Payments Monitor - Third Quarter, 2016

CEO's Corner

Dr Leila Fourie’s inaugural CEO’s Corner

I’m fortunate to be joining APCA at an exciting time in the world of payments. I join the Australian market with re-packaged knowledge from other global markets, a curious mind and a high regard for Australia and all it has to offer. 

Australia has a strong economy that withstood the global crisis and robust household consumption expenditure underscored by a well-established digital economy. Additionally, Australians are fortunate to have a resilient and growing financial market, underpinned by a credible and sophisticated banking system. These factors all work together to create a positive spill-over effect for payments. 

As I go about my first few weeks, getting to know this market intricately, I’m struck by how advanced Australia is in its move towards a less-cash society. With ATM withdrawals down by 6.6% (compared to the 4.9% decline in 2015) and cheque use down by 17.2% (compared to the 15.7% decline in 2015), Australia is making great strides in reducing its reliance on paper money. This is important from an efficiency view point, as evidenced in a recent article in The Economist which indicated that 0.5-1% of GDP a year is spent on managing cash world-wide. And it’s more than coincidence that as I build up my picture of this advanced market, I’m thoroughly enjoying esteemed economist Kenneth Rogoff’s “The Curse of Cash”. His discussion about how paper money supports criminal activity and can cripple monetary policy provides interesting context.

This reduced reliance on cash in Australia is paired with exceptional tap and go payment habits, impressive smartphone penetration and a rapidly maturing Fintech market. Moreover, we are on the brink of having a global reference point for data rich real time payments with the New Payments Platform that will provide a stimulus for yet more innovation./Payments-Monitor/Third-Quarter-2016

Developments in payments are not limited to the NPP. Concurrent innovation includes new payment choices for public transport, early signs of a shift from cards to mobile, digital identity and industry wide consideration of access and APIs. My list wouldn’t be complete without mentioning blockchain technology, for which I keep coming back to a recent comment by IBM’s CEO Ginni Rommety, 'blockchain will do for transactions what the internet did for information'. As Standards Australia has been chosen to lead the development of international standards for blockchain, I’m particularly excited about the role that we can play in supporting this transformative technology.

As our digital future unfolds, I’m pleased to be developing APCA’s role in enabling the network effect, that is so crucial to payments, through collaboration with members and the growing number of new stakeholders. In response to the new and rapidly evolving landscape we have started to adjust our identity and to rethink how we engage the market. This new approach will deepen our engagement and collaboration with members and all stakeholders. In this new world, we will maintain and further evolve APCA's thought leadership role; position APCA as a contemporary, relevant, inclusive and representing organisation; aim to be the trusted advisor and best independent source for payments research; and be a leader in influencing regulatory and policy debates.

I look forward to working with you on the continued development of a world class payments system.

Industry News

New CEO appointments for APCA and NPP Australia

In September 2016, we were delighted to welcome Leila Fourie as our new Chief Executive Officer. APCA also congratulated former director Adrian Lovney on his appointment as inaugural Chief Executive Officer of NPP Australia. 

Leila Fourie, Chief Executive Officer, APCA

Dr Fourie comes to APCA with over 20 years of international experience, primarily in financial services, having served on multiple boards and held senior roles in banking, capital markets and payments. Prior to joining APCA, she served on the board of the Johannesburg Stock Exchange as Executive Director.

Before this, Dr Fourie was the Managing Director of the Card Division for one of South Africa’s largest banks, Standard Bank. She also served as Chairman on the board of Diners Club SA and board member on Chicago-based Diners Club International Advisory board.

For more information click here.

Adrian Lovney, Chief Executive Officer, NPP Australia

Prior to joining NPP Australia, Mr Lovney was General Manager of Product & Service at Cuscal Ltd. This entailed responsibility for product, services, and customers across the business, including leading the organisation’s work in NPP. He was an APCA director representing Credit Union members from February 2013 until August 2016.

Before this, he was Cuscal’s General Manager Strategy & Communications, responsible for leading the evolution of Cuscal’s business over the last five years as well as the successful migration and transition of customers to a new and innovative payments platform.

For more information click here.

Media Release NPP

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Industry News

Australian Payments Fraud - details & data published 

APCA’s latest fraud report, ‘Australia Payments Fraud – Details and Data’, released in August 2016, shows that Australians spent nearly $690 million on their payment cards in 2015. Fraud accounted for 0.07% of this total.

Australia’s rate of card fraud increased to 66.8 cents per $1,000 spent, up from 58.8 cents in 2014. This reflects a 21% increase in card-not-present fraud which now accounts for 79% of all Australian card fraud by value. Most of this fraud due to sophisticated malware and phishing attacks, and large-scale data breaches. The increase in card fraud is in line with global trends; card fraud in the UK increased from 75 pence in 2014 to 83 pence per £1,000 in 2015.

Online fraud is increasing as measures to combat counterfeit / skimming fraud take effect. On Australian cards used domestically, counterfeit / skimming fraud dropped by 10% due to the increased security of chip technology. However, on Australian cards used overseas, counterfeit / skimming fraud increased by 77%. Criminals are targeting terminals that are only magnetic stripe in countries that are still rolling-out chip technology. 

Closer cooperation between financial institutions and law enforcement is also helping to limit losses from ATM skimming attacks and card theft. Sharing information on payments fraud is helping to identify the activities of criminal gangs operating in Australia and to shut them down.

For tips on protecting against online card fraud and full stats and figures, visit Australia Payments Fraud – Details and Data.

Combating CNP fraud continues to be a strong focus for the industry. In the 12 months to June 2015, CNP fraud in Australia increased by 36% to $118 million. It now accounts for more than 70% of the total fraud occurring in Australia on Australian issued cards.

Regulatory Round-Up

Submission to the Productivity Commission & the ATM Access Code to be reviewed.

APCA lodges submission to Productivity Commission Inquiry

APCA lodged its submission to the Productivity Commission Inquiry into Data Availability and Use on 29 July 2016.

APCA's submission - Trusted Data Sharing, Now and in the Future - looks at how data sharing protects consumers, improves products and services, and assists governments and regulators. The submission highlights that trust is the cornerstone of data sharing arrangements in place within the payments industry today.

The APCA submission supports the alignment of the core requirements of data sharing: consumer interests, security, privacy, commercial incentives, compliance, and liability.

The numerous arrangements in place today deliver consumer benefits and provide a strong platform for using data to generate greater efficiency and innovation and deliver increased value for consumers. These arrangements should be used as the basis for greater payments data sharing.

The Commission will release a draft report in November 2016. Responses to the draft report will be due in December 2016.

For more information, read Trusted Data Sharing, Now and in the Future.


The ATM Access Code to be reviewed

APCA is conducting preliminary engagement with members and other stakeholders to inform options for the future of the ATM Access Code and Regime.

The review is undertaken in the context of: 

  • The mandated use of EMV at ATMs by Visa and Mastercard from 1 January 2016 with associated chip liability programs for non-compliance. The APCA Issuers and Acquirers Community has approved a similar mandate from 1 January 2017.
  • A number of developments in payments services including the eftpos Hub and other innovations that have seen the rise of contactless, on-line payments and a reduction in the use of ATMs.

It is important to gain a clear understanding of what industry stakeholders need in relation to ATM access in the future and how best the payments system can support this.

Information gathered as part of this engagement will be used to develop recommendations for the future of ATM Access regulation.

APCA has been consulting with stakeholders since late September 2016. 

For more information, read the Review of the ATM Access Code here.

Submission ATM Access Code

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