CEO’s Corner

Mitigating Scams, Better Together

We stand at a generational tipping point in payments, with two once-in-a-lifetime opportunities:

1. To ensure that the regulatory settings for payments – which currently date back to the 1990s – are modernised and are fit for the future. Implementing the recommendations from Treasury’s Payments system review: From system to ecosystem will achieve that aim, protecting consumers and supporting innovation.
    
2. To simplify the payment system. AusPayNet’s focus on payments modernisation (cheques, BECS, COIN and ISO 20022 for HVCS), together with, for example, AP+’s NPP roadmap, will achieve that aim, maximising the payment system’s efficiency and its benefits for end users.

Alongside these two generational opportunities, we have one generational obligation: to mitigate scams, which unfortunately affect far too many Australian consumers and businesses.

The Problem

Last month’s ACCC Targeting Scams report estimated that Australians lost more than $2 billion to scams in 2021. The ACCC also rightly observed that, “the true cost of scams is far more than just financial – it leads to emotional stress and can have life changing consequences for many individuals, families, and businesses.”

The Objective

To avoid such financial and emotional harm, we need to make Australia a hard target for scams. To do so will require:

• a focus on preventing scams, rather than compensating for them
   
• collaboration between all the actors in the scams ecosystem.

While compensation can reduce financial harm, it cannot reduce emotional harm and further, does not serve as a deterrent to scammers. We are therefore encouraging a focus on prevention over compensation as a way of avoiding consumer harm before it happens.

In terms of collaboration, the scams lifecycle is complex, with many touchpoints at which scams can be prevented. The owners of these touchpoints – including consumers as the first link in the lifecycle, the platforms that support their activity (social media, telecommunications and internet service providers) and banks and payment providers as the last link in the lifecycle – each play a role and should therefore collaborate to prevent and, as necessary, remedy scams.

The Strategy and Plan

AusPayNet is leading collaboration with these stakeholders by forming a Scams Mitigation Strategy and Program, with the Australian Banking Association, the Australian Financial Crimes Exchange (AFCX) and IDCARE. It now includes the following five key pillars of work.

1. Data and Insights: using data from AFCX to drive insights and response strategies to reduce scams, and to prioritise those strategies to maximise their overall impact on scam volumes.
    
2. Fusion and Response: via AusPayNet’s Economic Crime Forum (ECF), which brings together law enforcement, other government agencies and industry to drive response, community awareness and prevention strategies. One such prevention strategy, which is already live, is NPP’s PayID solution. This solution mitigates business email compromise scams. Businesses are now being actively encouraged to use PayID to give consumers certainty that who they are paying is their intended recipient. The ECF has also commenced a Remote Access Scam (RAS) pilot project, which is aimed at developing an intelligence package for the Australian Federal Police (AFP), detailing intelligence leads to enable offshore disruption opportunities.
    
3. End User Education: develop and implement an end user education and prevention program to increase customer awareness and reduce the likelihood of scams occurring. Such education will require a multi-year campaign that resonates with consumers, much like – in a different field – the ' slip, slop, slap' campaign.
    
4. Policy: contribute to public policy to ensure the uptake of the most effective strategies to reduce the impact of scams on consumers and to make Australia unrewarding to scammers. For example, we are currently conducting research on: approaches in other jurisdictions - such as the UK’s Confirmation of Payee – and whether scammers have simply moved to other channels; and the UK's Contingent Reimbursement Model and whether it has introduced moral hazard.
    
5. Industry Standards: review the existing AusPayNet and IDCARE identify theft and scam industry standards and guidelines – published in 2020 – to ensure consistent industry standards and minimise the impact of scams on payment end users and our financial system.

In Conclusion

We need all players in the scams lifecycle to contribute to preventing scams. While all scams involve a payment, not all scams are payment scams; scammers often begin social engineering their victims on digital platforms or groom them through telephone calls, SMS and emails. Information exchange between providers in these sectors, and banking and payments firms, is critical in preventing scams. And policy and regulatory responses need to involve all such actors, as well as the consumers unfortunately affected by scams. In mitigating scams, we are better together.

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Election of new directors

AusPayNet recently finalised its Board for the new three-year term commencing in October 2022, following the election of four representative Elected Directors. These directors represent the wider Electing Member Group, which includes Participant Members, Operator Members, and our new PSP Members.

We received 13 nominations for the four seats in a competitive election process. Nominations included two new PSP Members, two Operator Members, one mutual bank, and eight other Participant Members.

The new Elected Directors are Kees Kwakernaak (Fiserv), Adrian Lovney (AP+), Greg Moore (Macquarie Bank) and Derek Weatherley (Indue).

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AusPayNet publishes 2022 Australian Payment Fraud Report

AusPayNet’s 2022 Australian Payment Fraud Report highlights that in 2021, while card payments grew by 8.0% to $865 billion and online spending by 8.2% to $53 billion, the incidence of all card fraud grew at a slower pace, by 5.7% to $495 million for the year.

The rate of fraud on Australian card payments in 2021 was steady at 57.3 cents per $1,000 of spending, compared to 58.6 cents in 2020.

Stabilisation of the fraud rate coincides with AusPayNet’s introduction in 2019 of the CNP Fraud Mitigation Framework to counteract rising rates of CNP fraud. In the three years prior to the introduction of the framework (2016-2018), the fraud rate averaged 74.3 cents per $1,000 spent.

As criminals adapt and evolve their methods to take advantage of the increasing amount of time Australians are spending online, payment scams are on the rise, and these are a focus for AusPayNet’s Economic Crime Forum. Additionally, AusPayNet’s scams mitigation program developed alongside the Australian Banking Association (ABA), Australian Financial Crime Exchange (AFCX), and IDCARE, seeks to make Australia an unattractive target for scammers.

For more figures and insights, read the 2022 Australian Payment Fraud Report.

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The customer-led decline of cheques

In a segment broadcast in July, ABC Radio Darwin turned its attention to the question of whether paying by cheque has become ‘a dying art’ and AusPayNet CEO Andy shared his insights.

Listen to the full 12-minute segment.

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Advanced Encryption Standard (AES) Migration

With the emergence of quantum computing, there is a growing focus on post-quantum cryptography (PQC), new encryption methodologies that outpace the capabilities of quantum computing. The US’s National Institute of Standards and Technology (NIST) is focused on this area, for example.

In considering the need to be 'PQC ready', AusPayNet is proposing to migrate Australian card payments to AES. AusPayNet will shortly engage members and stakeholders in the creation of a program initiation document, to define the scope and timing of this migration.

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ISO 20022 migration

For a high-level update regarding the progress of the ISO 20022 Industry Migration Program, please refer to the recently published Migration Monitor on AusPayNet’s website.

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AusPayNet Summit 2022: Paving the way

Registrations are now open for the 2022 AusPayNet Summit, which will be held at the International Convention Centre (ICC) Sydney on Wednesday, 14 December.

Hosted by award-winning journalist and presenter, Helen Dalley, the Summit will involve several commentators participating in a dynamic series of interviews, panel discussions and rapid-fire talks. These will include an address by RBA Governor Philip Lowe, and Australia’s Assistant Treasurer and Minister for Financial Services, The Hon Stephen Jones MP, outlining the role of government in payments, as well as the ‘Big Debate’, in which industry experts will come together to discuss Australia’s readiness for digital currency. This event also provides a great opportunity for banking and payments industry professionals to network and make new connections.

More details about the Summit program can be found here.

Register now to take advantage of our early bird offer and save $145 on individual and group registrations (per person) that are completed before 14 October.

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New members

During the last quarter, AusPayNet was pleased to welcome the following new Payment Service Provider (PSP) members:

• Armaguard Technology Solutions Pty Ltd (effective 2 June 2022)
   
• Ingenico International (Pacific) Pty Ltd (effective 7 June 2022)
   
• Square AU Pty Ltd (effective 12 July 2022)
   
• payFURL ANZ Pty Ltd (effective 28 July 2022)
   

For more information on AusPayNet membership, please visit the membership page on AusPayNet’s website.

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Stakeholder Engagement Update

AusPayNet recently sponsored the ‘Best Innovation in Payments’ Award at the 7th Annual Fintech Awards. A special mention for all the nominees in this category, which included Zepto, Novatti and Airwallex. Congratulations to the team at Zepto, who ultimately received this award.

AusPayNet Stakeholder Advisory Council (ASAC)

ASAC met for a fifth time in August. Here, we thanked AP+ and PayPal for their contributions, as this was their final meeting (moving forward, under our new Board structure, they will be represented on our Board via the Electing Member Group). We also sought feedback on AusPayNet’s role when it comes to cyber security, as well as feedback on our corporate strategy, AusPayNet becoming an Authorised Standard Setting Body, and the implementation of our scams strategy.

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