| |
PAYMENTS SYSTEM BOARD ANNUAL REPORT – 2007
List of tables
Table 1: Number of Meetings Attended by Each Member in 2006/07
Table 2: Australian Non-cash Retail Payments
Table 3: Credit and Debit Card Accounts
Table 4: Non-cash Retail Payments in Selected Countries
Table 5: Fraud on Locally-issued Cards, 2006
Table 6: Credit Card Interchange Fees
Table 7: Scheme Debit Card Interchange Fees
Table 8: Credit Card Rewards Programs
Table 9: Core Principles and Central Bank Responsibilities for Systemically Important Payment Systems
Table 10: Actions to Improve Observance of the Core Principles – Recommendations and Responses
Table 11: FX Obligations by Settlement Method
Table 12: FX Obligations by Currency and Settlement Method
Table 1: Number of Meetings Attended by Each Member in 2006/07(a)
|
| Ian Macfarlane(b) |
1 |
(1) |
| Glenn Stevens(c) |
3 |
(3) |
| Philip Lowe |
4 |
(4) |
| John Laker |
4 |
(4) |
| Joe Gersh |
4 |
(4) |
| Susan McCarthy |
4 |
(4) |
| Robert McLean(d) |
2 |
(2) |
| John Poynton |
3 |
(4) |
|
| (a) Figures in brackets show the number of meetings each member was eligible to attend. |
| (b) Mr Macfarlane's term as Governor ended on 17 September 2006. |
| (c) Mr Stevens was appointed Governor on 18 September 2006. |
| (d) Mr McLean was appointed to the Board on 29 November 2006. |
..................................................................................................................................  |
Table 2: Australian Non-cash Retail Payments
| |
Year to June 2007 |
Growth, year to June 2007 |
| |
|
|
| |
Per cent of total |
|
Per cent |
| |
|
|
|
| |
Number
|
Value
|
Average
value ($) |
Number
|
Value
|
|
| Cheques |
8.6 |
14.1 |
4,039 |
-7.7 |
4.0 |
| Direct debits |
10.6 |
34.8 |
8,062 |
6.2 |
14.0 |
| Direct credits |
23.5 |
47.8 |
4,963 |
9.8 |
14.7 |
| Debit cards |
27.7 |
0.8 |
68 |
9.4 |
9.6 |
| Credit cards |
25.7 |
1.5 |
138 |
5.4 |
9.4 |
| BPAY |
3.9 |
1.1 |
671 |
15.6 |
19.4 |
| Total |
100.0 |
100.0 |
2,446 |
6.6 |
12.7 |
|
| Sources: BPAY; RBA |
.................................................................................................................................. |
Table 3: Credit and Debit Card Accounts
|
|
Growth, per cent, year to: |
| |
|
|
|
June 2007 |
June 2007 |
June 2006 |
June 2005 |
|
Number of accounts |
|
|
|
|
| Credit (million)* |
13.5 |
4.4 |
8.1 |
6.5 |
| Debit (million) |
27.0 |
4.3 |
2.9 |
1.6 |
| Advances outstanding* |
|
|
|
|
| Total ($ billion) |
40.8 |
11.4 |
16.7 |
13.1 |
| Accruing interest ($ billion) |
29.1 |
10.1 |
18.6 |
13.2 |
Average total outstanding per account ($) |
3,014 |
4.4 |
8.1 |
6.5 |
|
| * Includes credit and charge card accounts |
| Source: RBA |
.................................................................................................................................. |
Table 4: Non-cash Retail Payments in Selected Countries
Number per capita, 2005
|
Cheques |
Direct
debits |
Direct
credits |
Debit
cards |
Credit
cards |
Total |
|
United States |
112 |
25 |
19 |
75 |
70 |
299 |
Canada |
42 |
19 |
27 |
95 |
60 |
243 |
United Kingdom |
32 |
45 |
50 |
70 |
35 |
232 |
France |
63 |
40 |
38 |
84* |
na |
225 |
Netherlands |
0 |
63 |
75 |
82 |
5 |
224 |
Australia |
24 |
24 |
59** |
59 |
58 |
224 |
Sweden |
na |
18 |
57 |
97 |
20 |
192 |
Germany |
1 |
81 |
81 |
24 |
5 |
192 |
Switzerland |
0 |
7 |
82 |
37 |
14 |
140 |
Singapore |
20 |
12 |
6 |
32 |
na |
69 |
|
| * Split between debit and credit cards not available |
| ** Includes BPAY transactions |
| Sources: Bank for International Settlements (BIS); RBA |
.................................................................................................................................. |
Table 5: Fraud on Locally-issued Cards, 2006
Cents per $1,000 transacted
Category |
Australia |
United Kingdom |
|
| Lost/stolen |
4.6 |
12.6 |
| never received |
1.4 |
2.8 |
| Fraudulent application |
1.2 |
2.2 |
| Counterfeit/skimming |
7.8 |
18.4 |
| Card not present |
6.6 |
39.2 |
| Other |
2.2 |
3.7 |
| Total |
23.9 |
79.0 |
|
| Sources: APCA; APACS |
.................................................................................................................................. |
Table 6: Credit Card Interchange Fees
Exclusive of GST
|
MasterCard |
Visa |
| |
|
|
|
1 Nov
2006 |
26 Jun
2007 |
1 Nov
2006 |
30 Jun
2007 |
|
Consumer standard |
0.30% |
0.43% |
0.55% |
0.55% |
Consumer electronic |
0.46% |
0.43% |
0.40% |
0.40% |
Consumer chip |
– |
0.63% |
0.50% |
0.50% |
Commercial |
1.12% |
1.15% |
1.15% |
1.15% |
Commercial chip |
– |
1.35% |
– |
– |
Premium |
0.90% |
0.95% |
0.90% |
0.90% |
Premium chip |
– |
1.15% |
1.00% |
1.00% |
VMAP* |
– |
– |
– |
0.30% |
Tiered merchants |
– |
0.34% |
– |
– |
Petroleum |
– |
0.34% |
– |
– |
Government and utility |
|
|
|
|
| – electronic |
– |
0.30% |
30.0¢ |
30.0¢ |
| – standard |
– |
0.30% |
74.0¢ |
74.0¢ |
Micropayment |
– |
– |
2.5¢ |
2.5¢ |
Charity |
– |
0% |
0% |
0% |
Recurring payments |
– |
0.30% |
0.40% |
0.40% |
Quick/express payments |
– |
0.30% |
0.40% |
0.40% |
Benchmark |
0.50% |
0.50% |
0.50% |
0.50% |
|
| * Visa Merchant Alliance Program |
| Sources: MasterCard website; RBA; Visa website |
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Table 7: Scheme Debit Card Interchange Fees
Exclusive of GST
|
MasterCard |
Visa |
| |
|
|
|
1 Nov
2006 |
26 Jun
2007 |
1 Nov
2006 |
|
Consumer standard |
– |
36.4¢ |
0.31% |
Consumer electronic |
– |
9.1¢ |
8.0¢ |
Consumer chip |
– |
13.6¢ |
– |
Commercial |
– |
36.4¢ |
– |
Commercial chip |
– |
40.9¢ |
– |
Tiered merchants |
– |
3.6¢ |
– |
Petroleum |
– |
9.1¢ |
– |
Government and utility |
|
|
|
| – electronic |
– |
29.1¢ |
8.0¢ |
| – standard |
– |
29.1¢ |
37.0¢ |
Micropayment |
– |
0.50% |
2.5¢ |
Charity |
– |
0% |
0% |
| Electronic incentive |
– |
– |
4.0¢ |
Recurring payments |
– |
9.1¢ |
8.0¢ |
Quick/express payments |
– |
0.50% |
8.0¢ |
Benchmark |
12.0¢ |
12.0¢ |
12.0¢ |
|
| Sources: MasterCard website; RBA; Visa website |
.................................................................................................................................. |
Table 8: Credit Card Rewards Programs
Four largest banks, June 2007
|
Average spending
required for
$100 voucher |
Benefit to
cardholder as a proportion
of
spending
(%) |
|
| 2003 |
12,400 |
0.81 |
| 2004 |
14,400 |
0.69 |
| 2005 |
15,100 |
0.66 |
| 2006 |
16,000 |
0.63 |
| 2007 |
16,300 |
0.61 |
|
| Sources: Banks’ websites, Cannex |
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Table 9: Core Principles and Central Bank Responsibilities for Systemically Important Payment Systems
|
Core Principles for systemically important payment systems |
| I. |
The system should have a well-founded legal basis under all relevant jurisdictions. |
| II. |
The system’s rules and procedures should enable participants to have a clear understanding of the system’s impact on each of the financial risks they incur through participation in it. |
| III. |
The system should have clearly defined procedures for the management of credit risks and liquidity risks, which specify the respective responsibilities of the system operator and the participants and which provide appropriate incentives to manage and contain those risks. |
| IV. |
The system should provide prompt final settlement on the day of value, preferably during the day and at a minimum at the end of the day. |
| V. |
A system in which multilateral netting takes place should, at a minimum, be capable of ensuring the timely completion of daily settlements in the event of an inability to settle by the participant with the largest single settlement obligation. |
| VI. |
Assets used for settlement should preferably be a claim on the central bank; where other assets are used, they should carry little or no credit risk and little or no liquidity risk. |
| VII. |
The system should ensure a high degree of security and operational reliability and should have contingency arrangements for timely completion of daily processing. |
| VIII. |
The system should provide a means of making payment, which is practical for its users and efficient for the economy. |
| IX. |
The system should have objective and publicly disclosed criteria for participation, which permit fair and open access. |
| X. |
The system’s governance arrangements should be effective, accountable and transparent. |
| Responsibilities of the central bank in applying the Core Principles |
| A. |
The central bank should define clearly its payment system objectives and should disclose publicly its role and major policies with respect to systemically important payment systems. |
| B. |
The central bank should ensure that the systems it operates comply with the Core Principles. |
| C. |
The central bank should oversee observance with the Core Principles by systems it does not operate and it should have the ability to carry out this oversight. |
| D. |
The central bank, in promoting payment system safety and efficiency through the Core Principles, should cooperate with other central banks and with any other relevant domestic or foreign authorities. |
.................................................................................................................................. |
Table 10: Actions to Improve Observance of the Core Principles – Recommendations and Responses
|
| Legal foundation |
| Recommendation: Require entities located outside the Australian jurisdiction that apply for participation in RITS either as a branch or on a remote basis to provide a legal opinion that analyses possible conflict of laws and potential legal risk for RITS and its participants. |
| Response: At this stage the RBA is not convinced that the potential legal risks arising from the participation in RITS of entities not located in Australia warrant the additional cost to new participants of gaining further legal certainty. |
| Security and operational reliability, and contingency arrangements |
| Recommendation: Require security enhancement of the proprietary communication network to meet international standards with regard to confidentiality, integrity and authenticity of the transmitted information and data. Consider an external review of the RBA’s business continuity plan that would include the assessment of the hardware, software and internal procedures. |
| Response: Implementation of a new RITS user interface was completed in April 2007, bringing the confidentiality, integrity and authenticity of transmitted data up to best practice. This project was well advanced at the time of the FSAP assessment. The RBA is considering the commissioning of an external review of RITS architecture in 2007/08, including business continuity arrangements. |
| Efficiency and practicality of the system |
| Recommendation: Consider following up its studies of RITS costs and pricing structure by consulting RITS users. The RBA should consider a review of the pricing structure to ensure that it promotes efficient functioning of the system. |
| Response: The RBA’s Business Services Group has undertaken considerable work on pricing of RITS transactions and various means of balancing requirements for cost recovery, system efficiency and the provision of appropriate incentives for participants. Liaison with industry will occur in due course. |
| Governance of the payment system |
| Recommendation: Consider establishing a consultative framework with the users in order to ensure RITS continues to meet users’ needs in terms of efficiency, practicality and service level. The RBA may wish to re-establish its advisory user groups, representing different categories of RITS participants, to discuss issues related to technical and business features of RITS. |
| Response: The RBA now holds RITS User Group Forums in Sydney and Melbourne twice each year. The first forums were held in February 2007. |
| Central bank responsibilities in applying the Core Principles |
| Recommendation: Consider whether current arrangements avoid potential conflicts of interest between the policy and oversight functions (that fall under the jurisdiction of the PSB) and the RBA’s role as an operator of the RITS system. Strengthen the implementation of the PSB’s oversight responsibility by developing formal methods and procedures including regular monitoring and reporting, on-site inspections of important payment systems and arranging regular meetings with payment system providers and other stakeholders. |
| Response: Internal RBA discussion offers considerable benefits and the Board is satisfied that procedures are in place to identify and address any conflicts of interest that might arise. |
.................................................................................................................................. |
Table 11: FX Obligations by Settlement Method
$US billion equivalent
|
All
institutions |
% of total |
Australian
banks |
% of total |
|
CLS (PvP) |
2,091 |
55 |
76 |
60 |
Correspondent banking |
1,224 |
32 |
44 |
35 |
Bilaterally netted |
304 |
8 |
5 |
4 |
‘On us’ without settlement risk |
112 |
3 |
1 |
1 |
‘On us’ with settlement risk |
53 |
1 |
0 |
0 |
Other PvP |
38 |
1 |
0 |
0 |
Total settlement obligations |
3,821 |
100 |
126 |
100 |
|
| Source: BIS |
.................................................................................................................................. |
Table 12: FX Obligations by Currency and Settlement Method
Per cent of total
|
All |
USD |
EUR |
JPY |
GBP |
CHF |
AUD |
|
CLS (PvP) |
55 |
55 |
58 |
62 |
54 |
58 |
58 |
Correspondent banking |
32 |
31 |
29 |
24 |
32 |
26 |
30 |
Bilaterally netted |
8 |
8 |
7 |
8 |
9 |
8 |
8 |
All other |
5 |
6 |
5 |
6 |
4 |
7 |
3 |
Total settlement obligations |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
|
| Source: BIS |
|
|
