Transcript of Question & Answer Session The Shift to Electronic Payments – Some Policy Issues

Thanks, Ellis. Ellis has agreed to take a couple of questions, and then we’ve got a final panel for you guys. Thanks for sticking around for the payments topic.

Ellis, you mention in your speech that a couple of the banks haven’t met the deadlines for the least-cost routing; you said that was disappointing. Some of the major banks also failed to meet their deadlines for PayTo; and I presume that is also disappointing, but it’s coming next month. Do you feel that the bank needs sort of more than suasion; is that enough? Would you like to have powers to compel the banks to hit these deadlines?

We’re very keen on working cooperatively with the industry. What I can say, which is very positive, is the industry does work with us on trying to achieve these expectations that the Bank sets. It is disappointing that they’re not always met on time, but we can see concerted efforts that are being made to get these things done. We also recognise that it’s not that easy to get all this investment completed on deadline, with a lot of competing priorities. So, in this context, this is where the work that the government is doing on a strategic plan, I think, will be really, really helpful, and this could possibly be the next step: rather than the RBA having to, say, use powers of compulsion is some of these objectives. They really should be national objectives that can be built into a strategic plan. It can be the government and the RBA, other regulators and industry together going, ‘Look, this is the timeline of investment that the industry needs to meet.’ So, I think that would be a very positive development.

Yes; and that strategic plan, Ellis, is under consideration by Treasury. As you said, the government is trying to enhance its leadership role in the payments system and provide clarity on what the priorities are across all of these different areas to help the banks invest. We haven’t seen the report yet. How important is it, do you think, in the bank’s eyes to get that policy out this year? And a related question: with respect to the powers of the RBA, not only over payments systems but payments services—a potential change in the act that the government has said that it’s going to consider—how important is that?

I think both of these are very important. The strategic plan is important. It will really provide that vision for the Australian payments system that will put the government, industry and regulators all on the same page, and we’ve already seen that the consultation paper came out late last year. We’ve certainly made a submission; hopefully, you’ve all made submissions as well. My sense is that Treasury are making great progress on this and really understand the issue, so I’m really looking forward to that plan coming out. We can’t expect everything in one go in the first plan; I think it’s something that they’ll be updating over time. We can build up the detail, build up the pipeline over time. I think it will be a really positive process, and we’ll look back in a few years time and go, ‘Yep, this was a key development.’ On the reforms to the Payment Systems (Regulation) Act, this is really important for us to be able to achieve our mandate to promote an efficient, competitive and safe payments system. The Payment Systems (Regulation) Act 1998: that pretty much says it all. It was perfect for 1998. It could deal with issuers, acquirers and card schemes. No­one really thought about mobile wallets, gateways, all sorts of new infrastructures, ‘buy now pay later’. Lots of things hadn’t been invented then. And so having updated definitions of payment systems and the participants in payment systems will provide us with the flexibility to be able to continue working cooperatively with the industry to achieve our mandate.

Okay, Ellis. Well, I’m going to leave it there. Thank you very much for taking a couple of questions. We’ve got one more panel before the day concludes, so thank you for your speech as well.

Thanks very much.

Applause—