Regulation, challenges, innovation: Inside AusPayNet Summit 2023
The Indue team was excited to sponsor and attend last week’s AusPayNet Summit, an annual end-of-year highlight for the payments sector, bringing together industry experts, decision-makers, innovators, and regulators for stimulating discussions on the future of payments in Australia.
The theme of this year’s AusPayNet Summit 2023 ‘A Turning Point’ – focused on how the industry can take advantage of current opportunities to deliver secure and customer-focused payments systems, within a sector focused on encouraging innovation and fostering collaboration.
As leaders in payment services, the Indue team valued the opportunity to connect with others in the industry, explore emerging trends, share valuable insights and collaborate on solutions for challenges facing our industry.
Our key takeaways included:
- Industry, government and the RBA need to work together to modernise the rapidly evolving payment services sector.
- Licensing of payment providers must balance risk mitigation with seamless access.
- Reforms of the cheque system are underway but will take substantial time and effort to complete.
- Appropriate regulation of open wallets is needed given their increasing role in the payment’s ecosystem.
- AI can provide enhanced decision making and improved efficiency, but it isn’t always the best solution.
RBA Governor insights on payments modernisation
The Summit included a fascinating address by the newly appointed Governor of the Reserve Bank of Australia, Michele Bullock, who spoke about how the Government’s reforms to modernise the payments system will enhance safety, efficiency and competitiveness across the payments ecosystem.
The key takeout from the Governor’s address was that industry, government and the RBA will need to work together on navigating the broad range of key challenges in the rapidly evolving payment services sector.
The three key issues that will be particularly strategically important to the RBA in 2024 include: 1) the next review of retail payments regulation (which will include a focus on Least-cost routing (LCR), Mobile wallets, and Buy-now-pay-later (BNPL) services); 2) maintaining access to cash; and 3) supporting the transition from BECS to modern payment systems.
Governor Bullock noted some significant challenges will need to be overcome for the industry to successfully transition all BECS payments to more modern payment systems, including financial institutions needing to uplift their processing capacity, and enabling NPP services that can reliably handle the full range of payments that are currently processed by BECS.
A balanced approach to crucial reforms
With Australia’s payment landscape evolving at such a rapid pace, Summit discussions shed light on the crucial reforms aimed at reshaping the sector’s regulatory architecture.
Discussions about the licensing of payment providers revolved around finding a balance between safeguarding against potential risks and ensuring seamless access for users, which is pivotal for the sustained growth of the payment services sector.
As this year’s AusPayNet Summit reinforced, collaboration among industry leaders, regulators, and all stakeholders will be critical in developing a regulatory landscape that caters to the ever-evolving needs of the payment ecosystem.
Regulating new ways to pay
The shift from traditional cheque-based transactions towards digital methods has been led by customers and while the system is ready for change, a full transition and phase-out of cheques will require significant time, and substantial efforts in revamping systems and processes. It will also require overcoming barriers such as a lack of digital capabilities or distrust of digital solutions among consumers.
The regulation of open wallets is also increasingly necessary given the substantial role they play in the payment’s ecosystem. There is a need for appropriate regulation that aligns with the evolving nature of wallet providers.
Threats and opportunities of AI
Generative AI does provide a revolutionary new tool with the potential to fundamentally change the way things are done, with opportunities to significantly improve decision making, personalisation and the efficiencies of payments technology.
However, when considering security in payments, AI isn’t always the best solution. There is a need to consider how the use of AI impacts the threat landscape, as well as questions around ethics, equity and responsibility of data.