Payments Monitor Newsletter

November 2021

CEO's Corner

We held our Annual General Meeting (AGM) on 28 October 2021. This year’s AGM was a landmark, not just because it was AusPayNet’s 30th AGM. It was also significant because it unanimously passed key resolutions on our membership, our Board representation, and our funding.

These resolutions reflect our broad review of our governance over the last 12 months, to ensure that our Constitution and governance framework are fit-for-purpose in a time of accelerated change across the payments industry. To date, the review has focused on ensuring that:

  • wider stakeholders’ and new entrants’ viewpoints are adequately heard and represented;
  • our Board and membership structures are appropriate for the growing and changing payments landscape; and
  • our funding structure is appropriate, stable, flexible, and transparent.
Membership

Members agreed to add a new membership type: an AusPayNet (i.e. not framework specific) membership class for Payment Service Providers (PSPs), designed to capture paytechs through to Big Tech.

PSPs play an increasing and critical role in the payments ecosystem, yet – notwithstanding the growth of our membership to 144 members – prior to this change there was no suitable AusPayNet membership for them.

This move is also aligned with the outcomes of the Treasury Review, which has recognised that there is a regulatory gap in licensing the functions carried out by PSPs.

The creation of a new PSP membership class ensures that AusPayNet is representative of the entire payments value chain, thereby enhancing effective self-regulation across the payments ecosystem, as all participants in the value chain will be able to participate in, and become subject to, our governance and oversight.

Board Representation

To enable AusPayNet to fulfil its purpose, our Board needs to have the perspectives of, and be representative of, the broad participants and stakeholders across the payments ecosystem. To this end, all classes of AusPayNet Members must have the right to be represented at Board level.

Members therefore agreed to retire the grandfathering provisions in the 2014 Constitution, which gave “credit unions” and “building societies” a seat at the Board. Instead, those seats will form part of a wider Electing Member pool (electing four directors) as of the 2022 elections; and all Members – Voting Members, Operator Members and our new PSP Members – will have the same right to nominate and vote for those Board positions.

The above reforms – which build on last year’s move away from proportional voting at Board level to one Director, one vote – will ensure that AusPayNet’s Board remains fit-for-purpose, is representative of AusPayNet’s growing and diversifying membership, is in line with developments in corporate governance best practice, and enables all classes of membership to be directly represented at Board level.

Funding

Finally, Members agreed to move all references to fees out of the Constitution into a separate Fee Policy, and adding the right to project levy all Members and across (rather than just within) frameworks.

This ensures that our funding model builds in the ability to be flexible and responsive to emerging issues and therefore remains fit-for-purpose.

Next Steps

We will continue our governance review, and over the next 12 months, we will be focusing on:

  • reviewing our corporate objects;
  • reviewing our regulatory architecture (i.e. the structure of our rules), including drafting a code of conduct that will apply to all AusPayNet Members;
  • commissioning an independent review against best practices for standards bodies, ahead of the establishment of the process for the authorisation of industry standard-setting bodies envisaged in the Treasury Review.

All of this will ensure that AusPayNet’s governance is not only fit-for-purpose but fit-for-future.

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Payments Summit

Registration for AusPayNet’s annual summit, one of the most important events in the industry’s calendar, is now open. This year, the summit will bring together over 800 participants from across the payments community to discuss the most pertinent topics.

This year, we will be hosting a half-day virtual summit on 9 December from 9am – 11am and registration is free of charge.

Our program will feature a much-anticipated annual address by Governor of the Reserve Bank, Philip Lowe, a keynote by Senator Andrew Bragg, and a panel discussion led by Deloitte. There will be opportunities for questions following each session via our virtual platform.

Click here to register for the 2021 virtual summit.

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Economic Crime Forum (ECF)

AusPayNet’s Economic Crime Forum (ECF) held its inaugural meetings in September and November 2021. The ECF took over from and expanded on the Fraud in Banking Forum’s success and brings together a broader set of participants to share insights on and coordinate joint responses to economic crime – including but not limited to scams, fraud, financial crime, and banking-related cyber incidents.

Leading and supporting industry to tackle payment scams and safeguard customers is a key priority for the ECF with the recently announced strategic framework for cross-industry coordination on scams prevention. Sustained cross-industry coordination will drive better targeting of scam activity and protection of customers and support greater collaboration with law enforcement. It will allow for the identification and coordination of initiatives to prevent scammers from exploiting the ecosystem and support better online safety outcomes for Australians.

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2021 Annual Review

Our 2021 Annual Review was published on 29 October 2021. It provides insights into how we are leading change in a rapidly evolving landscape. We invite you to read ‘Building the ecosystem’ here.

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ISO 20022 Industry Migration

The ISO 20022 Industry Migration Program continues according to plan. To read more about what’s happening in the program, click here for the third quarterly ISO 20022 Migration Monitor.

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Payment Acceptance Device Certification

In our last issue, we discussed our review of our approach to payments acceptance governance to ensure that the governance mechanisms we manage, on behalf of the industry, are fit-for-purpose.

As a result of the review, a revised approach to assessment of payment acceptance solutions based on registration will be introduced in 2022. Solutions that meet a recognised standard (for example, PCI) will be registered for use in Australia with no additional requirements. Solutions that do not meet a recognised standard will undergo a structured risk assessment to identify security risks and any appropriate mitigants for introducing the solution to Australia.

The revised approach promotes innovation by supporting solutions that outpace standards development, and improves speed to market by increasing alignment with globally recognised and supported approval processes. Additionally, the approach has repeatable processes that deliver efficient and consistent outcomes.

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The Federal Government’s Review of the Australian Payments System

In August 2021, the Federal Government released the final report and recommendations of its Review of the Australian Payments System. The Review’s recommendations were broadly aligned with AusPayNet’s submission in January, and included enhanced payments leadership, more aligned payments regulation and simplified payments licensing.

We look forward to coordinating any adjustments that may be required to current arrangements for self-governance once the Government has released its response to the Review.

Click here to read more about AusPayNet’s response to the final report of the Federal Government’s Review of the Australian Payments System.

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The RBA’s conclusions on the Review of Retail Payments Regulation

The RBA released the Conclusions Paper for its Review of Retail Payments Regulation on 22 October 2021. One of the primary objectives of the Review is to reduce payment costs and improve competition through Merchant Choice Routing (MCR), and the RBA has outlined a policy framework that removes barriers to MCR. Under this framework, the RBA expects all acquirers, payment facilitators and gateways to offer and promote MCR functionality to merchants in the online environment. It expects the same of acquirers and payment facilitators in the device-present (in-person) environment. Additionally, card schemes are encouraged to provide a voluntary undertaking to maintain competition and avoid tying conduct.

The RBA will also amend its interchange standards and introduce a ‘sub-benchmark’ to cap the weighted-average interchange fee, to restrict the possibility of card schemes using interchange rates to incentivise issuing single network debit cards instead of dual-network debit cards.

In its 9 July 2021 submission to the RBA, AusPayNet expressed support for merchant choice and highlighted that merchant choice is likely to be informed by a more complex set of inputs than pricing, due to new payment methods, consumer (data) choice and closer integration of marketing and payments.

As indicated in the RBA’s conclusions, AusPayNet is working with Members and other stakeholders in the transaction value chain to align on clear consumer notification. Please get in touch if you would like more information on our work in this area.

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Regulatory Round-up

We welcomed the opportunity to respond to the following consultations during this quarter.

Response to the Department of Home Affairs’ ‘Strengthening Australia’s cyber security regulations and incentives’ discussion paper

On 13 July 2021, the Federal Government commenced a consultation regarding options for regulatory reforms and voluntary incentives to strengthen the cyber security of Australia’s digital economy. Developed in conjunction with its Members, AusPayNet’s submission sought to present views on facilitating secure information sharing between payments industry participants, to enable them to improve their preventative security measures and promptly take restorative actions. It emphasised the tension within current legislation that either directly or indirectly prohibits information sharing, and it highlighted how other jurisdictions have addressed similar issues. The submission also included suggestions on how the regulatory environment may be improved for clarity, consistency, and ease of compliance. Read our submission here.

Response to the 2021 Independent Review of the Banking Code of Practice – Consultation Note

On 13 August 2021, we responded to the 2021 Independent Review of the Banking Code of Practice – Consultation Note and focused on issues that may impact the frameworks we administer. We supported a review of the Banking Code of Practice that has regard to the pace of technological innovation in payments, regulatory change, and changes in customer behaviour and banking services. Accordingly, we submitted that a review of the Code should aim for technological and regulatory neutrality, and assess the relevance of existing Code provisions as well as new developments. We also suggested that any Code review recommendations are timed to align with the outcomes of concurrent reviews, such as the Treasury Review of the Australian Payments System, without creating duplication of those regimes. Read our submission here.

Response to the Queensland Parliament’s consultation on the Justice Legislation (COVID-19 Emergency Response – Permanency) Amendment Bill 2021

On 6 October 2021, we responded to the consultation on Queensland’s Justice Legislation (COVID-19 Emergency Response – Permanency) Amendment Bill 2021. Our submission focused on the ‘Documents Reforms’ section of the Bill. We supported the Bill’s stated objective to permanently implement certain aspects of the temporary arrangements to allow individuals, businesses, and government to continue using digital technology to meet their needs. We recommended that the technology neutral approach adopted in the Bill be extended to all Queensland legislation insofar as it refers to payment methods, and particularly where payment by cheque is encouraged. The submission also reiterated AusPayNet’s previous request to the office of Queensland Treasurer in October 2019 seeking their assistance to amend legislation in response to the customer-led decline in the use of cheques. Read our submission here.

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New Members

During the past quarter, AusPayNet was pleased to welcome the following two new Members:

  • Alex Bank Limited (a Tier 2 member of BECS, effective 27 July 2021), an Australian digital bank with a strong focus on customer needs
  • Change Financial Limited (an IAC Affiliate Member, effective 28 July 2021) delivers innovative payments solutions for existing and emerging markets

For more information on AusPayNet membership contact panguita@auspaynet.com.au.

Our 2021 Review ‘Building the ecosystem’ is available here.

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