Making It Happen

Issue 665: 11 November 2024

Making It Happen with AusPayNet

Following up on “A payments strategy for Ireland” (Payments:Unpacked issue 660) we now take a look at payments a little further around the globe with a focus on Australia’s payments landscape.

Australian Payments Network (AusPayNet) champions Australia’s payments system. AusPayNet enable competition and innovation, promote efficiency, and control and manage risk to deliver improvements for all users of the payments system.

With a strong focus on collaboration, AusPayNet’s role includes:

• inspiring innovation

• facilitating self-regulation

• coordinating system-wide standards

• policy development

AusPayNet’s network includes more than 150 members and participants across a range of organisations with a significant interest in payments.

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Making It Happen Annual Review

AusPayNet’s 2024 Annual Review, ‘Making it happen’, has just been published - the review seeks to reflect on their work throughout FY2024 to help facilitate the continued evolution of payments in Australia.

With a total straight line flight distance between London and Sydney of 10,557 miles experiencing Australia’s payments landscape is quite difficult so here’s the next best thing - ten highlights from AusPayNet’s 2024 Annual Review “Making it Happen”.

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1: As a self regulatory body for payments AusPayNet’s remit covers five payment types

Source: AusPayNet

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2: A clear strategy centred around “Together, we create confidence in payments for all”

AusPayNet’s strategy set out on a page:

Source: AusPayNet

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3: Cheques are in “wind down”

Source: Graphic AusPayNet & data RBA

In 2024, the number and value of cheque payments in Australia continued their rapid decline. Just under 18.1 million cheque payments were made, down 26.6% from 2023. The total value of cheque payments over the same period decreased 21.2% to approximately $230 billion.

In 2023, the Australian Treasury announced in its Strategic Plan for Australia’s Payments System that Government would phase out cheque usage by the end of 2028 and that the cheques system would be wound up by no later than 2030, subject to consultation.

Since that time, the customer-led decline of cheques has continued, with cheque use comprising less than 0.1 per cent of total volume of retail payments in Australia today.

While the decline continues, AusPayNet state that it is important that those that still use cheques are supported through a smooth transition to the adoption of more modern digital payment methods.

….many Members also considered that an orderly closure of the cheques system could be achieved earlier than 2030, and that simplifying the transition plan could help facilitate clarity and understanding for users. Our submission also highlighted the critical role of the Government in ensuring a smooth and timely transition, including through clear commitments on reducing its own cheque usage, and by addressing any legislative and regulatory barriers to moving away from cheques.

AusPayNet

Upon receipt of regulatory approval, AusPayNet plan to stand up a coordinated program of work that will focus on end-user communications, remaining cheques use cases, the removal of legislative barriers to change, and a coordinated move to the revised transition dates that will be published in Treasury’s updated Cheques Transition Plan.

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4: The end is nigh for BECS

Back in issue 581 (4 March 2024) we covered the end of Australia’s BECS system and AusPayNet’s annual review notes that following an extensive three-year consultation process involving their Members, fintechs, major payment schemes and some end-users of bulk payments, AusPayNet announced in November 2023 a target end-date of June 2030 for the BECS Framework.

This target end-date aims to focus industry attention and effort on the migration progress and is subject to there being viable modern alternatives to accommodate all BECS use cases, particularly bulk payments, while also considering the capability, reach, performance and resilience of those alternatives.

As the custodian of the BECS Framework, AusPayNet state that it is committed to ensuring that the transition away from the Framework will be managed responsibly to ensure no disruption to the efficient and secure flow of essential payments. To achieve this outcome, AusPayNet are leading several activities that have been categorised into three dimensions:

• Control the future of the Framework: AusPayNet will continually test the validity of the target end-date

• Collaborate with industry: As industry prepares for the transition, including addressing the challenge of bulk use cases and the ubiquitous reach of BECS, AusPayNet will continue to engage with and monitor related industry and regulator initiatives.

• Coordinate migration: AusPayNet recognises that a successful decommissioning of BECS and accurate assessment of the related timing may benefit from collaboration between regulators and industry participants.

The transition away from BECS to more modern payment alternatives suited for the digital age is not without challenge, but through responsible management, has the potential to deliver better outcomes for users of payments and the payments ecosystem.

AusPayNet

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5: HVCS ISO 20022 Migration

The success of AusPayNet’s ISO 20022 Industry Migration Program guiding the industry through the generational change of adopting the new standard for financial messaging, ISO 20022, for the Australian HVCS continued in 2024.

AusPayNet’s 50 HVCS Participants are now fully migrated to the use of ISO 20022. With completion of the domestic HVCS migration, participants must now focus on the next Phase of the Program: the implementation of updated HVCS message specifications in November 2025.

Interoperability with cross border payments and with other markets is the key to enabling this evolution to occur without introducing new fragmentation of standards, friction, and incompatibility. The Financial Market Infrastructures (like HVCS) that achieve interoperability will reduce costs and processing times for their participants.

Embracing ISO 20022 is not just a tactical compliance obligation; it is a strategic opportunity for the future innovation and growth of the payments industry.

AusPayNet

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6: Combatting economic crime

Since 2018, total spending on Australian cards has increased 27 per cent to $1.1T, driven by a 58 per cent increase in card- not-present (CNP) spending on Australian cards over the same period to $340B. CNP fraud continues to account for 90 per cent of card fraud.