2016 Payments Monitor


China's BATs soar

Dr Leila FourieOn a recent trip to China, I was struck by the scale and pace of growth of China’s Fintech community.

China’s Fintech market cap valuation of US$69 billion dwarfs the USA’s US$31 billion and the rest of the world at US$11.5 billion. This rapid growth has its roots in the political reform that began in 1978. In parallel, Government-led modernisation programs increased consumption and drove investment, laying the foundations for the rise in online payments. The catalyst for behavioural change, however, was the 2003 SARS epidemic. Preferring to stay indoors to avoid exposure to SARS, people relied on the internet for information, communication - and payments.

The combination of these events led to the emergence of a new type of organisation – the internet banks. These gained traction when underpinned by legislation in 2011. So how do internet banks differ from traditional banks? There’s a key difference from a regulatory perspective in that internet banks can’t take deposits or open branches. There are also size and focus differentiators; internet banks typically have a tenth of the workforce of traditional banks and 50% of this workforce is focussed on technology.

There are more than 250 licensed internet banks in China, with three of the major ones - informally known as the BATs (Baidu, Ant Financial and Tencent) - dominating the scene. In fact the BATs’ growth has been so rapid that they now process more than 95% of payment volumes, representing 10% of the value. Tencent’s success started with the launch of a WeChat Red Packet service. Tencent digitally transferred the long held Chinese tradition of gifting red envelopes at New Year by making it possible through a mobile app. This promotion accelerated unprecedented growth in digital payments, increasing the customer base from 5 million to 500 million in two years.

When I asked what the reasons were for the BATs vertical growth curve, they gave four: focussing on the customer experience; targetting the largely ignored low value, high volume market segment; circumventing the traditional infrastructure and connecting directly to the banks; and better balancing the tradeoff between security and convenience.

In terms of customer experience, each of the BATs has focussed on keeping the customer on the platform. For Alipay, this has led to the development of a ‘lifestyle super app’. This app includes a wide range of services such as social networking, interactive entertainment, browsing, maps, medical services and online media. The host of services offered increases customer stickiness, while the payments feature is the glue.

I was amazed as I walked through shops and restaurants at how well entrenched the BAT apps were, seamlessly integrating ordering from a menu and payment. What caught my attention was learning about their pioneering credit rating tools which are unlike the traditional static sources we are all familiar with. The internet banks use automated, dynamic and regularly updated scoring that incorporates lifestyle indicators such as the web sites visited, payments profiles, geo location information, and social media profiles. Customer scores are disclosed in a rating app which customers use for a range of purposes, from avoiding pre-authorisation deposits at hotels to dating profiles! The internet banks are now expanding into wealth management and lending.

The BATs’ success has been built on access to data, a compulsory national ID card and a supportive regulatory environment. As jurisdictions around the world all consider these core elements, it will be interesting to see how the future unfolds.

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APCA is rebranding

APCA LogoThis year, APCA celebrates 25 years at the heart of the Australian payments industry. It’s an important milestone for us and we’re taking the opportunity to revisit our brand to ensure that it reflects the type of organisation that we are today.

The payments landscape is changing rapidly, and APCA is evolving with it. We are proud of our long history and excited about new opportunities to support the future evolution of Australian payments.

APCA was established in February 1992 to manage rules for clearing payments instruments – our name, ‘Australian Payments Clearing Association’, is a direct reflection of this role. Back in the early '90s, most non-cash retail payments were made by cheques, followed by direct entry and cards.

The world of payments has changed significantly since then, and the pace of change is accelerating. Rapid innovation in payments technology and services has created a more digital and connected environment. Today, hardly anyone uses cheques, most face-to-face payments are ‘contactless’, online shopping is the norm and mobile payments are gaining traction.

Responding to this change, APCA has become the home for collaboration and cross-industry innovation, actively developing its role in enabling the network effect. As participants continue to grow in number and diversify in nature, we are engaging with a broader range of stakeholders than ever before.

Our rebrand is an important step in positioning for the future and we look forward to providing further details on our new brand identity in the coming months.

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Industry continues strong focus on tackling online card fraud

Australian Payments FraudAPCA’s latest fraud data released in December 2016 show that card not present (CNP) fraud remains the most prevalent fraud on Australian cards. In the 12 months to 30 June 2016, CNP fraud – both domestic and overseas – increased from $323 million to $402 million, accounting for 77% of all fraud on Australian cards.

As in many other jurisdictions, Australia’s CNP fraud is increasing due to continuing growth in e-commerce, a global trend in online card fraud, and migration of fraud online as chip technology and industry efforts continue to reduce card present fraud.

While most CNP fraud on Australian cards occurs overseas, these latest statistics show that domestic CNP fraud grew by 32% to $156 million over the 12 month period. Tackling this fraud continues to be a key priority for APCA’s Issuers and Acquirers Forum (IAF).

The IAF, comprising financial institutions and the card schemes, meets regularly to consider non-competitive payment card issues. As part of its work in exploring an industry-wide solution to CNP fraud, over the last year, the IAF:

  • Commissioned research on: the impact of CNP fraud on consumers; the changing landscape of online retail and fraud; and the approaches taken in other jurisdictions to mitigate CNP fraud.
  • Developed a set of guidelines for issuers and acquirers to provide a set of best practices for implementing a range of data security, fraud detection and customer authentication solutions for the CNP environment. APCA is currently consulting industry on these guidelines.
  • Engaged merchants to understand their needs and expectations and to help develop an industry communications strategy for combating CNP fraud. This included a merchant forum in early November.

During 2017, the IAF will work to promote awareness and encourage effective mitigation of CNP fraud through continued education and communication, and implementation of the best practice guidelines. These industry initiatives will support the ongoing fraud mitigation efforts of financial institutions, the card schemes and law enforcement.

The fraud statistics media release is available here.

More information about the guidelines contact consultation@apca.com.au.

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APCA releases draft Best Practice Guidelines for CNP transactions

Card and TabletAPCA released draft guidelines for card-not-present (CNP) transactions on Tuesday, 6 December 2016.

The objective of the guidelines is to provide a set of industry best practices for implementing a range of data security, fraud detection and customer authentication solutions for the CNP environment.


The guidelines provide recommendations to acquirers and card issuers:

  • to maximise the use of available transaction data
  • to enhance the security of card data
  • on fraud detection and customer authentication methods
  • on the use of tokenisation
  • on the education of card holders and merchants

Industry has been invited to provide written feedback on the guidelines by Tuesday, 31 January 2016.

For more information, please contact consultation@apca.com.au.

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Changes to the APCA Board

Simon Babbage and Kees KwakernaakOn October 27 2016, we welcomed two new directors to the APCA Board - Simon Babbage, Country Head Global Liquidity and Cash Management at HSBC Bank Australia, and Kees Kwakernaak, Managing Director Global Transaction Services at Bank of America National Association. Mr Babbage and Mr Kwakernaak replace Paul Apolony and David Carter in representing the Electing Members.


Mr Apolony was first appointed to the Board in June 2007. During his time on the Board, he served terms as Chairman of the ACDES Management Committee, Chairman the HVCS Management Committee, and was member of the Audit, Risk & Finance and Remuneration committees. Mr Carter joined the Board in June 2014, serving a term as Chairman of the Fraud Committee. We thank Mr Apolony and Mr Carter for their significant contributions.

We also extend our congratulations to APCA director, Lindsay Boulton, on his recent appointment as the Reserve Bank Assistant Governor (Business Services). Mr Boulton’s appointment was announced by the Reserve Bank Governor, Philip Lowe, on 23 November 2016.

For more information on the APCA Board, click here:

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Australians are increasingly choosing digital payment methods

Blue GlobeIn November 2016 we released our sixth Milestones Report showing how digital payments are continuing to take over from cheques and cash.

Over the past 10 years, cheque use has declined by nearly 73% and the rate of decline is accelerating. Cheques now represent just 1.2% of all non-cash transactions. Simultaneously, cash use is declining with ATM withdrawals dropping a further 6.6% in volume this financial year as Australians show a clear preference for electronic payment methods.

These declines have been driven by the continued increase of digital transactions. The use of debit and credit cards grew by 12.1% this year, while direct entry use increased by 7.2%. Online spend is diversifying as it matures with overall online sales up by 13.5% and Takeaway Food showing the fastest annual growth of 56.1%.

Supporting this growth is the increase in digital literacy. Over 65s in Australia are embracing online banking with over half of older internet users performing online banking transactions.

Check out our Australia's Digital Economy Infographic or read the full Milestones Report November 2016.

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The Australian Payments Council holds its annual Community Meeting

APC LogoThe Australian Payments Council held its third annual Payments Community Meeting on 11 November 2016 at the Sheraton-on-the-Park in Sydney.

The meeting was attended by 80 participants from across 36 leading organisations including financial institutions, card schemes, and FinTech companies. Discussions revolved around the Council’s work in delivering on the Australian Payments Plan .


In summarising the significant progress made on the Council’s initiatives, Chairman Mark Birrell highlighted the industry’s work on digital identity, cybersecurity and data sharing.

Mr Birrell also acknowledged the Payments System Board and recognised the unique relationship shared between the Council and the Board.

The meeting featured a panel discussion on the payments priorities of 2017, with experts from across the sector, including:

  • Nigel Dobson, General Manager Transformation Projects, ANZ
  • Leila Fourie, CEO, APCA
  • Adrian Lovney, CEO, NPP Australia
  • Danielle Szetho, CEO, FinTech Australia
  • Pip Wyrdeman, Senior Adviser Cyber Policy, Department of Prime Minister & Cabinet

For more information, on the Australian Payments Plan see the Australian Payments Council’s inaugural annual review here.

Payments Community members work together to develop Australia’s future payments system. If you would like to take part in this work, please contact info@australianpaymentscouncil.com.au.

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Productivity Commission’s draft report on Data Availability and Use

APCA lodged a submission on Monday 12 December 2016 in response to the Productivity Commission’s draft report into Data Availability and Use.

The Commission’s draft report investigated access and use to public and private sector data, making several draft recommendations towards reforming data sharing. In particular, the draft recommendations proposed the creation of a new ‘Comprehensive Right’ giving consumers greater control over data. The draft report also noted that the private sector was best placed to determine the appropriate standards for such data transfer. This report was the second of three stages in the Commission’s 12-month inquiry.

The draft report aligned with many of the points raised in APCA’s submission to the Commission’s issues paper during the first phase of the inquiry. In particular, the need to maintain security and privacy while ensuring consumers continue to benefit from their data.

APCA’s latest submission reconfirms that appropriately strong authentication mechanisms must be in place to support data sharing, and highlights the importance of trust. In particular, for the sharing of payments data as Australian consumers place significant trust in the handling of their personal information by financial institutions.

The final report on the inquiry into Data Availability and Use is expected to be handed to the Australian Government in March 2017.

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APCA participates in blockchain standardisation

APCA LogoAPCA’s Emerging Technology Lead, Nick Cliff, is a participant on the International Organisation for Standardization's (ISO) committee specifically formed to develop global standards for blockchain.

Led by Australia’s peak standards body, Standards Australia, this ISO technical committee will draw on the expertise of representatives from 35 countries. The committee will work on standards to support privacy, security and interoperability among users, applications and systems. The aim of the initiave is to unlock the potential of blockchain technology.


The 2016 annual review is available now: Connections and Collaboration

APCA LogoThis year’s annual review, ‘Connections and Collaboration’, reflects on the vibrant Australian payments environment and our work in driving payments evolution, positioning for the future, and promoting collaboration.

Check out our Payments Snapshot Infographic or read the full review.


News and Views

Here is a selection of opinion articles from the APCA blog during the past quarter:

Infographic: The Digital Economy November 2016
by Alice Markie

The Australian Payments Council to host Challenge Design Workshop
by Alice Markie

Staying Smart Online – Why Cybersecurity Matters in Payments
by Alice Markie

International Perspectives: Payments UK on the Digital Economy
by Alice Markie

Cash: the Next Generation
by Alice Markie

International Developments: The Open Bank Project
by Nick Cliff

Connections and Collaboration: What Do They Mean For The Future?
by Alice Markie

More data, more value
by Damien Butler


Dr Leila Fourie’s inaugural CEO’s Corner

Dr Leila FourieI’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.

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.

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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.

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Changes to the APCA Board

APCA LogoIn September 2016, we farewelled APCA’s longest serving director, Paul Inglis, following his resignation from the Board. Mr Inglis was appointed by the Australia and New Zealand Banking Group Limited as a director in July 1998. During his 18 years on the Board, he served on numerous Board committees as Chairman and member, as well as on various working groups. We thank Mr Inglis for his valuable contribution.

APCA also extends its welcome to two new directors. Anne Collard was appointed to the Board by ANZ following Mr Inglis’s resignation. Craig Kennedy represents Credit Union Members. Mr Kennedy joined the Board in August 2016 following Adrian Lovney’s resignation. APCA’s Board of Directors as at 12 September 2016 is available here.

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Australia Payments Fraud – Details and Data published

Australian Payments FraudAPCA’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.



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APCA lodges submission to Productivity Commission Inquiry

Trusted Data SharingAPCA 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.

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The ATM Access Code to be reviewed

ATM CardsAPCA 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.

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APCA hosts Connections and Collaboration evening

Women in PaymentsAPCA, in partnership with Women in Payments, hosted a discussion on the future of payments on Wednesday, 17 August 2016. The theme of Connections and Collaboration brought together 60 members and a panel of experts to discuss dominant themes in our changing payments landscape.

We’re grateful to our panellists for their time and the insights shared:

  • Michele Bullock, Assistant Governor (Business Services); Reserve Bank of Australia
  • Chloé James, Group Media & PR Director; RFI Group
  • Dhun Karai, Non-Executive Director, Head of Payments, Cards & Financial Services
  • Deanne Keetelaar, General Manager; Transaction Products and Payments; National Australia Bank
  • Debra Taylor, Commercial Director Independent Data and Transaction Services; Stone and Chalk

You can read an overview of some of the themes discussed in our blog post.

Thank you to everyone who attended and contributed to this lively and informative evening.

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The Australian Payments Council meets with the Payments System Board

The Australian Payments Council and the Payments System Board of the Reserve Bank of Australia held their second joint meeting on 19th August 2016.

Glenn Stevens, the then Governor of the RBA and Chairman of the Payments System Board, acknowledged the important role of the Australian Payments Plan in guiding the strategic development of the payments system.

Mark Birrell, Australian Payments Council Chairman, provided a progress report on the industry’s collaborative action and Council members provided information on initiatives currently being undertaken on the Australian Payments Plan. Glenn Stevens commended the Council for its work on the Plan.


Read more here.

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News and Views

Here is a selection of opinion articles from the APCA blog during the past quarter:

Are contactless bank cards the future of public transport ticketing?
by Alice Markie

The irony of Bitcoin and the future of Shared Ledger Technology
by Chris Hamilton

To read more articles, click here.

To receive notification of all new articles, click here to sign up to the APCA blog RSS feed.


Money 20/20 Europe - Rob Craig (APCA Chair)

Rob Craig ChairmanFor those who don’t know, this year was the first time Money 20/20 has been held outside the US. This was a great opportunity to gain insights considering that the European banking system is similar to the Australian system especially in comparison with the US, which is significantly more fragmented. The reason that I found a FinTech conference particularly useful is that it deals with innovation / disruption and the challenges these create for existing and new players as well as regulators.

I thought I’d share my thoughts on what Australia can learn about driving change in the payments system.



1. Distributed Ledger Technology

The conference participants and commentators seem to be divided into three groups:

  • the sceptics: don’t see distributed ledger technology (DLT) having a major impact on the financial world
  • the pragmatists: believe there are some natural places for distribution ledgers to simplify operating models and improve customer outcomes; for example, registers of assets (e.g. capital market instruments)
  • the believers: believe DLT creates the opportunity for industries to organise horizontally, rather than vertically, as the DLT creates trust between the layers rather than organisations doing this. For example, the role an insurance company plays between the insured and the re-insurance company could reduce.

There are also many, and varied, implementations of DLT regulation. For private networks it was suggested that participants could create a rulebook on which they mutually agree. Public DLT networks are a little more challenging and require some form of industry regulation. Because of the newness of the technology, governments are conservative with the changes – this in turn creates uncertainty for FinTechs.


Interestingly, Isle of Wight has decided to take a position within the distributed ledger marketplace by creating local legalisation that supports DLT. Isle of Wight is actively marketing itself as a sensible place for distributed ledger / blockchain FinTechs to domicile and launch their business from.


2. Improved point of sale devices and applications can grow businesses

Point of sale (POS) devices and applications received a lot of attention. Especially over the debate as to:

  • whether dedicated POS terminals (hardware) are dead
  • the perceived failure by financial institutions (FIs) to properly service this segment
  • the value that can be created for the merchant by good quality software running on standard hardware (i.e. tablets)

In contrast, the large hardware manufacturers were promoting their latest fully integrated suites, although some of them are opening up the software to create a platform for payment services companies to build applications on.


The example of improved POS commonly quoted was ordering your coffee on your smartphone just prior to arriving at the café so that it is already made when you get there and the payment is taken automatically. There was some debate, however, as to the degree of personalisation and the distinction for users between what’s creepy and what’s cool.


A second trend in the area of POS is digital wallets - what some commentators argue are inevitable. The combination of new generations of POS software and digital wallets certainly make the trend of ‘invisible payments’ a real possibility.


Some groups promoted a complete shift away from card transactions to fully digital transactions. They argued for using the mobile as the interaction device thus enabling fully integrated, or seamless, payments. Others believe that the card and physical terminal are here for the foreseeable future. It seems that both arguments have validity.


3. Consistent implementation across a market is critical to combat Card-Not-Present (CNP) Fraud

This discussion really revolved around balancing security versus customer experience. The main message conveyed was that FIs will need to keep testing fraud prevention and detection methods to balance the customer experience impact. Consistent implementation of a solution across a market was seen as a critical enabler of success. There was a reasonable degree of expectation that smart implementation of tokenised systems would significantly reduce CNP fraud.


4. Digital Identity is a cornerstone to solving various forms of fraud

One of the strongest digital identity examples is Sweden’s BankID system which sits alongside their national identification card but is actually a collaboration between the banks as opposed to a government initiative. This meant that it became commonly used - driven by regular internet banking use - and it was also designed to be interoperable including with government services from day one.


5. Open APIs are an enabler for customers that force FIs to focus on customer experience

It’s fair to say that the impact of the European Commission’s PSDII is far from clear and many of the detailed issues must be resolved at a country level. One of these issues is how liability will be managed, with country groups expected to report back on suggested approaches to managing liability in the near future.

Debate focused on the belief that open APIs will push some FIs to be infrastructure providers (tracks) and some to be customer experience companies (trains). Both are argued to be valid market positions. However, the overall fear is that some FIs will fail to clearly land in one area or the other, and will be unsuccessful at both. Some argued that there are already FIs making a concerted effort to be the customer experience enabler, and that the drive to open up APIs simply accelerated this trend - putting pressure on the European FI to completely digitalise their business in a race to lift customer experience.

These are key learnings for Australia which are worth keeping in mind in the context of the Productivity Commission’s inquiry into Data Availability and Use.


6. There are many ways for FIs to participate in FinTech innovations

There was a reasonable amount of discussion on whether traditional FIs should embrace FinTech partners. The weight of the conference was certainly yes.

The core argument was that successful FinTechs will solve real customer challenges. That is, they could improve the experience/outcome for customers or the FI.


It is also clear that there are many ways for FIs to participate in FinTech innovations. These can include (each with their own pros and cons):

  • creation of innovation labs
  • partnering with promising FinTechs to take offers to market and test and learn
  • investing in FinTechs to leverage their upsides
  • purchasing services from proven FinTechs


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Decline in cheques accelerates as digital economy grows

Milestones ReportAPCA’s latest Milestones Report, released in April 2016, shows that the digital economy is accelerating the decline in cheque use.

The report shows that both Australian businesses and consumers are choosing electronic payment methods in place of traditional payment systems.


Cheque Use Graph

Australians used 16.3% fewer cheques in 2015 than 2014. This rate of decline is accelerating, with a 14.3% drop the previous year. Meanwhile the use of cash has declined with ATM withdrawals dropping 5.5% over the past year. Globally, Australian cheque use is declining faster than most other nations, with a total decline of 71% over the last decade.

Australia was also ranked as one of the most digitally active nations in the world. We are fifth globally for smartphone banking uptake, and the sixth most smartphone concentrated nation. Meanwhile an impressive 86% of Australian households are online.

Click here to get the full infographics and report.

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RBA releases images of the new $5 banknote

New $5 BanknoteThe Reserve Bank of Australia (RBA) released images in April of the new $5 banknote.

The new note will be issued into circulation from 1 September 2016. Existing banknotes do not need to be exchanged as the original issue can still be used.


The new banknote:

  • has new security features including a distinctive top-to-bottom window
  • retains many features from the current $5 banknote such as colour palette, size, and people portrayed

More information about the design and security features, which will be common to all banknotes in the new series, will be part of a RBA public awareness campaign over coming months.

APCA continues to support the introduction of the next generation banknotes and promote collaboration between RBA and industry stakeholders.

For more information visit the RBA Next Generation Banknote website.

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Updates on the Issuers and Acquirers Forum

On 24 May 2016 APCA issued ‘Third Party Digital Wallet Security Guidelines’. These voluntary Guidelines provide Issuers with a statement of industry best practice - and a frame of reference for considering and managing potential fraud and data / transaction security risks.

The Issuers and Acquirers Forum (IAF) will maintain the Guidelines and monitor developments in international standards for mobile wallet payments.

The Guidelines address the following three issues:

  • security: customer identification and authentication on enrolment and customer authentication at the time of transaction
  • tokenisation: use, selection, and minimum standards of tokenisation services
  • compliance with the Privacy Act: in reference to the disclosure of transaction data to card Issuers


The IAF is also reviewing options for an industry response to card-not-present (CNP) fraud in Australia. This follows the ACCC's draft determination proposing not to grant authorisation for the application to mandate and coordinate implementation of 3D Secure by online merchants.

Combatting CNP fraud continues to be a strong focus for APCA and the IAF. 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.


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Government inquiry into data availability and use

Australian GovernmentThe Productivity Commission has commenced a public inquiry into ‘Data Availability and Use’.

Following recommendations from the Murray and Harper inquiries, the Commission has been asked to conduct a broad ranging investigation to ‘examine the benefits and costs of options for increasing the availability of and improving the use of public and private sector data by individuals and organisations’.

An APCA working group is examining the implications of the inquiry.

The Australian Payments Council is drafting a response to the inquiry based on recent work completed on guiding principles for digital identity.

The Australian Government will use the output of this inquiry to consider policies regarding data availability with an aim to boost innovation and competition.

The issues paper looks at two areas of interest for APCA:

  • the release of private datasets which could include sharing product lists as well as individuals transactional data in either a read or write function
  • consumer’s data about themselves which could lead to greater identification and authentication of consumers and therefore lower fraud
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Canadian Payment Association advances future of payments strategy

Canadian PaymentsThe Canadian Payments Association (CPA) released ‘The Vision for the Canadian Payments Ecosystem’ on 20 April 2016.

The paper outlines plans for modernisation of the Canadian payments system that “must be fast, flexible and secure, promote innovation and strengthen Canada’s competitive position”.

Several references are made throughout the document to similar modernisation efforts in Australia such as the New Payments Platform.

An extract from the Vision paper identified eight focus areas:

  • fast payment options - A modern system should make funds available to recipients in near real-time
  • data-rich payments - The ISO 20022 global message standard should be adopted to provide expanded and standardised information with payments
  • easier payments - Payments should be convenient to send using simple identifiers such as an e-mail address, mobile number or even social media handle
  • cross-border convenience - Consumers and businesses should have access to practical and convenient methods to make payments to those in other countries
  • a platform for innovation - The payments system should be flexible and adaptable, providing a platform for innovation, decreasing costs, and delivering ongoing efficiencies
  • transaction transparency - Notifications to payer and payees should provide tracking updates on the status of payments
  • activity-based oversight - Rules and regulations should focus on services provided, instead of the type of institution that provides them
  • Open, risk-based access – A modern payment system should foster competition and define objective requirements for access – without compromising safety and security.

Public consultation is open until 20 June 2016.

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Welcome to APCA's newest recruits

The new organisational structure put in place in late 2015 established “Payments Direction” and “Payments Community” as distinct focuses for APCA. Recently, we welcomed new recruits to three newly formed roles within these units – we are delighted to introduce them.

Nick CliffNick Cliff Payments Direction

Nick joined APCA on 21 March as Research Manager. His key focus is on monitoring how the world of payments is changing, globally and in Australia, and interpreting the implications for stakeholders. He is also assisting the Australian Payments Council's subcommittees for Digital Identity and Enabling the Future.


Damien ButlerDamien Butler Payments Direction

Damien joined APCA on 30 May in the role of Executive Manager, Policy and Strategy. In his previous role, Damien headed public policy at Suncorp Group, leading the Group's major public affairs priorities. Damien has also held several senior roles at Insurance Australia Group across government and industry relations, policy & corporate affairs and joint venture partnership management.



Paul AnguitaPaul Anguita Payments Community

Paul Anguita joined APCA on 16 May as Manager, Member Engagement. Paul’s role is to further build and develop relationships with our members. He previously worked five years at HSBC in a mix of retail & commercial banking roles. Most recently, he was an Account Manager in HSBC's commercial transactional banking business. Paul is excited about getting to know all APCA members in 2016.

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News and Views

Here is a selection of opinion articles from the APCA blog during the past quarter:

Are contactless bank cards the future of public transport ticketing?
by Alice Markie

The irony of Bitcoin and the future of Shared Ledger Technology
by Chris Hamilton

To read more articles, click here.

To receive notification of all new articles, click here to sign up to the APCA blog RSS feed.


Thank you, and good night!

Chris Hamilton APCA CEOThis is my last CEO Corner for APCA, after 10 years. For old times’ sake, I went back to my first CEO Corner of March 2006. Unsurprisingly, it is a bit of a sermon on the virtues of industry collaboration for systemic change. At least I’m consistent.

I’m something of a payments tragic: I’m passionate about efficient payments infrastructure as an enabler of economic development and prosperity. In Australia, our systems have evolved a lot in the last 10 years. We score well by global standards on measures like increase in electronic payments per capita, account penetration, rise in mobile banking usage, proportion of currency in virtual form, rate of chip and contactless take-up, decline in cheque use, decline in cash use, and so on. Australians take their highly automated payments system for granted, and also take for granted that they will get each innovation pretty much as soon as it rolls off the production line.

The New Payments Platform is a substantial investment by the leading payments institutions in seeking to ensure that this continues into the future. It’s not a new product or service, but a platform for bringing new payments products and services to market in the future in a better way than has been possible up to now.

Not that there isn’t plenty more innovation we could strive for. The rapidly evolving fintech ecosystem is a welcome opportunity to hothouse some further improvements in the payments system. I think it is very encouraging that we see a lot of engagement and dialogue amongst the fintech community and the payments community. At APCA, we were delighted to have Stone and Chalk present at our 2015 Annual Conference, giving them a platform to engage the who’s who of Australian payments. Once the New Payments Platform goes live in 2017, I hope the fintech community will play an important role in identifying and developing overlay service ideas to get the best out of the new real-time architecture. The formation of the Governments Fintech Advisory Council seems to be more evidence of that constructive engagement.

In our own payments community, we are more focused than ever on collaborative engagement to improve the system. Under new Chairman Mark Birrell, the Australian Payments Council is following through on the Australian Payments Plan it launched in December, to explore and prioritise areas of collaboration. Doing so requires engagement and debate from across our community, and in Government too. Some of this is under way already, and I hope you will see more in the coming year. In this endeavour, we have had the support and encouragement of the Reserve Bank of Australia, which has repeatedly demonstrated its preference for industry engagement and collaborative solutions over formal regulation. I applaud them for that.

So: the two things I am most pleased to see at the end of my time are payments infrastructure that has evolved, and will continue to evolve, to meet the needs of the changing economy, and a healthy, sophisticated policy debate amongst industry and regulator. Like all meaningful systemic improvements, these were the work of many – but I am happy to have been part of the team.

Back in 2006, I said that: “breaking in a new CEO is a rare opportunity for an organisation to re-evaluate everything: streamline processes, tweak structures, dust off the things in the too hard basket and generally recapture the spark”. This, I think is again relevant today. Being CEO of APCA is a great job, but it’s time to let someone else have some fun.

It has been my privilege to work with some wonderful folk at APCA, staff and members who are bringing new ideas and perspectives after only a few months, and some stalwarts who were delivering the goods when I started 10 years ago, and will do so after I finish. Each adds something valuable to our culture. These are turbulent, exciting times for payments, but APCA is in good hands. Thank you, all.


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Australian Payments Council establishing Principles of Digital Identity

Digital Security KeyFurther to recommendations in the Australian Payments Plan, the Australian Payments Council has started work on a set of Principles for Digital Identity. Members of the Council’s Payments Community, representatives from government bodies and the Fintech community have worked collaboratively over a number of weeks to agree a set of principles.

A workshop that attracted 40 attendees from a cross section of industry provided a forum for issues generation. Participants discussed five main topics:

  • anchoring trust
  • identity models
  • customer experience
  • privacy & control
  • technology & standards

The principles, that cover a range of issues including ethics, data ownership, control, value, and usage, will help shape the approach to digital identity in Australia. They are grouped according to three main themes; regulatory, technical and commercial.

Organisations and individuals that would like further information on this are invited to contact the Payments Council info@apca.com.au.

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Industry to implement CNP roadmap

Card SwipeAPCA is seeking authorisation from the Australian Competition and Consumer Commission (ACCC) to implement a roadmap for combatting card-not-present (CNP) fraud.

In the 2015 financial year, CNP fraud accounted for 80% of all fraud perpetrated on Australian cards. It is the fastest growing type of card fraud worldwide.

The CNP roadmap initiative brings together issuers, acquirers, and the four major card schemes. It will target online card fraud occurring in Australia.

The main action is to progressively roll out 3D Secure to all Australian online merchants. Using a risk-based approach, the focus is on improving security while making the authentication process easy for consumers so as to address merchant concerns about shopping cart abandonment. The roll-out will be supported by an industry merchant and consumer education campaign.

APCA submitted its application to the ACCC at the end of January 2016.

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APCA supports the RBA with Next Generation Banknote rollout

Australian BanknotesThe Reserve Bank of Australia (RBA) announced new security features will be introduced to Australia’s banknotes starting with the $5 banknote on 1 September 2016.

To promote collaboration between the RBA and industry stakeholders, APCA established the Next Generation Banknote Support Project in September 2015.

The project’s objective is to support the RBA’s introduction of the ‘Next Generation’ of banknotes to minimise impact during the introduction of each denomination.

This includes:

  • ensuring cash-in-transit providers will be able to supply the required quantities of new banknotes to key locations around Australia
  • working to ensure banknote equipment is updated and capable of handling both the old and new series of banknotes.
  • supporting the RBA in supplying financial institutions with educational material
  • ensuring that branch and call centre staff are trained to help familiarise customers with the new security features.

The first new design will be released in the middle of the year. It will include a ‘tactile feature’ to aid the vision-impaired community, as well as a range of new security features intended to ensure the ongoing security of Australian banknotes. The colour palette, people and sizes will remain unchanged.

For more information visit the RBA banknotes website.

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APCA responds to RBA consultation on card payments regulation

Reserve Bank of Australia APCA made its submission to the RBA’s Review of Card Payments Regulation on 3 February 2016. This was in response to the Consultation Paper that was issued on 3 December 2015.

The APCA submission supports the following points:

  • retention of the 50 basis point weighted average for credit card interchange
  • annual, rather than quarterly, compliance with the interchange fee benchmarks
  • the principle of enhanced disclosure to merchants about costs; but with some concern over a lack of flexibility within the current RBA proposal
  • the publication of a draft timetable of the reforms for industry comment
  • future reviews to examine the changing competitive dynamics in the industry; including the rationale for regulation which assumes that merchants have no option but to accept Visa and MasterCard

The APCA submission can be found here.

Following its meeting on 19 February 2016, the Payments System Board said that it would work towards a decision on the Review at the May 2016 meeting. It identified the implementation period as an important issue, given the wide range of suggestions for an appropriate transition time.

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Stakeholders respond to RBA consultation on card payments regulation

Over 30 unique non-confidential submissions to the Review were published on the RBA website alongside the APCA submission.

The submissions noted the following:

  • broad acceptance of the 50 basis point weighted average from financial institutions and schemes as well as some merchants. However, consumer groups, some merchant groups, and a payments provider suggested hard cap for credit card interchange.
  • significant concern from financial institutions over the 8 cent debit card weighted average, from the current 12 cent weighted average. Many identified that this proposal had not been raised previously and that little evidence was provided that the reduction is warranted.
  • no consensus on the treatment of companion cards but there is significant concern around the inclusion of commercial cards within the regulatory regime. There is also some concern over the inclusion of foreign-issued cards within regulation.
  • limited support for the RBA’s proposal for quarterly compliance with the interchange fee benchmarks, with most advocating for annual compliance
  • in respect to surcharging, while most broadly agreed with the RBA’s overall approach, concerns have been raised around complexity and inflexibility of parts of the RBA’s proposal. Many merchants believe they should be able to include their costs associated with chargebacks into cost of acceptance calculation. There are also 800 emails from individuals supporting the banning of surcharging altogether.

The submissions are available here.

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Faster Payments Task Force marks anniversary of strategies document

Federal Reserve LogoIn early 2016, the US Federal Reserve Banks celebrated the first anniversary of the release of the Strategies for Improving the US Payment System paper.

The Faster Payments Task Force was established to progress the agenda outlined in the paper and an update of its activities was released on 2 February 2016 to mark the anniversary.

The main objectives of the Task Force are to foster debate within the USA about how to make the payments system faster and more secure; consider the needs of the unbanked and underbanked; and explore the role of the US Federal Reserve as a payments infrastructure provider.

To date the Task Force has developed:

  • faster Payments Effectiveness Criteria which can be used to assess faster payments solutions and as a guide for innovation in payments. The 36 Effectiveness Criteria are categorised under six headings: Ubiquity, Efficiency, Safety and Security, Speed, Legal Framework and Governance.
  • a Decision-Making Framework and Glossary of Terms to help guide industry decision-making on potential faster payments solutions.

The Task Force has also convened a Capability Showcase, which allows firms to demonstrate their capabilities. A number of these pitches are available through YouTube.

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News and Views

Here is a selection of opinion articles from the APCA blog during the past quarter:

Development grants for finance sector women
by Alice Markie

Perspectives on the Australian Payments Plan
by Alice Markie

To read more articles, click here.

To receive notification of all new articles, click here to sign up to the APCA blog RSS feed.