Review of Retail Payments Regulation: Stored-value Facilities
3
     B
      lack Economy Taskforce (May 2018), Final Report
4
     For a discussion of the definition of ‘fintech’, see Appendix 1: “What is Fintech”
5
     igures taken from KPMG (February 2017) US$656m invested in Australia’s Fintech Sector in 2016; and KPMG
    F
    (August 2018) Investment continues to grow in Australia’s Fintech sector
6
    Telsyte (August 2018), Australian Smartphone Sales Slow Ahead of 5G
7
    Telsyte (October 2018), Household Interest in 5G Gathers Pace
8
    For a discussion of PSD2 and GDPR, see: Deloitte (August 2017), PSD2 and GDPR: Friends or Foes?
9
    Nets EU (June 2016), Market Overview: Payments in the Nordics
10
     BBC (September 2017), Why Sweden is Close to Becoming a Cashless Society
11
     Riksbank (October 2018), E-Krona Project, Report 2
12
     EY, (August 2017) Fintech Adoption Index
13
     UK Finance (June 2018), UK Payment Markets Summary
14
     Bank of England (June 2018), ISO 20022 Consultation Paper
15
     Vodafone (February 2018), Media Release: Vodafone Marks 10 Years of the World’s Leading Mobile Money Service
16
     Capgemini (October 2018), World Payments Report 2018
17
     EY, (August 2017) Fintech Adoption Index
18
     Monetary Authority of Singapore (November 2018), New Regulatory Framework to Enhance Payment Services
19
     Hong Kong Monetary Authority (May 2018), Guideline on Authorization of Virtual Banks
20
     McKinsey Global Institute (December 2017), Digital China: Powering the Economy to Global Competitiveness
21
     KPMG (July 2018) Pulse of Fintech Report
22
     EY, (August 2017) Fintech Adoption Index
23
     TCH (October 2017), Deep Dive into the ISO 20022 Implementation Strategy for US High-Value Payments systems
24
     GSMA (June 2018), Mobile Economy 2018
25
     Capgemini (October 2018), World Payments Report 2018
26
     G4S (August 2018) World Cash Report
27
     KPMG (July 2018) Pulse of Fintech Report
28
      .T. Kearney, AusPayNet (December 2018), Towards an Internet of Payments - Global Platforms Re-defining the
     A
     Payment Landscape
29
     APC, RBA (August 2015), Memorandum of Understanding
30
     RBA Governor, Philip Lowe (November 2018), Speech: A Journey Towards a Near Cashless Payments system
31
     APC (December 2018), The Changing Payments Mix
32
     RBA Governor, Philip Lowe (November 2018), Speech: A Journey Towards a Near Cashless Payments system
33
     International Monetary Fund (November 2018), Casting Light on Central Bank Digital Currencies
34
     World Economic Forum (August 2017), A Pragmatic Assessment of Disruptive Potential In Financial Services
35
     Oxford University, Practitioner’s Insight (July 2018), M-PESA, A Success Story of Digital Financial Inclusion
36
     World Bank (2018), The Global Findex Database: Measuring Financial Inclusion and the Fintech Revolution

                                                      Australian Payments Council 2019 Consultation Payments in a global, digital world / 23
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