Payment providers have long had to balance the trade-off between meeting mandated security requirements and providing convenience and the latest technology for consumers.
Over the past five to 10 years, this pressure has become more intense, as the demand for a wider variety of fast and convenient payment options. This, however, sometimes comes at the expense of security with criminals taking advantage of the situation.
Australians lost a record $323 million to scams in 2021. Money lost to scams almost doubled in one year, with more than 286,000 Aussies reporting they were scammed last year.
These figures represent a ‘significant’ increase of 84% compared to 2020, when Aussies lost $175.6 million through the year.
Investment scams did the most damage according to the latest figures from the Australian Competition and Consumer Commission’s (ACCC) Scamwatch.
Investment scams accounted for $177 million, followed by dating and romance scams which saw people losing $52 million.
December saw the most money lost ($43.2 million) and August 2021 saw the highest number of scams reported (40,874).
New South Wales residents were collectively duped of $110 million – the highest, followed by Victoria where residents reported $74 million lost.
Crispin Kerr, Australia-New Zealand vice president at cybersecurity company Proofpoint, said the data paints an unfortunate picture of just how effective scammers were at taking advantage of Australians in the past year.
“The 84% increase in losses to scams in 2021 is significant and is just the tip of the iceberg when it comes to understanding the true impact on Australians,” Mr Kerr said.
“Based on the numbers for December, during the holiday season, people can become desensitised to receiving numerous advertising links for shopping deals and the like and may not think twice about opening a dangerous file or clicking a suspicious link.
“The data shows scammers were extremely active in 2021 and we anticipate this will only increase as scammers continue to evolve and update their tactics.”
While investment and romance scams were the most damaging, there were a number of other scams that saw Aussies losing millions.
Investment scams accounted for more than half of all the money lost to scams last year, and increased in prevalence by 32% compared to 2020.
“Investment scams can seem very attractive, and scammers can come across as legitimate in their promise of financial gain through the purchase of shares, funds, cryptocurrency or other high returns,” Mr Kerr said.
“However, the reality is that these get-rich-quick schemes enable scammers to steal personal and financial information to siphon funds for their own gain.”
Social media sites were the main hub for money loss via romance and dating scams, with 40% of scams reported resulting in money lost.
“Scammers also utilised social engineering particularly during lockdowns when people were at their most vulnerable to steal millions from Australians in dating and romance scams,” Mr Kerr said.
Phishing scams – where scammers aim to gain personal information – had the highest number of reports in 2021, making up one quarter of all scams reported. This is an increase of 61% on the year prior.
Scams relating to threats to life or arrest disproportionately affected younger Australians aged 18 to 24 years old, and accounted for the highest losses at $3.3 million.
Employment and job scams also more than doubled in 2021 to $2.6 million, and identity theft scams increased threefold to $10 million.
Older Australians suffered the greatest loss according to the ACCC’s figures, with people over 65 years old losing a total of $81.9 million throughout the year.
This demographic also reported the highest number of scams (46,282), followed by Australians aged 35 to 4 years old with 43,526 scams reported.
Men lost more to scams than women, with men reporting $190 million lost compared to $131 million reported by women.
No age group was exempt from losing money to scams, but the amount lost to scams did increase with age in 2021.
When it comes to card fraud, however, card not present (CNP) transactions continue to dominate, making up 87% of total transactions. In 2019, AusPayNet launched the CNP Fraud Mitigation Framework to address and control this type of fraud.
Usually CNP fraud involves breaches by third parties, through hacking of IT systems of a retailer or other company. Stolen card details can then be stored by criminals and used well after the breach. Card on file transactions – where a customer keeps their card on file with a merchant they use regularly – are also becoming a preferred target of cybercriminals.
Global fraud losses for card issuers, merchants and acquirers of card transactions from merchants and ATMs are large, totalling almost US$28 billion in 2018 – a huge increase from the US$7.6 billion lost back in 2010.
Having said this though, in the past couple of years, the number of cases of payment fraud globally has been declining. This success has come through coordinated action within the payments industry, through measures including:
Globally, the COVID-19 pandemic has seen a spike in scams seeking to exploit fears about the virus, which include targeting government payments and superannuation withdrawals. In Australia, just before the pandemic broke out in early 2020, there was also a spike in scam activity related to bushfire donations.
In response, governments and financial institutions are taking responsibility to educate themselves, consumers and businesses about the types of scams out there to help others avoid being exploited. They’re also doing more to identify and track account takeovers, shutting down “fake named” and “mule” accounts that scammers use to receive payments.
Predictions on fraud and scams are almost impossible to make, as criminals are always changing their methods and targets, partly to circumvent government efforts to address fraudulent activity. However, by having an action plan of “education, awareness and tracking”, governments, banks, consumers and businesses can take control to prevent themselves from being another scam statistic.
As the world of payments continues to make strides forward, Australian consumers are likely to be at the forefront of the next evolution. At Indue, we help businesses adapt and meet the changing expectations of consumers, by delivering innovative, compliant and secure payment systems.
To learn more about the trends shaping the payments landscape and what it means for your business, contact us today
The competitive playing field for banks is evolving quickly, introducing agile new competitors and challenging traditional formulas for success. Customers, not products or business lines, are the centre point of strategies and business models today. The ability to leverage large volumes of data and new technologies to understand customers’ journeys and deliver personalised offers and experiences is now considered critical to driving loyalty, engagement and, ultimately, growth.
Backed by insights from 8000 global customers and 140 bank C-level executives, the World Retail Banking Report 2022 discusses how banks can seamlessly embed themselves in the customers’ digital journeys to enhance loyalty and drive growth by leveraging data and AI/ML technologies.
Have a look at the new World Retail Banking Report 2022
Source: Capgemini 2022
We are pleased to announce that Auswide Bank has selected Indue as their exclusive full-service payments partner.
An ASX-listed regional bank based in Bundaberg with 17 branches across Queensland, Auswide Bank has operated for more than 55 years with assets under management of more than $4 billion.
Auswide Bank has an Australia-wide lending presence supported through branches, business bankers, accredited mortgage brokers and online, and offers an extensive range of finance and banking products to help their customers realise their financial dreams.
Auswide Bank Managing Director Martin Barrett said the partnership announced today strengthens an already proven relationship, with Indue to provide end-to-end payment services that will support the bank’s digital transformation, provide a state-of-the-art customer experience and business outcomes.
“Auswide Bank has worked with Indue for 6 years and the extension of agreement is another exciting step in our relationship,” Mr Barrett said.
“Both organisations are focused on placing our customers at the centre of everything we do, and we couldn’t be more pleased to be partnering with Indue to help us continue to deliver outstanding service to our communities and customers across Australia.
“Indue will provide a full suite of end-to-end payment solutions, which is a key component of transforming our business with technology and providing digital payment choices for our customers, improving their experience and delivering stronger business outcomes.”
Indue CEO Derek Weatherley said Auswide Bank’s strategy was strongly supported by Indue’s strategy and Indue was very well placed to serve Auswide Bank in their mission to serve their customers.
“At Indue we have a deep commitment to our partners, and our ‘customer first’ approach is directly aligned to Auswide Bank’s focus on their customers and community,” Mr Weatherley said.
“This new partnership will provide Auswide Bank customers with access to a comprehensive suite of end-to-end payment services delivered through Indue’s ongoing digital transformation program.
“Indue reinvests our profits into research and development to ensure our customers are continuously able to deliver relevant payment solutions to their customers. Auswide Bank and its stakeholders will be a major beneficiary of these investments as we continue to develop and deliver these innovative payment solutions.
“Auswide Bank will benefit by tapping into Indue’s evolving suite of digital payments that bring real time, data rich, frictionless payments to customer’s anywhere, anytime, with the peace of mind brought by our market leading real time fraud and AML capabilities.
“The payment services suite provided to Auswide Bank will include Direct Entry, BPAY, NPP, Financial Crimes, Anti-money Laundering, Card Services, High Value Payments and PEXA. Auswide Bank plan to launch NPP and NPP Fraud as a matter of priority.”
Mr Weatherley said the teams were looking forward to working together for a swift transition over coming months.
For more information please contact:
Indue Head of Marketing & Communications – Clare Mitchell
[email protected] – 0429 889 556
Auswide Bank Head of Marketing – Karyn Kelly
[email protected] – 0414 011695
Payments solutions provider Indue today announced it has become a Tier 1 Participant Member of the Bulk Electronic Clearing System (BECS), the low-cost work horse of the Australian payments system, which processes more than $14 trillion Direct Entry transactions annually.
Indue Chief Executive Officer Derek Weatherley said he was pleased that Indue had transitioned seamlessly from a Tier 2 to a Tier 1 participant in BECS. This was a major industry change and went ahead without disruption to our clients, their customers or other industry participants. This change is also significant because organisations seeking a Tier 1 sponsor now have broader choice in a traditionally limited market.
“This was a seamless transition for our valued clients, and importantly this move future proofs our Direct Entry offering against decisions made by banks or other third parties. We now control our own destiny in respect of Direct Entry service continuity for the future, as we no longer rely on other parties to assure service continuity. This is important to our clients as they navigate a shifting state of play in account to account payments in the coming years.
“This change rounds out our position as a Tier 1 provider of all account-to account payment systems, complementing our New Payments Platform offering and our real time account to account Orion fraud solution” Mr Weatherley said.
Indue currently provides Direct Entry services to a large and diverse customer base including Mutual Banks, Credit Unions, Banks, Mortgage Originators, Gift and Prepaid Solution Providers, Government Agencies, ATM Operators, FinTechs and Church Funds, processing over AUD$75 billion annually.
For more information please contact:
Clare Mitchell – Head of Marketing & Communications
Today we are delighted to confirm that The Mutual Bank has chosen Indue as their principal payments partner.
The Mutual Bank, a $1 billion mutual bank based in the Hunter region of NSW, has been serving the people of the Hunter since 1888. It offers a full range of financial products and services, including home loans, transaction and savings accounts, digital banking and payments services, credit cards, business banking and insurance.
The partnership will provide The Mutual Bank and its members with access to Indue’s comprehensive suite of end-to-end payment services delivered through Indue’s ongoing digital transformation program, which has focused on major investments key to the mutual sector.
The Mutual Bank CEO Geoff Seccombe said ‘the relationship formed today strengthens an already proven partnership that started with a digital payment solution and is now moving to end to end payment services’.
Indue CEO Derek Weatherley said ‘The strategic partnership with The Mutual Bank reflects the relevance of our ‘member first’ ethos as well as the strength of our product roadmap for the mutual industry, which has been delivered through a $50m program focussed on the future of customer experience in payments. Indue’s evolving suite of digital payments bring real time, data rich, frictionless payments to mutual members anywhere, anytime, with the peace of mind brought by our market leading real time fraud and AML capabilities’.
Indue CEO Derek Weatherley said the seven-year strategic partnership was a pleasing evolution of a relationship that formed when Indue worked with The Mutual Bank to assist them to be the first locally based issuer of Apple Pay in their region.
“Indue already provides Mobile Payments services to The Mutual Bank, and as part of that existing relationship we developed a trusted partnership based on mutual respect. It became clear as we worked together that there was tight alignment between our values, our product offering, and their payments needs. It became evident that Indue was an ideal partner to support The Mutual Bank in their mission to serve the Hunter community.
“The payment services suite provided to The Mutual Bank by Indue will now be significantly expanded to include Direct Entry, BPAY, NPP, Financial Crimes, Anti-money laundering, Card Services, High Value Payments, PEXA and an expansion of their Digital Payments offering, which will create efficiencies and deliver resilient and secure payments to their members.”
Mr Weatherley said the teams were very much looking forward to working together through a speedy transition and to build on our successful partnership to date with The Mutual Bank. Our servicing model takes the pressure off The Mutual Bank to take the lead on payments as we do this for them, giving them the space to focus on what matters to them, which is serving their community.
“We see significant cultural alignment with both organisations being ‘member first’ – focused on serving their customers and communities – and we couldn’t be more pleased to be partnering with The Mutual Bank to help them continue to deliver outstanding service to the community of the Hunter.”
The Mutual Bank CEO Geoff Seccombe ‘Indue earnt our trust and respect by delivering on their promise and their customer first focus was directly aligned to our focus on our members and community’.
See press release
For more information please contact:
Clare Mitchell – Head of Marketing & Communications
Credit card use is still below its pre-pandemic levels, while debit cards are seeing somewhat of a resurgence in 2021.
The latest Reserve Bank (RBA) credit and debit card data for March 2021 reflects how these cards have been used in the 12 months since the pandemic truly impacted Australians’ way of life.
According to the most recent data, the number of active accounts fell slightly from February to March to still be 7.25% below the March 2020 level (14.48 million accounts).
Debit cards meanwhile are 3.5% above pre-pandemic account numbers (35.28 million), with a minor monthly increase in the number of cards on issue.
That doesn’t mean people aren’t using their credit cards – far from it.
The number of month-on-month credit card purchases increased by 3.25% (more than 268 million), and the value of these purchases rose by almost 5.5%.
Since March 2020, the number of credit card purchases is up by more than 9%.
But these figures are nothing compared to the debit card.
Over the past 12 months, debit cards have seen a more than 20% rise in the number of purchases to 796 million in a month, and the value of these purchases has increased by 19.3% to roughly $36.3 billion.
Credit card use plunged during the COVID-19 pandemic, particularly among younger Australians, and many got busy wiping off their credit card debt during lockdowns, with some help from stimulus payments, super withdrawals and increased savings.
So while credit cards are still being used, it would seem they’re being used more conservatively:
The aversion to the higher interest charges on credit cards seems to be one reason for their decline compared to debit cards.
Payments expert Grant Halverson told Savings.com.au last month that “out of date” product is another reason.
“Credit card debit, which is now 1.3% of all consumer debt, is fading badly because the major banks … are still hooked on airline point programs – which only attract transactors not revolvers – while they push mortgages as the major debt vehicle – which is working,” he said.
“Debit has been growing double digits since 2009 – that’s picking up consumer spend and debt is now split across a range of lending.”
Points chasers and travel enthusiasts seem to have reacted positively to news of the New Zealand travel bubble and interstate travel incentives, according to Citi’s April Credit Card Index.
Credit card spending in April was 35% higher compared to April last year when spending was at its lowest point in years due to the pandemic.
Much of this growth has been driven by increased travel spending, particularly when it comes to rewards points redemption, which was halted for most of last year.
Head of Credit Cards and Loans at Citi, Choong Yu Lum, said rewards redemption on Citi cards rose 6% in April.
“Resurging after a year’s lull are travel and airline categories: general travel and experience redemption was up 10%, and Velocity points up 14%,” Mr Lum said.
“It is another strong indication that our Trans-Tasman bubble is working when it comes to stimulating spend in tourism.
“Additionally, we expect that increased domestic travel has contributed to this spike.
“The announcement of the New Zealand travel bubble early in the month has propelled airline spend…and (we) anticipate this will increase over the next few months as more families are reunited with their loved ones from across the Tasman.”
Article Source: savings.com.au
Australian banks are not delivering appropriate omnichannel customer service and struggle to keep up with changing approaches to customer loyalty, according to new research.
The study, conducted by software company Pegasystems and research group Omnipoll, found that poor omnichannel customer service results in more than half (54 per cent) of all customer interactions having at least one issue.
Customers’ top challenges included being forced to call or visit a branch after failing to complete an action online (36 per cent), waiting longer than expected for service in a branch or on the phone (28 per cent) and being transferred from one agent to another (25 per cent).
On the positive side, the study found signs of improved customer service from Australia’s banks over the past two years. The industry had an 86 per cent customer satisfaction average across Australia. This is more than energy/utilities providers (74 per cent), telecommunications (78 per cent) and general insurance (80 per cent).
According to the survey of 1,221 Australians aged over 18, banking customers say the number one driver of satisfaction is easy interaction with their bank.
It found that “digital” customers – those that travel cashless, regularly use online banking and prefer to pay with their phone – are the most satisfied with their banks and more likely to recommend them to other people, but they are also the least loyal.
Indeed, 49 per cent of “digitals” have considered switching banks in the past six months, compared to 36 per cent of “traditional”, the most loyal group, who are also the least satisfied and least likely to recommend their bank.
The researchers attribute this lack of satisfaction among “traditionals” to poor omnichannel service through the pandemic, particularly with branches closing.
The traditional segment – mainly comprising customers over 50 years old – also rated their banks poorly on proactively helping them with money management. Despite this, traditionals still show the most loyalty and longevity, with six in 10 traditionals having been with their bank for more than 15 years.
The researchers attribute the growing lack of loyalty in the digital segment to multiple reasons. Firstly, only 32 per cent of all customers feel their bank is good at rewarding loyalty, while only 38 per cent feel they are given the best possible prices or rates.
Digital customers are also much more likely to have products across multiple banks, which significantly reduces switching challenges. Therefore, if digital customers are unhappy with their current provider, switching is a much simpler process than it would be for traditional customers.
“While banks are doing well to achieve high customer satisfaction, there is work to be done in delivering seamless omnichannel customer journeys and providing proactive customer service,” says Jonathan Tanner, senior director, industry principal financial services and insurance APAC, at Pegasystems.
“Given the level of first-party data banks have on their customers, there are plenty of opportunities to enhance customer relationships and improve customer journeys by providing more personalised service.”
Tanner adds: “Traditionals, in particular, are looking for more personalised, proactive service. As banks continue to close branches, they will need to support traditional customers in transitioning to digital banking to ensure they don’t feel left behind.”
“As this research shows, loyalty is no longer an accurate indicator of customer satisfaction, especially for digital customers who are more often on the lookout for better deals and service and more willing to change providers. This means customer relationships and seamless customer journeys will be pivotal to banking providers’ long-term success.”
Article Source: rfigroup.com
With total spending on cards rising 5.4% to $847.3 billion during the same period, the fraud rate in FY21 was 57.8 cents per $1,000 spent, up from 55.8 cents per $1,000 in FY20, but well below the rate of 73.8 cents in FY18.
Card-not-present (CNP) fraud – mainly affecting online transactions – rose 12.3% to $442.0 million in FY21 as e-commerce surged during successive periods of COVID-19 lockdowns in various parts of the country. In FY21, CNP fraud accounted for 90% of all fraud on Australian cards.
Lost-and-stolen card fraud dropped 9.2% to $28.0 million, and counterfeit/skimming fraud fell 37.3% to $8.9 million, an acceleration of a long-term downward trend for this type of fraud.
AusPayNet CEO Andy White said rising e-commerce volumes underscored the need for industry coordination to target the activities of fraudsters.
“Online transactions continue to grow strongly and inevitably this attracts the attention of organised fraud groups,” Mr White said.
“Industry-wide efforts to mitigate CNP fraud will remain critical, but we all need to remain vigilant when transacting online,” he said.
CNP fraud involves valid card details being stolen and used to make purchases or other payments without the card being present at the point of sale, usually online. Consumers are not liable for fraud losses on payment cards and will be refunded, as long as they take due care with their confidential data.
The end of FY21 coincided with the conclusion of the second full year of operation of the industry’s CNP Fraud Mitigation Framework. Under the Framework, merchants who consistently exceed agreed fraud threshold targets are required to introduce strong customer authentication. The Framework also encourages secure technologies such as real-time monitoring, machine learning and tokenisation.
“We expect to see the full benefit of the CNP framework as we emerge from the pandemic,” Mr White said.
Release of the latest payments fraud data comes soon after the inaugural meetings of AusPayNet’s Economic Crime Forum (ECF). As the successor to the Fraud in Banking Forum, the ECF brings together industry stakeholders to coordinate joint responses to economic crime including scams, fraud, financial crime, and banking-related cyber incidents.
“Alongside our focus on CNP fraud, last month we launched our scams strategy. Over the coming year we look forward to working with industry to reduce the impact of scams on vulnerable businesses and individuals,” Mr White added.
Consumers and merchants are reminded how they can be vigilant online in the lead up to the Christmas holiday season.
Steps consumers can take include:
Guidance for merchants:
Keen to keep pace with the impact of recent global events and an accelerated digital shift, how are financial institutions, consumers and SMEs adapting their behaviours in coming months? RFI Global’s infographic explores our top predictions for 2022.
Mr Oldham is a highly credentialled Australian non-executive Director and currently serves on the Boards of Bank of China Australia and Waves of Wellness Foundation He is a retained advisor to Barwon Investment Partners, chairing its Risk and Compliance Committee. He has previously been a non-executive Director of Vietnam International Bank
As a former senior banking executive, he has deep experience across credit, operational, market, compliance, liquidity and business risk, including risk governance leadership.
Over the past 25 years, Mr Oldham has had a strong focus on risk management in financial services, both as a practitioner and as a consultant.
Most recently he was Chief Risk Officer for CBA’s International Financial Services division based in Hong Kong with oversight of banking and insurance businesses in China, Vietnam, South Africa, and Indonesia.
Prior to that he was lead partner for Deloitte Australia’s financial services risk advisory practice for four years, and was Head of Business Risk and Credit Strategy for Westpac’s Institutional Bank for three years. Earlier he was with Macquarie Group for 16 years, acting as an advisor on risk to Macquarie’s corporate and government clients, and as a Division Director in Macquarie’s Risk Management Group.
Commenting on Mr Oldham’s appointment, Indue Chairman Mr Frank Gullone said: “Tim will bring a wealth of banking experience gained in Australia and overseas. His specific background in risk management will add further depth to Indue’s solid base in the area.”
For more information please contact:
Clare Mitchell, Senior Marketing Manager, Indue Limited E: [email protected]
Last year as millions sheltered at home, e-commerce proved crucial to keeping retail sales flowing. Now, as outbreaks begin to subside and mobility returns, e-commerce’s share of total sales has fallen from its 2020 peak, raising questions about the lasting impact of the abrupt shift to e-commerce.
Transaction data offer two reasons for optimism that the accelerated uptake in online selling will persist even after the pandemic. First, the digital revolution now extends beyond large digital goods merchants to include more small and medium-sized businesses (SMBs). Second, SMBs that enhanced their digital offerings in 2020 now have a distinct advantage. Expanded sales channels have led to enlarged customer bases and provided a firm basis for the continued development of digital capabilities.
Evidence from Australia and Singapore indicates that e-commerce gains are sustained even after outbreaks are brought under control. In both countries, local transmission of the novel coronavirus largely ended late last year and consumers’ visits to retail outlets soon recovered. Greater mobility helped brick-and-mortar retail sales to rebound, yet online sales as a share of the total remain 3 to 5 percentage points higher than prior to the pandemic.
Achieving a similar expansion in online sales prior to the pandemic would have taken between four to five years based on previous adoption rates in these countries. Years of development were compressed into a single year, leaving consumers more familiar with buying online and merchants with new sales channels.
According to our analysis of VisaNet data, retail merchants of all sizes across all regions of the world adapted to the lock-downs and pandemic by moving more of their sales online.¹ While the shift was more pronounced for large businesses, SMBs were not far behind. In Canada, for example, while one in three large businesses pivoted to expand their online sales, one in four small businesses did the same. Adaptations to survive the pandemic and investments made last year have opened up new channels for merchants of all sizes to reach consumers in more ways.
Interestingly, transaction data further shows that half of the increase in SMB online sales last year came from businesses that had no or minimal online business before COVID-19. Prior to the pandemic, three out of every five small Visa SMB retailers had no online sales in 2019. Responding to the challenges from the pandemic, 7 percent of these firms made their first online sales in 2020. Though traditional brick-and-mortar retail remains the main channel for sales among small businesses, the pandemic has accelerated the pace of adoption of digital channels.
These first-time participants showed strong returns on the investment, with their sales as much as 20-30 percentage points higher than their peers who did not shift to digital selling. Moreover, digitally-enabled SMBs emerged from the pandemic more resilient to lockdowns. Of these newly-online merchants, 86 percent were able to stay open in 2020 with limited closures, compared to just 70 percent of their peers with offline-only sales who managed to avoid extended periods of inactivity during the year. The secret to their success was in the wider markets these newly digitally-enabled firms enjoyed—markets that were opened to them through e-commerce and electronic payments.
Digitally-enabled merchants were able to drive stronger sales as the shift online expanded their customer base.² Prior to the pandemic, online sales accounted for less than 20 percent of all sales for the majority of retail SMBs in countries around the world. This limited their reach to customers within a set geographic radius around their physical stores. Moving online opened up markets that previously may have been unreachable before the pandemic.
Within the subset of SMBs that had at most 20 percent of their sales online in 2019, those that increased their online throughput in 2020 experienced a 14 percent increase in customers compared to a 3 percent decline for those that stayed offline, according to the VisaNet analysis. In fact, the growth advantage that small businesses with expanded digital channels have over their peers can be almost entirely attributed to their relative success in attracting new customers. In the United States in particular, SMBs that did not increase their online presence lost about 4 percent of their customers, whereas those that did enjoyed a 1 percent expansion.
This shift to online also coincides with a shift in consumer preferences in favor of online shopping. A recent Cybersource study reported³ that mixed-channel retailers received the highest customer satisfaction scores, compared to merchants that had either exclusively-online or brick-and-mortar sales channels. The COVID year has already left a lasting imprint on small businesses. Vaccine rollout delays or broader spread of new COVID-19 variants would likely only reinforce and accentuate the digital transformation and deep technological shift in retail that was precipitated by the pandemic.
Source: Visa Global Perspectives, April 9 2021.
Fiserv’s local boss Kees Kwakernaak expects another wave of consolidation in the banking sector, as evolving technology triggers more change and scale and customer experience becomes increasingly important.
Mr Kwakernaak, head of Nasdaq-listed Fiserv’s Australian and New Zealand operations, sees further banking rationalisation and marked changes across the payments sector over the next four years.
“You get sort of these plateaus then you see another (consolidation) wave again, and that’s happening in a lot of countries and there is no doubt we are going to see that here,” he said.
Mr Kwakernaak added that it was unlikely Australia would still have about 65 smaller banks in the future, and highlighted the experience in the US where the number of community banks had halved in a few years.
Fiserv — which has a market capitalisation of $US82.9bn ($108.7bn) — is a global payments and financial services technology group that processes about one in eight transactions in Australia.
Already this year, Bank of Queensland has agreed to buy ME Bank for $1.325bn and renewed debate has surfaced over whether Suncorp will sell its bank.
At the smaller end of the sector, in January Teachers Mutual Bank signed a memorandum of understanding with authorised deposit-taking institution Pulse Credit Union for a merger.
Mr Kwakernaak said he didn’t expect further rationalisation in the Australian market to deter new non-bank players from entering Australia, particularly those that “play close” to the customer.
He noted banks were trying to keep a lid on costs but also working out how to invest in improving interactions with customers.
“It will be hard for many of them to continue to invest in the legacy (systems), but then also in the new customer experience,” Mr Kwakernaak added.
He believes consumer habits and technology uptake during COVID-19 has underpinned fundamental and structural change in the payments market, with customer experience a key battleground.
“Some people say that COVID-19 has fast-tracked everything by three years … I’m not sure that is true.
“We’ve all just seen some change that we would not have expected and in particular around the mix,” Mr Kwakernaak said.
He highlighted the unexpected take-up of QR codes and consumers having many more options in the way they shopped and paid.
“I would not have thought that QR would be a real option in Australia 14 or 15 months ago,” he said.
“Even though it works well in Asia and makes a lot of sense, I think we were wrong on that because the convenience of the QR code is clearly there and again it’s a habit.”
Mr Kwakernaak also pointed to the NSW government’s vouchers given to households to stimulate dining and recreation spending, which were administered by a phone app or website, as highlighting how payments were changing.
He sees technology being used by banks to facilitate “hyperpersonalisation” for customers and more collaboration between players. “Open banking will also allow the banks a lot more to collaborate,” Mr Kwakernaak said.
“I actually think we are going to move a little bit away from that disruption stage to more collaboration.
“Technology is going to make that easier.”
In three to five years, he expects more real-time payments will occur between businesses and in business-to-customer segments, rather than staying focused on person-to-person transactions.
Fiserv delivered the centralised infrastructure that supports the real-time New Payments Platform locally, in partnership with SWIFT.
Mr Kwakernaak’s comments come against the backdrop of separate reviews of the payments sector by the Reserve Bank and Treasury.
The latter is due to report to the government this month.
“We are not looking at a broken system, so I think it will be more about fine-tuning than wholesale change,” he said of the Treasury review.
In the buy now, pay later sector, competitive dynamics are changing after giant PayPal unveiled its “Pay in 4” instalment option.
Commonwealth Bank is also getting more involved after last month announcing a bigger push into buy now, pay later to give retailers a much cheaper and direct instalment payment option.
Mr Kwakernaak said the developments would enable large sections of both companies’ customer bases to access the platforms, and probably change broader pricing to merchants.
“That will be a good test of the loyalty towards some of the other schemes,” he added.
In December, Fiserv outlined an agreement with Bank of Queensland covering card issuing and management to support the bank’s BoQ and Virgin Money Australia brands.
Fiserv — which took over First Data in a $US22bn deal two years ago — last month announced a bolt-on acquisition of Pittsburgh, Pennsylvania-based technology company Pineapple Payments.
Source: The Australian. 12 April 2021.
The 2021 program includes a series of exclusive customer events, together with an industry program designed to keep our payments friends and colleagues abreast of market influences.
The exclusive customer series includes presentations by key partners including KPMG, Visa & RFi covering both international influences, and their impacts on the Australian markets. The much anticipated Youth Study by RFi, due later this year will deliver unique insights on what is important to our youth today, and what specifically within the financial services and payments markets is on their radar.
Indue events span the breadth of our product portfolio with a focus on:
How to manage a constantly changing threat, (March on demand)
How to innovate on Australia’s fastest rails, (May coming soon)
How to deliver more ways for your customers to pay (June coming soon)
The world’s fastest growing payments product – how to harness the potential – 20 April 2021 – register today
To keep up today on our Cultiv8 event series, subscribe to Indue News today.
Their appointments follow the retirement of current Board members Robin Burns and Sally Collier.
Ms Rix and Ms Cheadle join the Board in January 2021.
Ms Rix is a tax and advisory partner with BDO in Brisbane and has had a distinguished career in corporate advisory and non-executive roles across numerous sectors spanning more than 35 years.
Her current Board roles include Chair of Harcourts Group, Queensland Performing Arts Trust (Chair of Risk Management and Audit Committee) and Chair of AEIOU Foundation. Ms Rix is also a Queensland University of Technology Council Member and Business School Adjunct Professor. Her previous Board roles have included Queensland Rail (Chair of the Audit and Risk Committee), Port of Brisbane Corporation and Mater Misericordiae Ltd.
Her experience includes the various aspects of commercial, financial and taxation matters.
Ms Cheadle is an accomplished corporate advisor, executive and non-executive Director with experience growing finance, services and technology companies.
She spent 17 years of her 27 year career in Asia where she held executive positions with Kroll (head of investigations for Asia), KordaMentha (partner in charge of Forensics), Deloitte (head of Singapore Forensic), and Ernst & Young(Forensic Accounting service line leader for Asia Pacific). She is presently non-executive Director and Chair of Audit and Risk Committee for two ASX listed companies, namely: Isentia Group Ltd and Shriro Holdings Ltd. Ms Cheadle was previously a nonexecutive Director and Chair of the Audit, Risk and Compliance Committee for two other ASX listed companies, namely: QANTM Intellectual Property Ltd and SurfStitch Group Ltd.
Indue Chair Frank Gullone welcomed Ms Cheadle and Ms Rix to the Board, and said he looked forward to their contribution and the opportunity to leverage their depth of corporate experience.
“Together, they bring to the Board outstanding and relevant experience, and deep expertise in business strategy, transformation, risk and governance.
“Susan and Abigail’s diverse backgrounds and skills will further strengthen the Indue Board and complement the expertise of the existing Directors in the strategic development of the company.”
For more information please contact:
Clare Mitchell, Senior Marketing Manager, Indue Limited E: [email protected]
The following article on the Global Banking Annual Review 2020 has been sourced from the McKinsey & Company website.
“Ten months into the COVID-19 crisis, hopes are growing for vaccines and new therapeutics. But victory over the novel coronavirus still lies some nine to 12 months in the future. In the meantime, second and third waves of infection have arrived in many countries, and as people begin to crowd indoors in the months ahead, the infection rate may get worse. As a result, the potential for near-term economic recovery is uncertain. The question of the day is, “When will the economy return to its 2019 level and trajectory of growth?”
Welcome to the tenth edition of McKinsey’s Global Banking Annual Review, which provides a range of possible answers to that question for the global banking industry—some of which are perhaps surprisingly hopeful. Unlike many past shocks, the COVID-19 crisis is not a banking crisis; it is a crisis of the real economy. Banks will surely be affected, as credit losses cascade through the economy and as demand for banking services drops. But the problems are not self-made. Global banking entered the crisis well capitalized and is far more resilient than it was 12 years ago.
Our research finds that in the months and years to come, the pandemic will present a two-stage problem for banks. First will come severe credit losses, likely through late 2021; almost all banks and banking systems are expected to survive. Then, amid a muted global recovery, banks will face a profound challenge to ongoing operations that may persist beyond 2024. Depending on scenario, from $1.5 trillion to $4.7 trillion in cumulative revenue could be forgone between 2020 and 2024. In our base-case scenario, $3.7 trillion of revenue will be lost over five years—the equivalent of more than a half year of industry revenues that will never come back.”
Read the full report here: Global Banking Annual Review 2020: A test of resilience: Banking through the crisis, and beyond.
2020 Fraud Statistics released December 2, 2020 by the industry self-regulatory body Australian Payments Network (AusPayNet) show fraud on payment card transactions declined 15.4% in the 12 months to 30 June 2020 (FY20).
The following article has been sourced from AusPayNet’s website.
The fraud figures for the 12 months to 30 June 2020 (FY20) show fraud on payment card transactions dropped by 15.4% to $447.2 million continuing the trend recorded in the 2019 calendar year.
Within this total:
The decline, which came as spend on cards totalled $803.4 billion (up 0.5%), translates to a rate of 56 cents per $1,0000 – down from 66 cents per $1,000 in FY19.
The FY20 data includes the first full year in operation of the industry CNP Fraud Mitigation Framework, which came into effect on 1 July 2019.
For more information on the data and payment fraud trends, including a “Spotlight on Scams”, read Auspaynet’s 2020 Payment Fraud Report here.
Article & Image Source: Australian Payments Network (Auspaynet)
The rise of contactless payments can be seen right across the sector, made even more accessible following the temporary increase of PIN limits for contactless payments from $100 to $200 to reduce the need for physical contact with payment terminals, a move led by the Australian Payments Network (AusPayNet).
This sentiment can also be translated to the gift card space. What has traditionally been a somewhat ‘hands-on’ process — from purchasing in-store to the act of giving itself — gift cards are now turning completely digital and Indue are the first in Australia to utilise the Visa network to make this happen.
It’s a move that’s in line with shifts in consumer behaviour. A 2019 survey by Roy Morgan of more than 50,000 consumers revealed 72 per cent of Australians are embracing digital payment solutions and mobile payment wallets in lieu of more traditional physical payment methods while shopping, and this has only been amplified as we tackle the global pandemic.
Indue Chief Commercial Officer Dave Hemingway said Indue’s new contactless digital gift card offering further embeds the business’ payment expertise in the retail sector, setting a new benchmark in retail technology.
“Consumers expect fast, convenient and secure payments, and Indue is proud to redefine the boundaries to create an exciting, new product that we’re certain will benefit retailers and consumers across the country, even more so from a COVID-safe perspective,” Dave said.
“Building on our 20-year partnership with Visa, together we’ve created an entirely new product allowing major retailers to utilise a digital gift card that is universally accepted without requiring point-of-sale integration, paving the way for future advancements in this sector.”
With the widespread impacts of COVID-19 affecting several industries across the country, technology will play a key role in helping businesses bounce back. There has never been a more crucial time for retailers in particular to consider digital gift cards as a way to secure a solid consumer base and boost sales through a convenient, safe and seamless purchase journey.
In this increasingly contactless environment, the rise of innovative, digital solutions that not only streamline gift giving and receiving, but protect our overall health, will no doubt become a necessity as we continue to navigate the ‘new normal’.
The Australian gift card market is valued at up to $2.5 billion annually, making it the most popular gift given in Australia. Market research has shown that while gift givers would prefer to gift something physical to convey thought and meaning, recipients generally prefer to receive digital gift cards for the convenience factor. Indue has tapped into this sentiment, creating a multi-merchant digital gift card solution, providing multiple options for the recipient to choose where they spend.
Just six months in the making in partnership with Visa, the Indue digital gift card provides the same level of security and convenience customers know and trust when they tap-and-pay on their mobile phone or wearable device. Lost or forgotten cards are a thing of the past with a balance displayed in real time, enabling recipients to check their balance on the go and removing the need to attempt multiple transactions to spend the remaining value.
Consumers want the convenience they’ve come to expect from using their smart device for transactions, so it’s only natural that digital gift cards provide a better customer experience overall.
The digital gift card also offers added flexibility when it comes to purchasing them online, particularly around peak holiday periods.
“Digital gift cards extend the buying window at the busiest times of the year, in particular the lead up to Christmas,” said Indue Chief Commercial Officer, Dave Hemingway.
“When people are buying plastic gift cards online, that stops at around 19 December because purchasers are concerned they won’t arrive in time. Consumers now have the ability to buy a digital gift card online on Christmas Eve, with an almost instant digital delivery to the recipient.”
Emerging Payments Association’s InFocus takes a look at Cyber Security, a theme that is more important than ever, following the wide-scale shift to remote working, and the increase in usage of e-commerce and digital identity.
In this first interview for InFocus, Lance Blockley is talking to Mani Amini CEO at Secure Forte and Dave Hemingway CCO at Indue.
The October 2020 NPP Roadmap includes an update on the enablement of international payments via the platform as well as case studies from organisations leveraging the New Payments Platform’s capabilities to deliver innovative payments experiences and improved business efficiencies.
Source: NPP Australia
The ISO certification features requirements on how to implement, monitor, maintain and continually improve an Information Security Management System (ISMS) in accordance with the standard, including preserving the confidentiality, integrity and availability of information to ensure risks are adequately managed.
Indue Chief Executive Officer Derek Weatherley said the accreditation reinforces the organisation’s proven security processes and credentials against the global standard.
“This is a significant achievement for Indue, which specialises in helping customers gain competitive advantage through innovative payment solutions,” Mr Weatherley said.
“The certification strengthens our approach to information security, and demonstrates to our customers and partners that we maintain the highest levels of data security.
“We are trusted by our customers to store and process their most valuable data, so this certification provides assurance that we have all the necessary controls in place to ensure this important information is protected.
“Particularly in the context of COVID-19 where we’ve seen an increase in the risk of data security breaches alongside a surge in online transactions, we’ve continued to demonstrate our commitment to secure payment products, supported by rigorous compliance, program oversight and our transaction monitoring and protection system, Orion Financial Crimes.”
Data security has never been more important, with COVID-19 restrictions forcing many businesses to move to remote data almost overnight, significantly increasing the risk of data breaches.
By implementing and following the necessary steps to comply with the ISO 27001:2013 standard, organisations can identify, control and eliminate security risks, ultimately certifying the security practices adopted within the organisation.
ISO is an independent, non-governmental, international organisation that develops standards to ensure the quality, safety and efficiency of products, services and systems.
Paving the way for future advancements in the sector, the new digital gift card allows major retailers to offer a digital gift card that is universally accepted, without requiring point-of-sale integration.
In addition to offering a convenient, contactless payment option for consumers, the product also provides the ability to capture consumer data to generate targeted engagement. Recipients of the digital gift card are required to download the retailer’s app in order to provision their digital gift card into Apple Pay or Google Pay, creating an opportunity to gather purchasing metrics, serve up additional offers to consumers and link in to the broader shopping experience.
“There’s no ability to connect with a consumer when they use a plastic gift card — it’s an anonymous transaction. Our digital gift card technology, which integrates seamlessly with retailers’ existing apps, encourages tighter engagement,” said Indue Chief Commercial Officer, Dave Hemingway.
“Our mission is to ensure the millions of Australians who access their money through our clients’ companies have access to market-leading payment products, and we’re thrilled to have delivered once again with our digital gift card.”
Operating costs for retailers who offer digital gift cards are also lower, removing the need to pay for manufacturing and distribution. Expiry dates for many gift cards need to be printed on the card at the time of manufacture, which could result in stock issues if the cards are unable to be sold within a set period, whereas Indue’s digital gift cards generate an expiry date at the point of purchase.
Importantly, Indue’s digital gift card is flexible in its deployment, providing both B2C and B2B distribution solutions.
“Digital gift cards don’t necessarily need to be distributed via e-commerce. For example, we’ve had enquiries around digital gift cards to distribute to staff as part of a loyalty program, so there are a range of different distribution models that we can harness,” Dave said.
IBM Safer Payments, the next generation platform powering Indue’s Orion Financial Crimes fraud monitoring solution, has been recognised at the Asia Risk Technology Awards 2020 as Fraud Detection and Prevention Product of the Year.
The Awards, recently held in Singapore, are the longest-running and most prestigious in the region, recognising vendors that deliver innovative and forward-thinking technologies to meet the financial services industry’s complex challenges.
IBM Safer Payments won the award specifically for bringing agility to combatting fraud and for its differentiated capabilities — a solution that is particularly well positioned to serve Australian clients as disruptions associated with faster payments and the emergence of challenger banks gathers momentum.
Indue’s Chief Commercial Officer, Dave Hemingway, said this important industry acknowledgement for partner IBM demonstrates Indue’s commitment to bringing next generation risk and compliance solutions to serve Australian customers, and to meeting their specific industry and business needs.
“We began leveraging IBM Safer Payments in 2018 as part of our Orion Financial Crimes service, to reduce the risks associated with the introduction of the New Payments Platform — with real-time payments comes a greater risk of fraud and cyber crime,” Mr Hemingway said.
“Indue is now using IBM Safer Payments to its full capacity and we’re seeing incredible benefits as a result.
“The pace of change within the industry, particularly due to COVID-19 where we’ve seen a significant move to online transactions, has meant we’ve been able to harness the capability of IBM Safer Payments, and adjust and adapt to meet these changes in behaviour, fast.
“It’s reassuring to know that what we’re doing and the tools we’re using in the financial crimes space is backed by world-leading, award-winning technology and we’re proud to be leading the way.”
Indue’s Orion Financial Crimes solution integrates artificial intelligence and machine learning algorithms to deliver a 24/7, Australian-based fraud monitoring solution, powered by IBM Safer Payments.
With the integration of IBM Safer Payments, the Orion Financial Crimes team has experienced a 20% reduction in false-positive rates, and have been able to make rule changes up to 90% faster when compared to traditional platforms, while managing all payments channels in the one system.
Indue consistently outperforms the industry average in financial crimes prevention, offering credible, major bank grade anti-fraud capabilities for small to mid-tier banks.
Find out more about Indue’s Orion Financial Crimes Service.
Mr Burns was appointed to the Indue Board in October 2017 and was elected Chairman in December 2018.
Following the announcement, Mr Burns said: “It has been a privilege and honour to serve as a Director and Chairman of the Board over these past three years, during a period of significant regulatory, technological and economic change across our industry”.
“I believe now is the appropriate time to transition to a new Chairman as we continue with the Board renewal process.
“I am also delighted with the Board’s selection of Frank Gullone as the next Chairman. Frank will continue to drive Indue’s strategic agenda and ongoing digital transformation.”
With Mr Burns at the helm, Indue has successfully launched its Mobile Payments product with both Apple Pay and Google Pay, accelerated migration of Cards and AML to the next generation “real time” financial fraud monitoring technology and led the company’s refreshed strategy ‘FOCUSS 2023: Technology to Transformation.
“On behalf of the Board, I would like to thank Robin for his contribution and the solid foundation he has laid for the future and wish him all the best,” Mr Gullone said.
Mr Burns said he would remain on the Board until the end of his current term as a Director in November 2020 and Mr Gullone would assume the role of Chairman effective immediately, to ensure a smooth transition to new Board leadership.
Mr Gullone was appointed to the Indue Board in April 2013 and is Chair of the Risk Committee. He holds senior executive, Chairman, non‐executive Director and corporate advisory experience across the financial services sector, professional services and a range of other associated industries.
With more than 35 years’ experience, Mr Gullone is also Founder and Chair of the strategic management consultancy, Gullone Group Consulting and advises leaders of organisations on strategy and leadership.
He is also the former Chairman of multi-award winning superannuation industry fund Kinetic Super. He retired from that role following the successful merger with Sunsuper in 2018.
Mr Gullone’s executive career includes roles as CEO of Superpartners, Managing Director of the Centre for Investor Education, Executive Director at Freehills and General Manager of ANZ Trustees at ANZ Funds Management — part of the ANZ Banking Group. He commenced his professional
career with J. B. Were and Son Group in 1982, where he progressed to become the Group CFO.
Commenting on his appointment, Mr Gullone said: “I appreciate the trust placed in me by the Indue Board and I look forward to my ongoing work with the Board and management to ensure we deliver long‐term value creation for our customers and shareholders”.
For more information please contact:
Clare Mitchell, Senior Marketing Manager, Indue Limited E: [email protected]
The digitisation of payments, changes in ecommerce and acceleration of mobile wallet adoption are global payments trends in 2020 challenging the industry to keep pace. These trends are not only forcing businesses to change the way they operate, but are also putting data security at the forefront of business strategy.
With the future of payments quickly coming into focus — thanks in no small part to the impact of COVID-19 — Indue CEO Derek Weatherley shares his insights on the top five payment trends influencing 2020.
Even prior to the COVID-19 pandemic, ecommerce was expected to continue to grow rapidly in 2020. But restrictions and public space shutdowns have significantly changed consumer behaviour, with a 29 per cent increase in ecommerce spending locally month-on-month since lockdowns began in March1. On the other hand, physical transactions have decreased and people are using less cash — a longer-term trend accelerated by the global pandemic as some businesses discourage the use of cash.
Helping drive this trend is a population seeking more flexible and convenient ways to pay. Combine this with confidence in stronger digital security and a willingness within the retail sector to embrace technological change, Australia is starting to see mobile payments take off. In 2019, The Reserve Bank of Australia reported 83 per cent of point-of-sale card transactions were contactless payments, signifying a rise of almost 20 per cent in three years2. COVID-19 is only adding to this rise with the payments industry temporarily increasing the contactless card PIN limit from $100 to $200 to minimise physical contact with the payment terminal and help reduce the risk of COVID-19 transmission.
One trend to keep a close eye on is the digital wallet. Roy Morgan’s latest Digital Payments Report revealed that digital wallets such as Apple Pay, Google Pay and Samsung Pay are being used by roughly one in 10 Australians (9.8 per cent) — up from 6.8 per cent a year ago3. This upward trend will continue, but the mobile wallet race hasn’t fully played out just yet as the industry looks to cater for all the different use cases.
One thing is clear — the payment industry will continue to evolve to meet the needs of merchants as consumers demand improvements to the overall ecommerce and contactless experience.
It’s a busy time for payment systems operators, with heightened conversation taking place across payment schemes in the industry. We’ve also seen in recent times a significant transformation of the base-level clearing and settlement capabilities, causing disruption for many in this space and providing future innovative payment solutions.
The high level and pace of change is causing congestion and headaches for financial institutions and payment providers. As older forms of payment are migrated, schemes are coming into competition with each other, creating congestion and ultimately higher costs for consumers.
This will likely settle in the next three to five years as the industry settles on its future scale approaches to utility payment processing, but the medium-term landscape remains challenging and costly.
Understanding what’s next in payment industry platforms comes down to understanding the value proposition in the eyes of consumers and merchants and their respective appetite to pay. We expect to see competition between providers of closed and open payment platforms increase, as they contest for a larger slice of their customer dollars and loyalty4.
Data security in the world of payments has never been more crucial and with innovation comes security issues as payment products and services evolve. The speed of transactions have increased through advancements like New Payments Platform (NPP) real-time payments, and we are exposed to significantly larger and more valuable data footprints online, which all contribute to a heightened risk of fraud. By investing in sophisticated machine learning payment technology, Indue now has the capacity to draw from a much larger pool of data and undertake significantly more sophisticated real time analysis to detect trends that benefit — and protect — each individual client.
Indue’s Orion Financial Crimes solution integrates human and artificial intelligence (AI) with machine learning algorithms to deliver a 24/7 fraud monitoring solution. This solution provides a broad gambit of services, including real-time fraud and anti-money laundering monitoring across all payment channels. This is a significant shift in how financial institutions trade on trust, and therefore need to put reputation and security at the forefront of their business priorities. Without robust data security measures, businesses run the risk of damaging their brand and making consumers feel uncertain about the safety and security of their accounts.
We have transformed our financial crimes services and continue to invest in leading-edge payment technology to better monitor trends and ultimately protect our customers from fraud. Assurance of identity in a virtual world is another key area of focus in an increasingly digitised world and an area where we are assisting our customers to adapt to with ongoing innovation in this area.
Product commoditisation will not only challenge business models, but shift the economic climate, especially in the banking and fintech sector. Digitisation and ease of payments have changed the way customers think, decreasing the value of traditional competitive differentiators in the process — payments are now instantaneous, simple and 24/7.
As consumers become more and more accustomed to these seamless transactions, it presents a challenge to providers who need to balance the cost of creating a frictionless experience and meeting consumer expectations. Expect to see structural shifts among the players operating in this environment as they look to drive revenue through new or enhanced customer experiences, and make use of data analytics to anticipate customers’ changing needs and expectations4.
COVID-19 has made embracing and adapting to the work-from-home environment a must for businesses. The shift has provided opportunities for businesses to expand their workforce and recruit talent from anywhere, as most payment organisations aren’t restricted by location.
Even before COVID-19, Indue embraced work from home and flexible working hours, revising the way we manage talent to reap the positive benefits of a geographically dispersed workforce and provide an increased work/life balance across the organisation.
The final word — what do these 2020 payments trends mean for our customers?
Our customers rightly focus their investment dollars on driving the top line, and leave the distraction of digitisation and changing payment rails to us to handle on their behalf. However, with continued evolution of the online world, it’s important that our customers sensibly invest in the modernisation of their platforms, particularly those platforms that make their customers lives easy. They don’t need to be on the leading edge, but do need to keep pace.
The Reserve Bank of Australia has released the following Research Discussion Paper:
by James Caddy, Luc Delaney and Chay Fisher
Since 2007 the Reserve Bank has conducted a Consumer Payments Survey (CPS) every three years, which provides comprehensive information on how Australians make their payments. The 2019 CPS was conducted just before the emergence of COVID-19 in Australia and gives a detailed snapshot of consumer payment behaviour prior to the changes in spending patterns induced by the pandemic. The survey provided further evidence that Australian consumers increasingly prefer to use electronic payment methods rather than cash for their day-to-day payments. Many people now tap their cards (or sometimes phones) even for small purchases. When paying with a card in person or online, consumers are more often choosing to use a debit card rather than a credit card. As a result, debit cards were the most frequently used consumer payment method in the 2019 survey. Consumers are also increasingly taking advantage of the ability to make payments using a range of innovative new payment services that have emerged in recent years, often facilitated by mobile technology and the use of digital payment credentials. Despite the trend towards electronic payments, cash still accounted for a significant share of lower-value payments and a material proportion of the population continue to make many of their payments in cash.
The Disruption Evolved series by Morgan Stanley features guest speakers who are leaders in their field and at the forefront of industry. In June this year, Michelle Bullock, Assistant Governor (Financial Systems) RBA, delivered a compelling keynote focussing on the potential implications for payment systems in the midst of the Covid-19 pandemic. With a focus on Panic, Pandemic and Payment preferences, Michelle’s shares her insights as we navigate these extraordinary times.
Below is a transcript of Michelle’s address.
Assistant Governor (Financial Systems)
Keynote Address at the Morgan Stanley Disruption Evolved Webcast
Online – 3 June 2020
Thank you to Morgan Stanley for the opportunity to speak this morning.
We are living through quite extraordinary times. The COVID-19 pandemic is having dramatic effects on economies around the world, impacting employment, businesses and households. Monetary and fiscal policies have been heavily mobilised to help bridge the impact of the containment measures on economic activity. But the health crisis has also disrupted aspects of the retail payments system; payment patterns have seen large, sudden shifts as merchants and consumers have changed both their payment preferences and their mode of interaction. Payment service providers have tried to accommodate these shifts in preferences in a fast-changing environment…”
The Australian Payments Network’s 2020 Payment Fraud Report shows that in 2019, card fraud fell by 19.5% to $464 million – the biggest decline ever – as total card spending rose 3.9% to a record $819 billion.[/vc_column_text][vc_column_text]This translates to a fraud rate of 56.6¢ per $1,000 spent, a significant drop from 73.1¢ per $1,000 in 2018.
The drop in card-not-present (CNP) fraud, mainly affecting online transactions, is the first ever and coincides in part with the introduction in July 2019 of the industry CNP Fraud Mitigation Framework.
The industry is committed to tackling CNP fraud, which accounts for 87% of all card fraud, and remains vigilant as e-commerce volumes increase during the COVID-19 pandemic.
For more information on the data and payment fraud trends, including a “Spotlight on Scams”, read Auspaynet’s 2020 Payment Fraud Report here.
Article & Image Source: Australian Payments Network (Auspaynet)
The PayID service, which is available in the internet or mobile banking of nearly 90 Australian banks, credit unions and building societies, was launched when the New Payments Platform went live in February 2018.
PayID enables registered users to receive instant payments into a bank account via a simple identifier, like a phone number, email address, ABN or business name, instead of a BSB and account number.
It replicates the speed and ease of cash, while also providing additional assurance through a payee confirmation step – the ability to see the name of the person or business associated with a PayID prior to a payment being made. This confirmation step reduces payments being mistakenly made to the wrong person or business.
Since its launch, people have turned to PayID as a simple and cashless way to pay family and friends, from splitting bills to sending money to family members during emergencies.
“Research suggests to us that the uptake of PayID has been largely driven by word–of–mouth and the experience of paying another person’s PayID,” said CEO of NPP Australia, Adrian Lovney.
“When a user asks another person to pay their PayID, it’s often in situations where they require a quick cashless payment, or they don’t want the hassle of remembering and sharing a BSB and account number.
“When the payer experiences the speed and ease of paying another person’s PayID inside their usual internet or mobile banking app, they’re more likely to register their own PayID with their financial institution. It’s almost like a ‘paying it forward’ situation,” he said.
Businesses have also turned to PayID as a cost–effective alternative to cash or cards, particularly during the COVID-19 pandemic. Since March, more businesses have advertised PayID as a payment alternative, particularly those who rely on cash on demand such as cafes, hairdressers or services such as mobile dog washing.
Payment innovators are also using the NPP’s PayID capabilities to enable real-time and contactless point of sale payments. Azupay, which has been developed by an Australian fintech, works by creating a unique, single-use Azupay PayID at the time of payment, which automatically includes the merchant information required for reconciliation such as the amount and a description. Customers then use that PayID, either by entering it manually or via a QR code, to make the payment without the need to input additional information.
The NSW Government’s Department of Customer Service recently began offering Azupay payments for Liquor and Gaming licence renewals with further rollout plans currently underway.
This article originally appeared on nppa.com.au (NPP Australia)
Indue is one of the 13 founding members of the NPP initiative, which facilitates real-time settlements of payments with funds available in your account in less than a minute.
The COVID-19 2020 Pandemic is having an unprecedented impact on how we live and work. We are planning for the worst and hoping for something better. No matter how long it takes for the crisis to pass, 2020 will be a year that is not forgotten quickly.
It will undoubtedly be a period of change, some of which will alter the way we do things forever.
We are likely to wash our hands more frequently, and we will be much better at conducting remote meetings using platforms such as Zoom, Webex, Skype for Business, GoToMeetings, etc. Telemedicine will likely become more prevalent, as will the ability and propensity to work from home effectively.
We will be super-sensitised to microbes, and, given the economic impacts being experienced, we may be more concerned about the sustainability of the companies we buy things from, together perhaps with more conservative views regarding our ongoing employment and income. Indeed, the cross-border supply chains that have been constructed over the last 15+ years of globalisation have been shown to be a potential weakness (e.g. a key global production site of surgical masks being in Wuhan), so perhaps domestic manufacturing will get a boost everywhere and cross-border commercial transactions decline.
Although the total number of payments in the Australian market is currently suffering a severe decline, as economic activity is strongly curtailed, what might happen to the ways consumers pay? Not necessarily in the short term – although many merchants are now refusing to take cash, travel card issuance & usage has crashed, and cross-border payments (a key revenue source for the international schemes) are drying up. Rather, we are looking at the potential longer term residual impacts.
In The Initiatives Group white paper “The Changing Face of Consumer payments in Australia”, we identified that the way we pay takes a long time to change. It is all about trends, and long ones at that. The following graph was used to show how the ways we pay have changed over the past 15 years.The trends are clear – cash and cheques are on the decline, and fast becoming in the minority of transactions. Electronic payments continue to increase. Cards are now more than 60% of transactions, with the growth in debit cards far outstripping credit cards. It is now quite normal to pay for a morning coffee (currently only available as “take away”) using a card – not so long ago a $3.50 purchase would have been made with cash.
“Fed Plans Release of Clean Cash As Virus Spreads” (pymnts.com, March 22, 2020)
The decline in the use of cash will accelerate, along with an associated decline in ATM usage (noting that for every ATM withdrawal that does not happen, an additional 10-15 electronic transactions will be generated, mainly on debit cards).
Cash carries bacteria 1 (no prior studies seem to have focused on viruses!). Both cash and bacteria travel fast. Even though it has been found that polymer notes, like those used in Australia, carry less bacteria than (absorptive) paper notes such as those in the USA and China, consumers and merchants alike will be less keen on handling cash, and more keen on using electronic payments. Indeed, the UK has just lifted the contactless limit from GBP30 to GBP45 to help further reduce the use of cash. More locally in Australia, one of your authors has found that cash is no longer accepted at the local Coles Supermarket, Harris Farm Markets and the golf club (which is closed for now anyway).
Australians are the world leaders in the use of contactless open-loop payments, with well in excess of 90% of card present transactions being contactless. This means that, for transactions under $100, we don’t need to touch a terminal that somebody else has used or handed us. We also don’t have to hand our card over to a stranger. That’s good, right?
Well, maybe not… unfortunately there are studies, albeit in the USA, where contactless payments are still in their infancy, that have shown that cards “can be grimier than cold hard cash”.2
However, it still feels safer to use a card that only you have held than notes and coins that have gone through multiple hands, so plastic cards will quickly pick up transactions from cash.
Despite the high ownership of smartphones and Australians’ love of contactless payments, until recently, the take up of mobile wallets such as Apple Pay, Google Pay and Samsung Pay (the “Pays”) has been slow. It may depend on your industry and your demographic, but The Initiatives Group has heard conflicting reports. Claims of 25% of POS transactions being handled via the Pays have been offset by merchant claims of far far lower percentages, hence we would suggest that the average across all contactless payments is still under 10%.
Regardless, the use is set to accelerate. Your phone may or may not be a great carrier of bacteria, but it is something you will touch anyway, so what’s the difference if you now use it for payments and avoid fiddling around with your wallet for a card.
Whilst wearables are only another form factor for using the Pays, their use is likely to increase as an even more “contactless contactless” form of payment. Notwithstanding we believe that wearables, perhaps other than smart watches, will remain relatively niche.
In-app payments are likely to be a big winner from the COVID-19 crisis. Seamless payments will be the most contactless of contactless payments. Whilst in the short-term popular use cases such as Uber transport will take a significant hit, there will be many new use cases that become available earlier or even more popular – think of ordering home delivery (from supermarkets, for prepared food e.g. Menulog, Ubereats) and petrol stations (where something like the Caltex app avoids the need to enter the shopfront). We will be more ready to form new “safe” habits, and, if used frequently enough, these use cases will be habit forming, just as the adoption of contactless card payments was slow until Woolworths and Coles offered them (back in 2012).
We found the new 13cabs “No Touch Parcel Deliveries” of interest. Whilst no-touch may not be as big a deal from 2021, here is another reason to get into the habit of using in-app payments for taxi services. In the future will we see the groceries delivered paid within the 13cabs app, or the taxi delivery paid for within the Coles or Woolworths app?
As handling cash becomes less popular, might we now see electronic peer to peer payments use accelerate. Perhaps this will provide stimulus to the use of PayID, Beem It and card-tocard systems. Although current social distancing and work-fromhome orders may well diminish the need to pay our friends and relations in the near term.
In the short-term, eCommerce spend on travel and discretionary items has tanked, however online ordering of grocery goods and fresh foods is up globally. Discretionary spend, such as fashion, will recover once people are again allowed to physically interact. Grocery and fresh food ordering online will be a new habit – whether for home, work or locker delivery, or click and collect. Although it may not maintain at COVID-19 levels, this will likely fuel more rapid long term growth in eCommerce retail spend.
The economic impact of potential (or actual) unemployment, of recession and of media noise about depression, will all make consumers more wary of both the sustainability of companies that they deal with and their own ability to pay in annual large lump sums. We predict this will lead to a preference for annual payments to be made monthly (already a trend before the crisis), and not necessarily by auto direct debit (as consumers may wish to retain control). In addition, this preference may lead to consumers demanding that they are not penalised with any surcharge for paying monthly.
Noting that, just as the decline in ATM use accelerates the volume of electronic payments, so too does monthly payment . . . 12 transactions rather than one.
Adversity is often the mother of invention, so it is likely that we will see a range of new electronic payment products, use cases and services being created.
An emphatic “No”. As noted above, online real-time payments over the NPP may be accelerated – whether by Osko, other overlay services or by ‘pay anyone’ (previously via direct entry) payments growing faster. The increased volumes allowing the NPP to become less expensive per transaction.
Perhaps a trend towards mobile phone payments will improve the use case for NPP payments on your phone at POS, enabled by QR codes? Notwithstanding, we do expect that there will be even more new overlay service activity that takes advantage of the NPP.
The current COVID-19 crisis will see payment volumes drop sharply as economic activity stalls. Within the remaining payment activity, the mix of payments will change:
Depending upon the length of the crisis, many of these changes will become habitual and are likely to outlast the short term impact of the virus – such that the retail payments mix in the Australian economy will be altered forevermore.
Disclaimer: The opinions expressed in this article are the author’s own and do not necessarily reflect the view of Indue. The Initiatives Group has advised participants in the payments market since the 1990’s – including issuers, acquirers, third-party processors, technology providers and associations. The Initiatives Group has a strong relationship with Indue, and can help participants in the payments sector generate more value from their markets and customers. To find out how, please get in touch.
1 A Oxford University study in 2014 found that the average European banknote contained 26,000 bacteria which could be potentially harmful to a person’s health; and market research has found the majority of European consumers rank physical money as being more unhygienic than the hand rails on public transport
The first shift of the timeline was announced in January 2019 when Treasury released an updated timeline for the rollout of the Consumer Data Right (CDR) regime. The Open Banking delay was largely due to the need to continue testing the robustness of the new infrastructure, which saw the July 2019 original launch date evolve into the commencement of a beta testing phase for only the major banks.
The updated timeline had February 2020 set as the new targeted public launch date, where consumers would be able to instruct the major banks to share their credit card, debit card and deposit account data with accredited third parties.
The subsequent delay announced late last year shifted the February 2020 launch date to July 2020, a full 12-months after it was originally supposed to roll out.
One of the key objectives of the Open Banking reform is to foster fair and healthy competition within the finance industry. In order to achieve this, there needs to be the exchange of highly sensitive data, which requires vigorous security mechanisms to be in place and relies heavily on new privacy considerations. The ACCC confirmed the additional lead time will be used to ensure the comprehensive testing of a system that the Australian finance industry will have to adopt in earnest in the coming years.
“The CDR is a complex but fundamental competition and consumer reform and we are committed to delivering it only after we are confident the system is resilient, user-friendly and properly tested,” ACCC commissioner Sarah Court said.
“Robust privacy protection and information security are core features of the CDR and establishing appropriate regulatory settings and IT infrastructure cannot be rushed.”
Under the new timeframe, major banks will have to share data on credit and debit cards, deposit accounts and transaction accounts from July 1, 2020. From November 2020, the major banks must be able share information relating to mortgage and personal loan accounts.
For ADIs outside the Big Four banks, the delayed implementation timeline will be:
The postponement of the launch may have also been indirectly affected by ongoing pressures amongst the finance community, namely the FinTechs and consumer groups. In a submission to a Senate inquiry into fintech policy, FinTech Australia described the accreditation process for open banking as one of its top concerns.
FinTech Australia is a member driven organisation that is building an ecosystem for Australian fintechs to advance the global economy. The organisation represents more than 300 start-ups in the financial sector.
“Requiring a company to become accredited, expending significant time and upfront costs, simply to undertake initial tests is cumbersome and economically unviable,” says the submission. FinTech Australia estimates it will likely cost upwards of $100,000 for a fintech to become an accredited data recipient, increasing the barrier of entry to the markets that would be affected by the new regime.
From a consumer perspective, the accreditation process should be as comprehensive and vigorous as possible given the nature of the data being shared. Consumer groups, in response to the same Senate inquiry, are supportive of the accreditation criteria and CDR rules. Fintechs should not be exempt from the full accreditation process and the CDC rules should evolve if loopholes surface. The Consumer Action Law Centre, who is a non-for-profit consumer advocacy organisation, stated in its joint submission with The Financial Rights Legal Centre that the industry will need “well resourced regulators to provide adequate oversight and amend and improve the standards and recommend changes to the governing legislation, when and where FinTech arbitrage leads to demonstrably poor consumer outcomes”.[/vc_column_text][vc_column_text el_class=”ind-textBox”]
3DSecure (3Ds) is a security protocol that provides an additional layer of protection for cardholders and merchants alike for card-not-present (CNP) eCommerce transactions. It is used to authenticate the cardholder whilst undertaking a payment, ensuring that the person conducting the transaction is indeed the cardholder.
The purpose of the 3DS protocol is to facilitate the exchange of data between stakeholders – the merchant, cardholder and card issuer. The objective is to benefit each of these parties by providing the ability to authenticate cardholders during a CNP eCommerce purchase, reducing the likelihood of fraudulent usage of payment cards.
Issuers of Visa and MasterCard card products have already been exposed to 3DSecure 1.0 and its recent version 2.0 successor in the form of ‘Visa Secure’ and ‘MasterCard SecureCode’, respectively.
Indue is finaliaing a program of work with all of its Visa card issuing clients to upgrade Visa Secure version 1.0 to version 2.0. Version 2.0 introduces the requirement to have dynamic cardholder verification (i.e. one-time password via SMS) instead of static cardholder verification (i.e. cardholder identity questions).
Based on industry feedback and continual working groups, eftpos has undertaken the same initiative as the other card schemes and has commenced the process of establishing its own 3DSecure requirement. The scheme is currently working on finalising its solution design and technical specifications.
Indue has advocated to eftpos that its 3DSecure solution be compatible with the other card schemes’ solutions – namely Indue wants to ensure that eftpos’ final solution design allows the reuse of what its card issuing clients have already built to support the other schemes’ solutions. This would ensure that eftpos cardholders benefit from the same security protections as other scheme cardholders whilst leveraging the effort already expended to build a 3DSecure solution.
The eftpos 3DSecure 2.0 solution is currently in planning phase. eftpos is presently working with existing Access Control Servers (ACS), who provide the authentication solution software for issuers and merchants for 3DSecure, to finalise their own set of requirements.
eftpos have yet to confirm a set date for their finalised 3D Secure solution, but have advised that by October 2020, there will be a liability shift favouring those parties who have opted to enroll and implement the new security solution. The same strategy was previously employed by other card schemes in order to promote adoption and ensure that both parties within a transaction (merchant and card issuer) are protected against card fraud.
Once Indue has received eftpos’ detailed requirements for 3DSecure functionality, we will undertake further analysis to understand the changes and engage all of our affected eftpos Card Issuers to initiate a project for implementing the solution.
Tokenisation is a method of protecting sensitive data by replacing it with an algorithmically-generated number referred to as a ‘token’. In the payments world, tokenisation is commonly used to replace debit and credit card numbers in an attempt to prevent card fraud.
Under this form of tokenisation, a cardholder’s Primary Account Number (PAN) is replaced by a random number that is not linked to the card number prior to processing a transaction through the payments network. This process assists in mitigating the risk of exposing sensitive card data to unauthorised individuals or software that could potentially exploit the data by fraudulently duplicating the card details. It also prevents merchants from storing the PAN in databases, which are targets for hackers. Tokens cannot be decrypted or reverse-engineered. The only relationship between the original card number and its associated token number resides within the Token Service Provider.
A Token Service Provider (TSP) is a service provider that issues tokens, manages the lifecycle of tokens and stores the payment credentials associated with the tokens. TSPs can be an independent third party from the payment network or can be the actual card scheme (i.e. Visa, MasterCard, eftpos). TSPs must conform to strict security and privacy specifications defined by the global payment schemes and fall within the PCI-DSS compliance requirements.
Tokenisation takes many forms within the payments industry. One of the most prevalent uses of tokenisation is within the Mobile Payments space. When a cardholder provisions their payment card within an Apple or Google mobile wallet, the request is sent to the appropriate TSP to tokenise the card number. The token is then sent back to the mobile wallet for activation. The cardholder’s actual card number is never stored on the mobile device and as such cannot be extracted for misuse. All subsequent mobile transactions will use the token number as the payment credentials.
Tokenisation for in-app purchases is also on the rise due to its convenience. Some in-app purchases leverage the mobile payment functionality whereby the token stored on the mobile wallet is used to make a purchase within the phone application. An example of this would include purchasing tickets on the Ticketek app and instead of inputting credit card details, the user is able to select the Apple Pay option, which references the credentials stored within the mobile wallet. Not only does this option provide an easy streamlined purchase journey, it also removes any sensitive data from the transaction.
Tokenisation for card-on-file online purchases is also becoming more common given the recent occurrences of global data breaches. Wawa, a popular convenience store chain in the United States, confirmed in late 2019 the discovery of malware on their payment processing servers. The malware captured credit and debit card numbers, cardholder names and expiration dates. Card-on-file tokenisation protects a cardholder’s card credentials stored at online merchants with whom the cardholder frequently make purchases. Netflix holds the card credentials of all its customers for the purpose of charging the monthly subscription fees. The streaming service provider has recently undertaken a significant exercise of tokenising as much of its database as possible as a means to mitigate the risk of data breaches. As more online merchants migrate to tokenisation, the prevalence of card data breaches will hopefully decrease as well. Given that a new unique token is generated for each retailer, a security breach at one retailer will not compromise the security of the token data at another retailer.
Payment Account Reference – Providing a holistic view
Although the use of tokenisation enhances the security of digital payments, it also presents a challenge. If a cardholder’s card credentials are tokenised for use within Google Pay on an android phone, Apple Pay for an iPad and Netflix for monthly subscription payments, it becomes a one to many relationship. One single PAN is now linked to several tokens across different systems and platforms.
As only the TSP has the original data linking the PAN to the multiple tokens, the lack of visibility makes it difficult for other parties such as merchants to have a consolidated view of all transactions performed by the cardholder and subsequently provide value-add and compliance services. An example of this is the provision of fraud and anti-money laundering monitoring services. To provide the most effective service, there is a need to identify transactions on an aggregate card level to better assess customer behaviour and payment trends.
As a means to provide a consolidated view, some card schemes have introduced the use of a Payment Account Reference (PAR). According to a recent white paper published by EMVCo, a global entity facilitating worldwide interoperability of secure payment transactions, a PAR is a ‘non-financial reference assigned to each unique PAN and used to link a Payment Account represented by that PAN to affiliated Payment Tokens’. PAR is passed in the transaction message to the merchant so that they can reference this field when performing customer level analysis.
EMVCo affirms that this is a long term solution that will solve the issue by linking together disparate card-based and token-based transactions without compromising on security. Although this is the recommendation of EMVCo, it is the responsibility of the card payment schemes to adopt this concept and implement it into their respective payment ecosystems. eftpos is introducing support for PAR in the near future.
The Design and Distribution Obligations and Product Intervention Powers introduced two key reforms in financial services:
(a) a new governance regime for the design and distribution of financial products; and
(b) a product intervention power for the Australian Securities and Investments Commission (ASIC).[/vc_column_text][vc_column_text el_class=”ind-textBox”]
The design and distribution obligations (DDO) are intended to help consumers obtain appropriate financial products by requiring issuers and distributors to have a targeted and principles-based approach to designing and distributing products. The DDO provides a regulatory framework for issuers and distributors to develop and maintain effective product governance processes across the lifecycle of financial products.
These obligations generally apply to AFSL-regulated products or offers of financial products that require disclosure under the Corporations Act (i.e. a Product Disclosure Statement) and also regulated credit products.
Some of the key obligations set out by this new bill are, but not limited to:
The legislation does not provide guidance on making a target market determination. Each affected entity will need to consider what criteria they will apply when determining the target market of their financial products. ASIC has produced a draft regulatory guide that sets out matters that issuers should take into account in determining their target market. You can find a link to the draft guide below.
ASIC’s New Powers
Under the Product Intervention Powers (PIP), ASIC has now been given powers to enforce the new arrangements, including the ability to request necessary information, issue stop orders, and make necessary exemptions and modifications to the new arrangements. The key objective of the PIP is to prevent or respond to significant consumer detriment for financial products. A person who suffers loss or damage because of a contravention of the DDO may be entitled to recover that loss by civil action.
The PIP is already in force (as of April 2019) and as such, issuers will be required to assess which of their financial products fall under the new DDO and ensure that compliance and governance systems are in place to mitigate any risks of ASIC exercising their PIP powers.
The DDO will not come into effect until April 2021. ASIC has issued a consultation paper to seek feedback from stakeholders in relation to the design and distribution obligations and how ASIC will govern and enforce these new obligations. All consultation submissions are due by 11 March 2020. The finalised regulatory guide will be issued within the year.
The ways in which consumer payments in Australia are made is often likened to a train system comprised of the “rails” that carry the carriages (the payment systems), and the “carriages” that carry the passengers (the individual payments).
The media will have us believe that the payments landscape in Australia is constantly and rapidly changing. To an extent this is correct – but this is all about new “carriages” rather than “rails”.
Furthermore, simply because there are new ways to pay on offer, it does not mean that we all immediately change the way we pay. For example, it took well over 5 years for both BPAY and (much later) contactless card payments to become mainstream.
In Australia, there has only been one new set of rails introduced in the past 25 years (The New Payments Platform (NPP), 2018)
It is about trends, and long-term ones at that. The following graph shows how the ways we pay (our use of the rails) have changed over the past 16 years, exhibiting slow movements and not, as many media commentators would suggest, overnight leaps.
The trends are clear – cash (as proxied by ATM withdrawals) and cheque usage are on the decline, and fast becoming the minority of transactions. Electronic payments continue to increase. Cards now account for more than 50% of all payment transactions, with the growth in debit card activity far outstripping credit card since 2007. It is now quite normal to pay for a morning coffee using a card – not so long ago a $3.50 purchase would have been made with cash.
Will cash and cheques ever completely disappear? It is more likely that cheques will disappear, but only when the industry and/or regulator set a termination date – otherwise someone, somewhere will keep using them. However, the ability to access and use cash is considered critical for members of society who may be unbanked, and for remote residents where electronic payments may either be unavailable or inconsistent. Even in those economies closest to being cashless, such as Sweden, there are government requirements for the economy not to become cashless – at least not until no one is left behind or disenfranchised.
In 2019, the San Francisco Board of Supervisors passed a law requiring that all bricks and mortar retail businesses must accept cash – this even includes the Amazon Go stores (more about them later). This move is to make sure that the city’s poorest residents are not shut out of access to basic goods and services. Whereas “cash not accepted” signs are common in shops in Sweden.
The rails for electronic payments in Australia include the card rails (Visa, Mastercard, Amex, eftpos), the rails for direct entry and direct debit payments known as BECS (Bulk Electronic Payment System), the real-time payments rails operated by New Payment Platform Australia (NPP) and the international bank to bank transfer rails (SWIFT). The only one of these sets of rails that has been introduced within the last 25 years is the NPP, launched last year.
(Source: The Initiatives Group)
What runs on the rails is where the new action has been, as a plethora of “veneers” have been placed on top of the payment rails, giving the perception that the movement of money has changed. What has changed, and greatly, is the consumer interface, which has become more convenient, simple to use, frictionless and seamless. But, as noted earlier, just because a new way to pay is being offered there is no guarantee that it will be used.
Mobile wallets such as Apple Pay, Google Pay and Samsung Pay, otherwise known as “The Pays”, have arguably received more media headlines than any other payments related topic over the past few years. Despite this, it is estimated that they represent fewer than 5% of card present transactions, albeit that there now seems to be some acceleration in the adoption rate.
Requiring a credit or debit card to fund a transaction, The Pays operate on the Visa, Mastercard, American Express and, to a lesser extent, the eftpos rails. They have been offered in Australia since 2015 when Apple Pay was launched with Amex.
Even though some would describe it as simply a new “form factor” – a contactless payment (now over 90% of card present transactions) using a phone rather than a plastic card – the rollout through the payments industry has been slow. A popular hypothesis is that using your phone currently offers little benefit over using a plastic card – that is, there is no value added.
In addition, there has been significant reticence amongst the major banks to fund the fees payable to Apple Pay, which also comes with the limitation of no other application being able to access the NFC interface on the iPhone. However, as of today the only major Australian bank that does not offer Apple Pay (considered the vanguard of The Pays) is Westpac, so it is felt that the current low usage rates will increase to more significant levels over the next few years, assisted by use on mass transit.
A different type of mobile wallet where you can “pre-fund” your account prior to purchase (or link to a “top up” source of funds) is particularly popular in China, and increasingly so throughout Asia. AliPay and WeChat Pay both from China are prime examples.
When making purchases, these systems run on their own sets of rails with the transaction driven by a QR code interface (overcoming Apple’s NFC quarantine). This has permitted significant growth in electronic payment acceptance due to the simple and low cost set up for the payee. However, to fund the account, money is transferred from the user’s card or bank account.
This means the funding uses existing payment rails. To date the use of QR codes in payments in Australia has primarily been limited to visiting Chinese tourists. Australians are already well served by NFC contactless payments, so, whilst there may be more value-adding capability within a QR code, there is little incentive for consumers to change.
Another popular wallet, although not so much in mobile format (at least not in Australia), is PayPal. Created as a payment wallet to make secure online transactions, the PayPal wallet can be instantly funded by a credit or debit account, or pre-funded. An interesting contrast is that in the US keeping funds in a PayPal wallet is popular, whereas in Australia it is not.
Popularised by the success of the Uber rideshare app and the “just get out of the car at your destination and walk away” payment experience, in-app payments are the topic of a separate whitepaper published by The Initiatives Group.
Sometimes criticised for making it too easy for consumers to overspend as they do not have a “transaction moment” to reconsider their purchase, in-app payments are growing even faster than e-commerce. Prime examples include Uber – familiar to most of us; Grab, which dominates carshare in South East Asia, and which is now promoting its payment service in its own right as “GrabPay”; and the Hey You (Beat the Q) café pre-order and payment aggregator app.
In the USA, Starbucks is prolific enough to have its own pre-order and payment app, which accounts for a significant proportion of their sales and is integrated with the Starbucks Loyalty program. Further loyalty integrations are underway. For example, in the USA you can use American Express Membership Rewards points to pay for your Uber ride. Amazon is taking the in-app, seamless shopping and payment experience to the nth degree, (possibly out of the budgetary capabilities of most retailers) with its Amazon Go “no lines, no checkout” concept stores, it is extreme but an insight into what is already possible!
In Australia, Woolworths is currently trialling “Scan & Go” with selected Woolworths Rewards loyalty members in Sydney – it is a variation on Amazon Go, where shoppers scan items when they take them from the shelf and then just tap off when leaving the store. This is important, as Woolworths and Coles are able to move the market: it was really not until they adopted the NFC technology that contactless payments became commonplace in Australia.
Many innovations on the existing payment rails are actually changes in the form factor. As noted earlier, mobile payments are, for the most part today, simply the ability to use your phone to make a contactless card payment, rather than use the physical card itself.
Other new form factors include smart watches, including the Apple watch, Samsung Gear watches, as well as Garmin and Fitbit with Garmin Pay and Fitbit Pay respectively. Similarly, there are wrist bands and tabs attached to watch bands, even sunglasses and jewellery, such as the Bankwest Halo Payment rings. Current opinion is that these “wearables” will become popular, but amongst niche groups rather than the general population – for example waterproof bands and rings for swimmers, surfers, runners and cyclists.
BPAY and Pay Anyone (Direct Credit on internet banking or a banking app) are payment methods that use the BECS Direct Entry system. Both allow for bank account to bank account transfers five days a week (excluding Public Holidays), with banks transferring funds 5 times per day (but not necessarily posting them to accounts that frequently).
Reliable, secure and low cost, however it is possible that a transfer can take some time to occur or appear in the receiving account – if the transfer is made late on Friday afternoon and is to a bank that is not posting intra-day settlements it may not be until the following Tuesday that the funds appear in the recipient’s account.
Whilst BPAY volume continues to grow, BPAY now somewhat competes with itself as the provider of the first “overlay” service “Osko” for the NPP, which allows real time payments between consumers and businesses via BSB and account number or with a registered PayID (mobile number, email address or ABN) linked to their bank account. Further, a number of Financial Institutions have and are moving their Pay Anyone / Direct Credit transactions onto the NPP rails, instead of using BECS.
Particularly popular in geographies as diverse as the USA and China (perhaps due to the antiquated and previously limited payment systems available), P2P payments allow instant payments between consumers – splitting the bar tab, paying your share of the rent, getting money to the kids quickly, etc.
Venmo (now owned by PayPal) in the USA and WeChat Pay in China are prime examples. Both allow instant payments between other Venmo or WeChat Pay users from a pre-funded wallet. Perhaps they could be considered alternative rails, however, funding still comes from the existing rails transfer methods as these are linked to accounts.
In Australia, BeemIt allows P2P payments between BeemIt users, requiring only a Visa or Mastercard debit card for registration. Interestingly, BeemIt accesses bank accounts by using Visa and Mastercard for the authorisation messaging, then uses the eftpos rails to achieve the instant funds transfer.
As with many new ways to pay, BeemIt has not (yet) become popular in Australia as it has yet to gain sufficient penetration or ubiquity, and perhaps does not solve a significant problem that Australian consumers have (given the various other ways that they have to pay).
The establishment of real time payments platforms, moving and posting money between accounts 24×7, such as Australia’s NPP, is a major global trend. The UK has had “Faster Payments” and Singapore “FAST” for some time. More recently, Malaysia “DuitNow” and TCH (“The Clearing House”) in the USA have introduced real time payment platforms.
The NPP was launched in February 2018, the first new payment rails in Australia for 25 years (the prior launch was BECS in 1993). The NPP is an initiative that was primarily driven by the Reserve Bank of Australia, following its review of innovation in payments, and is co-owned by 13 banking organisations. It allows for real time payments between bank accounts.
To date, it has been held back by a somewhat uncoordinated introduction through the banking system. Whilst over 2 million PayID’s have been registered, use of the Osko payment “overlay service” has been relatively limited. This is likely to change once all banks deliver the range of features available, more entities register PayID, and business applications such as “Request to Pay” and a central consent management platform are delivered (effectively allowing Direct Debit transactions to be introduced by the NPP).
Even Sweden’s “Swish” success story has taken almost 7 years since its establishment in 2012 to reach a total of 1 billion transactions through the system.
Use cases range from instant P2P payments, to real time payment of employee wages, superannuation, even to the ability to safely buy/sell a used car privately on the weekend without the need for cash transfers or bank cheques.
(Image Source: Osko.com.au)
Cross border account to account payments have primarily been the domain of Swift and its 165 member banks. Even if the origin or destination banks are not members, the 165 banks can act as “correspondent” banks to route funds into the recipient country and currency, then onto the recipient bank. It is reliable, but can be slow, opaque and relatively expensive. The Swift rails also enable currency transfer services such as Western Union.
Faced with the emerging faster cross border payment challengers, such as crypto currencies, Ripple, Visa B2B Connect, and Visa and Mastercard acquiring FX transfer platforms, Swift has been developing faster, lower cost transfer products to enhance its existing rails. Swift GPI (Global Payment Innovation) is now conducting faster cross border payment trials, and is poised for rollout network wide.
Swift, which also provides the distributed switching platform for Australia’s NPP, is also testing its involvement in integrating the different real-time payments platforms between countries.
Thought too slow and expensive (today) for domestic payments, cryptocurrencies and distributed ledger technology is of interest for the future of cross border payments, although there is a long way to go. For example, Bitcoin transactions can occur at between 10-20 transactions a second (versus Visa at up to 56,000 per second), and crypto currencies are infamous for the volatility of their value in fiat.
However, the announcement in June 2019 of the Libra Foundation, with its bundled currency backed blockchain based “stablecoin”, and the Facebook developed Calibra payment wallet (planned to be the first wallet for Libra transactions) has generated significant excitement and debate. Whether or not is succeeds (or even permitted to launch by regulators), it raises the possibilities of western “bigtech” finally entering the payments (and broader financial services) category, and the possibility of a truly global currency that transcends fiat currencies and national borders – at the same time, reaching one of the world’s broadest social network audiences.
Will Libra run on new rails? Within the Calibra wallet this is likely, but Libra ultimately still needs to be funded from some other electronic source such as a bank account or card (even if unbanked users pass cash across the counter at “agent” locations). Indeed, it has been suggested that, to reach merchants for POS transactions, it may use the Visa and Mastercard rails.
There will be many legislative hurdles to overcome, and, in developed countries such as Australia with highly developed payments systems, there remains the question of what real problems are Libra and Calibra really trying to solve (maybe remittances?).
Use cases range from instant P2P payments, to real time payment of employee wages, superannuation, even to the ability to safely buy/sell a used car privately on the weekend without the need for cash transfers or bank cheques.
With millions of customers in Australia, the USA and soon in the UK, “I’ll AfterPay it” is becoming a familiar expression. AfterPay, Zip Money, Humm and SplitIt have become particularly popular amongst millennials – Afterpay claims 69% of its users are 18-35 years old.
New way to pay, on new rails? No. Latitude and Flexigroup have been offering interest free payment plans for decades, and products such as Afterpay rely on debit and credit cards to make initial payments and subsequent repayments.
However, Afterpay and its cohort have tapped a rich vein of new business – millennials who are not migrating to credit cards, with a short-term low value instalment payment product, tuned initially for online purchases and delivered digitally. Merchants with a sufficient margin structure to absorb the 4-6% fee, see the additional sales as a boon in what is currently a tough retail environment. Add to this a group of BNPL businesses, those delivering similar products to small businesses, such as ProspaPay.
The adoption of electronic payments by consumers and businesses in Australia continues apace, pushing cheque and cash transactions (although not the amount of cash on issue) into a relatively steep decline. Consumer payments are dominated in volume by card-based transactions, but the format of these is starting to become “buried” under layers of “veneer” interfaces, many of which rely on card-on-file for their funding source.
To the consumer, these veneers look like “new ways to pay” and certainly deliver the more convenient and seamless experience that people seem to be seeking. But underneath, the funds are moving between the payer and payee accounts as they have always done.
The new rails provided by the NPP will not generate any new transactions in the market, but will take volume from existing systems. For the sake of efficiency and the economy, one hopes that the NPP will accelerate the decline in cash usage and lead to the termination of cheques. But it will also take volume from Direct Entry and card payments. Just as Swish has entered ecommerce and the point of sale market in Sweden, once the cost of NPP transactions reduces (as it should with volume growth) then one would expect it will also appear in the online and POS environments.
The increasing use of electronic payments in Australia should see the overall cost of payments as a percentage of GDP decline and the tax take through GST and income tax rise – both of which are beneficial for the country.
Disclaimer: The opinions expressed in this article are the author’s own and do not necessarily reflect the view of Indue. The Initiatives Group has advised participants in the payments market since the 1990’s – including issuers, acquirers, third-party processors, technology providers and associations. The Initiatives Group has a strong relationship with Indue, and can help participants in the payments sector generate more value from their markets and customers. To find out how, please get in touch.
BPAY Group has launched a new Developer Portal to help organisations to access BPAY’s open API’s and create solutions that support their business and their customers’ needs.
The portal, initially launched in October with four BPAY APIs, and information about Sypht APIs, creates a one stop shop for developers, product managers and other innovators to build new payment services.
Australian Fintech NoahPay is the first to use both the BPAY and Sypht APIs in a new payment app: Billax. It allows WeChat users – mainly Chinese residents such as students living in Australia – to seamlessly pay their Australian bills using WeChat Pay.
NoahPay Director and Co-founder Ryan Yan said users can open Billax in WeChat, take a photo of their bill to automatically pre-populate the payment page with BPAY biller code, reference number and amount, and then confirm payment using Face ID.
BPAY Group is best known for its BPAY service, which was launched more than 20 years ago. Today, more than half of all BPAY payments are made through a mobile phone or an app.
Indue’s Mark Korogiannis, Executive Manager Payment Solutions, shares insights from the Future Banking Forum 2019.
In the past, when we needed banking solutions, we’d visit our local bank manager. This influential figure knew our financial, and often personal situation, and helped us achieve our financial dreams.
More recently, branch closures and automation have seen the demise of face-to-face banking – along with that personal connection. Today, technology looks set to potentially fill this gap, with the emergence of convenient digital platforms that transform the banking experience as well as how customer insights are utilised.
In October, I attended the Future Banking Forum 2019, which explored the impact of fintechs and neo-banks on personal banking. Speakers included industry experts like Simon Vans-Colina from Monzo, Dom Pym from UP, Joseph Healy from Judo Bank and Camilla Cooke from Xinja.
Here are three key themes I took away from the event:
The Banking Royal Commission highlighted the problems that can occur when unsuitable products are sold to customers. As a sector, we have a responsibility to ensure the solutions we offer are meeting our customers’ needs in a responsible way.
Neo-banks are taking a leadership position in this, using technology and data to deeply understand their customers, and fashioning banking solutions to match – in some cases personalised for that customer. Without the burden of legacy systems and rigid processes, tech-savvy neo-banks can take the friction out of the banking experience, while still meeting their compliance obligations.
For example, Xinja co-Founder, Camilla Cooke, commented that not only technology but also a new way of thinking, helps them compete with the big banks in a customer-experience ‘race to the top’ in the hope that a rising tide lifts all ships with customers voting to shift to banks that exemplify this behaviour.
With digital platforms and fresh thinking, neo-banks are helping recreate the connection that bank managers had with their customers. They view technology and data as their unfair advantage, using sophisticated tooling, artificial intelligence and machine learning to better respond to their target markets – often defined by a mindset and values rather than simple demographics.
To build a connection, banks need to understand what drives their customers’ financial behaviours. For example, Oliver Kidd from Archa said customer data showed their target market was motivated by convenience and value – not by learning how to save. As a result, the company is exploring non-traditional offerings, including aggregation services via a subscription model – potentially using open-banking to give their customers access to products and services from different banks.
Neo-banks tend to focus on, or appeal to specific market segments, rather than attempting to serve all markets. This could be a particular demographic, market niche, or customer set who hold certain attitudes and values.
Whatever their target market, the view of the neo-banks is that they have the skills, agility and attributes to connect with that market, and deliver solutions that provide value to individuals in those cohorts. They largely see themselves as raising the bar on customer experience – and providing a catalyst for the big banks to re-invent their products and services.
A key take-out from the forum was the sense that commoditisation of banking has gone too far, leading to a dehumanising, one-size-fits-all approach. So the next step for the sector is to turn this around, using technology to challenge the status quo. There was a strong sense that this will be achieved through a combination of competition and collaboration between neo-banks and more established players.
Overall the prevailing message was that by putting customer needs front-and-centre, we can create products that provide real value and benefits to our banking customers. And by building deeper connections in this way, we can earn their business, loyalty and trust – but also increasingly begin to add new forms of value to their modern lives.
AusPayNet 2019 Annual Review has been released.
As the payments industry association, AusPayNet’s network includes more than 130 members and participants. They bring together a diverse range of organisations including financial institutions, major retailers, payment systems operators and technology providers.
Find out more about AusPayNet’s key outcomes for 2019 and consumer payments trends by downloading the report here.
Source: Australian Payments Network AusPayNet
An extensive set of privacy rules that will accompany the introduction of the Consumer Data Right (CDR), including Open Banking, will be legally binding statutory provisions.
The Office of the Australian Information Commissioner has released draft privacy safeguards for consultation. They cover consent rules, disclosure and reporting obligations, limits on data collection, obligations to destroy certain data, and OAIC enforcement powers.Some of the privacy safeguards will apply in parallel with the Australian Privacy Principles, while others will override APPs.
The Consumer Data Right is designed to give people greater choice over how their personal data is used and disclosed. It allows consumers to access particular data and transfer it to an accredited person.
The Information Commissioner will have power to investigate possible breaches of the privacy safeguards and use a range of enforcement powers, including penalties.
The OAIC says the CDR system is built on consent, and an accredited person may only collect and use CDR data with the consent of the consumer.
A consumer can withdraw consent at any time.
An accredited person must not collect more data than is reasonably needed in order to provide the requested goods or services.
Each accredited person and each data holder must provide a “consumer dashboard” for CDR consumers, which is an online service consumers can use to manage data requests, authorisations and associated consents for the accredited person to collect and use CDR data.
CDR entities must have a policy describing how they manage CDR data. The policy must be available free of charge. They must handle CDR data in a clear and transparent way.
Accredited data recipients must provide consumers with the option if dealing anonymously or “pseudonymously” with the entity. Consumers must have the option of not identifying themselves.
In the banking sector, an accredited data recipient will not be able to deal with a consumer ion an anonymous basis because there may be obligations to verify identity prior to providing goods and services.
Accredited persons are prohibited from attempting to collect data under CDR unless it is in response to a “valid request” from the consumer. The CDR regime is driven by the consumer.
Accredited persons are required to destroy unsolicited data that the entity is not required to retain.
Accredited persons must notify the relevant consumer when they collect CDR data. This must be done through the consumer dashboard.
CDR data cannot be used for direct marketing.
Since launch of the New Payments Platform, the industry has seen a continual increase in consumer awareness and transactional volume. NPPA is now shifting focus to ensuring the platform delivers quality and new functionality. They have now released the NPP roadmap.
NPP Australia (NPPA) has today published details of its ongoing investment in the NPP, to extend and enhance the capability of the platform to meet the needs of participating financial institutions, payment providers and users within the wider payments ecosystem.
The public release of the roadmap comes less than two years since the NPP commenced enabling Australian consumers, businesses and government agencies to make real-time data rich payments between accounts at participating Australian financial institutions.
Today approximately 85 banks, credit unions, building societies and fintechs are connected to the NPP (either directly or indirectly) and more than 66 million accountholders can make and receive payments via the NPP. At the same time, more businesses and corporates are realising the benefits
of the NPP with approximately one in three transactions involving a payment to or from a business.
As at the middle of October, the NPP is processing an average of approximately 750,000 payments worth $750 million each day. Recently more than $1 billion in transactions was processed in a single day and the largest single transaction settled on the platform so far is $500 million.
Innovative use-cases that tap into the NPP’s core capabilities have also started to emerge. This includes: independent payments solutions providers such as Monoova and Assembly Payments; a service that enables employees to access their income as they earn it in real-time (Earnd); a consumer-to-business payment service that uses the NPP’s speed and PayID to deliver real-time
validation and processing for online payments (Azupay); and combining the NPP’s speed with blockchain to create equity management, compliance and share registry services (Block8).
CEO of NPP Australia, Adrian Lovney, says making the Roadmap publicly available ensures NPP momentum will continue.
“We’re focused on developing additional native capability that can support a range of use cases, which can be used by participating financial institutions and third parties to do different things. By developing native platform capability, governed by a common rules framework administered by
NPPA, it is akin to providing ‘building blocks’ that others can put together in different ways to deliver payment products and services outside the platform.
“NPPA does this by establishing different ‘business services’ that have different uses. A business service can either be used in its native form by participating financial institutions and third parties, or it can be further built upon and commercialised by an organisation wanting to develop an Overlay
Service on top,” Adrian said.
Available to be downloaded here, the Roadmap includes the development of foundational capability to enable third party payment initiation on the NPP. Central to this proposition is the account-holder’s authorisation (or consent) for payments to be initiated on their account with the creation of a digital
payment arrangement or a ‘mandate’ in advance of the payments being made.
This functionality increases the visibility and control that account holders have over these various payment arrangements, which will resolve some of the most frequent pain points with these kinds of payments today. It could enable a range of use cases in the future, such as recurring or subscription
type payments, ecommerce and ‘on behalf of’ services, such as a corporate using a cloud accounting software provider to do their payroll run.
The roadmap also includes structured data capabilities, which will support B2B payments and commercialisation opportunities such as payroll, superannuation, and einvoicing and a business service to support the domestic leg of inbound cross-border payments.
In addition to the capability centrally developed by NPPA and outlined in the Roadmap, individual participating financial institutions are also developing capability to support NPP payments, in a number of areas, such as APIs and conversion of bulk payment files, according to their own business
objectives and implementation timing.
Collectively the development and delivery of the capabilities contained in the NPP Roadmap will significantly enhance the platform’s functionality and drive further use of the platform by third parties.
Source: NPP Australia
As advised in Indue’s article in the last edition of our Industry Update, ASIC proposed changes via a consultation paper to Regulatory Guide 165 (RG 165): ‘Licensing: Internal and external dispute resolution‘, which sets out requirements for a financial firm’s Internal Dispute Resolution (IDR) processes.
This consultation paper, which was published in May 2019, outlined a number of new measures to strengthen the integrity and effectiveness of the IDR systems of financial firms. Since the release, ASIC has invited stakeholders in the finance industry to provide feedback on the proposals and have directly consulted with a number of these stakeholders for further input.
Upon the consolidation of feedback and careful consideration of all 68 submissions, ASIC recently held a stakeholder meeting to provide an update on changes to RG 165. ASIC confirmed that all companies, regardless of size, will be required to comply with all of the new changes outlined in the regulatory guide. RG 165 will, in future, be an “approved” ASIC standard, therefore enforceable as part of Australian Financial Services License (AFSL) and Australian Consumer Law (ACL) conditions. If obligations that are considered ‘core’ are breached, this will likely be a civil penalty breach. However, ASIC has yet to provide its final decision on this matter.
Some of the noteworthy intended changes and further clarifications provided by ASIC are:
ASIC expects that RG 165 will be finalised by December 2019 and anticipates about a month between the finalisation and enforceable provisions commencing. Requirements for data collection and reporting are being further revised and as such, timeframes for these elements have been delayed; however, no official dates have been provided. ASIC will consult with stakeholders during the first half of 2020 to define and finalise these requirements, as well as other elements such as including the need to record demographic information for all complaints.
Indue will provide its clients with a further update following the final publication of RG 165.
To view the consultation paper, please visit the ASIC website.
Long gone are the days when a cardholder could only make a purchase at point of sale with their physical card. The ongoing advances in payment capability previously paved the way for consumers to make online Card-Not-Present (CNP) transactions, but has now gone even further by enabling these CNP transactions to be initiated from a mobile wallet with fingerprint authentication.
Nevertheless, the fundamental transaction that underpins these digital advances is the CNP transaction, which is gaining momentum as one of the most popular ways Australians like to transact. The CNP transaction growth rate has increased from 14% in 2017 to 27% in 2018*, which may be partially accounted for with the increase of mobile in-app payment opportunities (where a consumer uses a retail app and selects a card stored in their mobile wallet to make the purchase). More avenues for CNP transactions means more opportunities for card compromise and fraud spending.[/vc_column_text][vc_column_text el_class=”ind-textBox”]
Earlier in the year, Indue advised its clients of the significant industry-wide initiative to combat the increasing CNP transaction fraud. Championed and led by the Australian Payments Network (AusPayNet), the CNP Fraud Mitigation Framework aims to target the most prevalent form of fraud in the card payments space.
According to AusPayNet’s ‘Australian Payment Card Fraud 2019’ report, although the rate of CNP fraud growth has decreased since previous years, CNP fraud still accounts for 85% of all card fraud on Australian cards.
The collective industry acknowledged the need to address this fraud concern by establishing this industry-wide framework.
The CNP Mitigation Framework took effect in 1 July 2019 after a long collaboration and consultation process to define the minimum standards that both card Issuers and Merchants need to meet as a means to reduce the rates of CNP fraud. These standards provided industry-agreed fraud thresholds that Issuers and Merchants were to report against. Failing to meet these thresholds would require them to implement additional security measures or be subjected to penalties. “Breaches of these thresholds will trigger obligations for Merchants and Issuers to take action. Repeated breaches over a period of time could ultimately result in financial penalties for Issuers or Merchants’ Acquirers,” AusPayNet said in an industry release.
In July 2019, Indue consolidated the required statistical data on behalf of our financial crimes clients and submitted the relevant reporting to AusPayNet. Indue has since continued to submit monthly reporting to AusPayNet according to the CNP Fraud Mitigation Framework requirements. As this new reporting becomes embedded in the operation and maintenance of the card payments ecosystem, AusPayNet and indeed the entire industry will get a glimpse into whether this new framework is making inroads into the chief objective of curtailing the growth of CNP fraud. Coupled with the 3DS 2.0 mandate issued by both Visa and MasterCard, this reporting and accountability should have an impact on fraud numbers. It will be an interesting space to watch over the next two to four years.
*Source: Reserve Bank of Australia
AusPayNet’s Australian Payment Card Fraud 2019 report
Indue’s March 2019 CNP Fraud Mitigation Framework article
Since launch of the New Payments Platform, the industry has seen a continual increase in consumer awareness and transactional volume. NPPA is now shifting focus to ensuring the platform delivers quality and new functionality through the NPP Mandatory Compliance Framework
In June 2019, the NPPA Board approved the introduction of NPPA’s Mandatory Compliance Framework (MCR) to ensure that all participants comply with a minimum set of capabilities such as performance, security and integrity requirements.
The key objective of implementing a compliance framework, which introduces strong risk and governance procedures for the payment stream, is to ensure a standard of quality across the board for all stakeholders – participants and customers alike.
The NPPA Board will designate requirements as mandatory compliance requirements, categorise them and determine the effective compliance date. NPPA will enforce the adherence to the MCR and any participant found to be non-compliant to the MCR may be subjected to financial penalties.
The MCR will be applied across two categories – integrity and operational requirements. Integrity requirements encompass items that are integral to the operation of the NPP. Operational requirements refer to items that do not necessarily affect the functional operation of the NPP, but create operational impacts. Fundamentally, the compliance to these new requirements ensures that all NPP participants are providing a minimum standard of quality and the core payment functionality is uniform across all participants.
By applying this minimum standard, the NPPA is also aiming to make the commercialisation of NPP (and future NPP products) easier for all participants.
It is now timely that NPPA has decided to enforce new Addressing Service protocols to ensure the platform provides customers with confidence that they can make payments in a secure environment. With the execution of the new Addressing Service requirements, new technical controls and monitoring will need to be put in place by all participants to reduce any potential security incidents and identify any system vulnerabilities early. These new requirements were approved by the NPPA Board in September 2019 and will be designated as mandatory compliance requirements (and thus subject to non-compliance charges) by 12 December 2019.
Indue has engaged directly with its NPP clients to provide the detailed requirements and ensure compliance.
It has been quite a busy year for eftpos. With the increase in the number of banks offering merchant choice routing, (which enables merchants to choose to route transactions via their preferred network) and enabling mobile payments via the eftpos network, eftpos has definitely advanced its value proposition for its customers. One key initiative that is critical to the eftpos network ecosystem is its Digital Acceptance Pilot program.
This aligns with eftpos’ commitment to updating its product suite to continually meet changing merchant and consumer needs.
Digital development will continue to be a key focus for eftpos over the coming year as Australians change the way they pay for goods and services.
This functionality enables eftpos cardholders to make online purchases at participating merchants using their eftpos card,. This is an unprecedented capability for the scheme.
eftpos collaborated with all parties within the transaction journey (Issuers, Acquirers, Switch Processers, Merchants and other service providers, including Indue) to develop and implement this new capability. Indue undertook a program of work with its eftpos clients, which commenced in 2018, to assist with the implementation of the required system changes to support online eftpos transactions.
In July 2019, eftpos coordinated a production validation program between card Issuers and participating Merchants to validate the new digital functionality changes. Three of Indue’s clients participated in testing and successfully made online transactions with selected merchants. The hard work undertaken by multiple stakeholders, including Indue and Indue’s clients, in the Digital Acceptance program was finally realised when the first-ever online eftpos transaction occurred during this validation. Previously, eftpos cardholders were unable to conduct online transactions using their eftpos cards.
This one transaction has fundamentally changed the payment landscape. Now eftpos joins the other card schemes in the digital arena.
In September 2019, eftpos began a Digital Acceptance Pilot Test program which has since seen more successful transactions made between several Merchants and Issuers. With the new functionality now validated in the live payments environment, this will have significant implications on the balance of power between the major card schemes due to the fostering of healthy competition.
As more merchants become enabled to accept online eftpos transactions, the industry will no doubt see some movement of transactional volume from other card schemes to the eftpos network.
Indue is extremely excited about the implications of this new capability for its clients – a richer cardholder experience through the expansion of their product’s reach.
With around 50 million eftpos-enabled cards in market, eftpos aims to help card Issuers create innovative, bespoke and secure payment experiences for their customers. The company is building an API gateway, with the first APIs expected to be in production early in the new year, potentially bringing new opportunities for innovation across the eftpos network.
On 1 August 2019, the Federal Government passed the Treasury Laws Amendment (Consumer Data Right) Bill 2019, which subsequently received Royal Assent on 12 August 2019. Open Banking is the first instalment of the Consumer Data Right legislation (CDR) in Australia, which gives individuals more control over their own data.
This legislation will allow individuals and businesses the right to obtain certain types of their data, which they have already shared with their financial institution, as well as provide authorised third parties access to this data.
The Australian Competition and Consumer Commission (ACCC) has since published the final version of the Consumer Data Right (CDR) legislation governing elements that are central to the implementation of the CDR in the financial sector.
As the CDR regime will allow consumers to request data holders to provide their data to accredited entities, the ACCC have now also released draft guidelines on the CDR accreditation process and on the insurance and information security requirements of accreditation. The intent of the guidelines is to provide information to assist applicants with lodging an application for accreditation as well as guidance on how applicants are to meet the obligations to protect data from misuse and unauthorised access.
The current CDR regime rollout timeline is as follows:
|July 1, 2019||Big 4 Banks to provide generic product data for deposit accounts and credit cards via API|
|Feb 1, 2020||Big 4 Banks to provide customer specific data for deposit accounts and credit cards, and generic data for mortgages and home loans, mortgage offset accounts and personal loans, via API|
|July 1, 2020||All other ADIs to provide generic data for deposit accounts and credit cards via API|
|July 1, 2020||Big 4 Banks to provide customer specific data for mortgages and mortgage offset accounts, and generic data for all other loans, leases and specialist accounts (e.g. trust accounts, pensioner deeming accounts), via API|
|Feb 1, 2021||All other ADIs to provide customer specific data for deposit accounts and credit cards via API, and generic data for home loans, mortgage offset accounts and personal loans via API|
|Feb 1, 2021||Big 4 Banks to provide customer specific data for all other loans, leases and specialist accounts (e.g. trust accounts, pensioner deeming accounts) via API|
|July 1, 2021||All other ADIs to provide generic data for all other loans, leases and specialist accounts (e.g. trust accounts, pensioner deeming accounts), and customer specific data for home loans, personal loans and mortgage offset accounts, via API|
|Feb 1, 2022||All other ADIs to provide customer specific data for all other loans, leases and specialist accounts (e.g. trust accounts, pensioner deeming accounts) via API|
The ACCC has advised that the Big 4 Banks have already commenced providing generic product data (as required by 1 July 2019) on a pilot basis. The ACCC has also now selected ten entities to participate in the testing of the CDR ecosystem in the run up to the next milestone in February 2020. The selected participants offer a broad range of innovative services to consumers, including services to manage personal finances, facilitate book keeping and assess a consumer’s financial status.
From 1 July 2020, all of Indue’s ADI clients will be required to meet the obligation advised above. The required APIs for data transfer will need to be developed in accordance to the Consumer Data Standards, which have been finalised by CSIRO’s Data61 as the appointed Data Standards Body for the CDR regime. Indue recommends that clients engage with their core banking platforms to understand what API solutions are available to support these new requirements.
Indue is currently looking into opportunities for hosting client sessions on Open Banking to assist in the understanding of requirements, impacts and implications of this new data regime for our clients.
The disruptive threat is indeed real, but how does a mid-tier financial services provider respond?
Many mid-tier providers in Australia focus on a specific region, industry, or some other slice of the broader market. To combat disruption, your solution lies in uncovering and addressing a need that is uniquely important to your specific community of customers.
If you read the trades, you’ll be aware that customer-centricity is the norm in today’s digital business.
Early customer-centric methodologies focused on the desirability of an idea – exploring whether a customer wants a new feature, by testing an idea with real customers.
As customer-centric approaches have matured, they have expanded to look at technical feasibility and commercial viability as well. This end-to-end exercise is called a Design Sprint – which can be completed in a matter of weeks.
Feasibility explores your existing technology landscape (CMS, CRM, and any other customer-facing systems), and determines if an idea customers love is technically feasible to implement. Feasibility considers your existing environment – and calls out any technical gaps that need to be addressed. If gaps exist, the feasibility phase tests whether they can be addressed through short Tech Spikes – simple technology tests that prove or disprove whether a technical solution will work.
Viability looks at the idea from a business lens. Will it save more money than it costs to implement? Will it retain more customers? Will it help acquire new customers? How long will it take to implement? What training will your team need, if any, to put the new idea in the market?
At the end of the Design Sprint, your business will have enough information regarding Desirability, Feasibility and Viability to decide whether or not you should invest in an idea – and enough customer feedback to understand how strongly they feel about your proposal.
This ensures your business will invest in building the right thing – and avoid spending time and resources on ideas that don’t deliver customer and business value.
Your competitors do not have the same direct and unfettered access to your customers that you have. Your access enables you to find out your customers’ unique needs and pains, and tailor your solution to fit – using a Design Sprint.
Building the right thing for your customers is key. Building the right thing makes your business “sticky” by giving your customer base more reasons to remain with you – even with new alternatives emerging in your market.
This article was written by Lukas Bower (@lukasbower) Managing Director at Industrie&Co Australia. As the payment landscape continues to evolve with new technologies, new payment providers and new customer requirements, it has become increasingly evident that financial institutions must ensure they continually assess whether their products and services are meeting the needs of their market.
The implications of ignoring these ‘disruptions’ is the risk of falling behind the masses and losing out to adaptive competitors.
Indue has partnered with Industrie&Co to enable a major Australian retailer to bring an unprecedented product into the Australian market, which is a great example of responding to the ever-advancing demands of the industry.
Interested to learn about how you can compete with industry disruptors? Join Indue’s Chief Commercial Officer, Dave Hemingway as he hosts an audience with Industrie&Co to dive deeper into the practical applications of design sprint methodology.
Thursday, November 14th, 11.00am AEDT
Industrie&Co is an Innovation and Technology Consultancy. With offices in Sydney, Melbourne, Hong Kong and Singapore, Industrie&Co helps Financial Services companies identify and build winning product ideas – from Design Sprint through to launch. Industrie&Co has a strong relationship with Indue, and can help implement next-generation payment solutions. To find out how, please get in touch and share your vision with us.
According to the ASIC website, their review seeks to:
ASIC met with deposit-taking institutions (ADIs) to investigate various programs, including how they run their programs, participation rates, interest rates, incentives such as toys offered to students, and how they use branding.
It also commissioned qualitative and quantitative consumer research. The research found that overall satisfaction with these programs is high, “however, there was some concern about the lack of digital interaction and substandard interest rates.”
With around 60 percent of primary schools participating, school banking programs have been embraced by Australian families for decades. According to ASIC’s Consultation Paper, while parents rate the programs highly and are “often drivers for student participation in school banking programs”, the research into consumer saving behaviour may not be as supportive.
“The research suggests that students who retain interest in the program are more likely to be internally motivated – they do not rely on their parents to fill out the deposit slip or remind them to take money to school.
“There is limited evidence among past students that school banking programs have a lasting impact on their saving behaviour.”What’s that? A dollar might not go further?
“Their recall of the program is often limited to the ritual involved. The research findings indicate that school banking increases the chances of a participating student remaining with the ADI that provided the program after they finish school and progress to adulthood. Findings also suggest that non-participating students were also likely to remain with the same ADI they banked with as a child.”
ASIC aims to develop principles for appropriate conduct and good practice in the implementation of school banking programs, to ensure they’re in the interests of young Australians.
In addition to the new payment stream gaining steady momentum, the NPPA will be sharpening their NPP strategic focus for the near future on the back of critical findings commissioned by the RBA.
The RBA released a report last month on the functionality of, and access to, the New Payments Platform. After public consultation and assistance from the Australian Competition and Consumer Commission (ACCC), the report outlines 13 recommendations that addresses the issues identified during the consultation. The key recommendations involves:
In a statement following the release of the RBA conclusions paper, the NPPA welcomed the comprehensive analysis undertaken and confirmed their intent to continue to enhance the capabilities of the NPP that would be available to be utilised by parties outside of the Platform or built upon by overlay service providers.
NPPA will provide a comprehensive public response by the end of July.
Over the past year, the NPPA have identified a number of opportunities to further enhance and optimise the existing product functionality to meet the needs of a range of stakeholders and end users.
The NPPA published its first version of standardised APIs for NPP in late 2018. The second version of the framework, which was released in May 2019, will see the extension of the API set to include different NPP functions, such as cancelling a payment, requesting a payment return and notification of a payment. The NPPA has established an API sandbox, which is a secure, cloud-based test environment that enables developers to test API solutions in an environment that is independent from the NPP basic infrastructure. This test environment will continue to evolve over time with the expansion of the API framework.
Last month, the NPPA released a standard for the use of QR codes to generate NPP payment messages. The standard defines the mandatory data elements required to initiate an NPP payment via a QR code. This new capability can be applied to a range of use cases, such as bill payments, invoices, e-commerce and eventually point-of-sale payments.
The solution design phase for this new service is nearing completion. The CMS is a service to facilitate the creation and secure central storage of customer-authorised recurring payment instructions across different financial institutions. The CMS will provide customers with more visibility and control over their payment authorisations. It is anticipated that this new capability will enable an easier transition for customers to switch banks by allowing them to manage their payment authorisations and update the links to bank accounts themselves.
The NPPA will explore opportunities to enable the platform to support broader forms of payments with a key emphasis on unattended payments. Payroll, tax and superannuation payments will be the three main types of unattended payments that will be considered. The NPPA aims to leverage the existing NPP ISO20022 standard to support these payment types, as the messages provide structured data fields to carry a richer data set in comparison to its direct entry equivalent. The NPPA will define the specific message elements for each type of payment.
Using payment initiation messages, an authorised third party can initiate a payment on behalf of customers of a financial institution or request payments to be made by a customer. The NPP was designed to support these types of messages, but the industry deferred the implementation until after the full launch. These new messages will support key use cases, such as authorised third parties initiating payroll, superannuation and tax payments on a customer’s behalf.
The NPPA believe that the development and delivery of these capabilities will significantly enhance the platform’s functionality and drive further use of the platform by third parties and end users.
It has been a busy half of the year for eftpos with steady progress through a number of their key initiatives. Indue has been working closely with eftpos in the past few months to flesh out requirements and understand the scope and impacts of changes as a result of these new initiatives.
eftpos confirmed in May that at least two of the major banks (ANZ and Westpac) have now joined Suncorp and Tyro Payments in offering their merchant customers the choice to route contactless transactions on multi-network debit cards. Allowing merchant choice routing gives merchants an opportunity to route transactions via the lowest-cost network and better manage the costs of accepting payments. This new choice also increases competitive pressure between card schemes to continually reassess scheme fees and interchange. Cardholders can still retain control of what network their transactions are routed through by inserting their card and choosing the account to use for the transactions.
Indue is well progressed in its program of work to support this eftpos initiative and is collaborating with First Data to implement the required changes. Currently, no system changes from Indue’s eftpos card-issuing clients are required to be compliant with the mandate; however, optional transaction message fields are available to provide additional information if desired.
eftpos is working across the industry to enable cardholders to register and use their proprietary cards or multi-network debit cards for mobile payments. Suncorp has joined ANZ in offering their customers the opportunity to pay via their eftpos cards with Apple Pay. eftpos has also expanded its reach of Google Pay to St. George, Bank of Melbourne and BankSA customers. These customers can now access eftpos CHQ and SAV from their mobile phones, which is a major win for cardholders who want to access services like eftpos cash out or who previously did not have the ability to enjoy the convenience of leaving their wallet at home.
One of the key initiatives in Indue’s Mobile Payments roadmap for FY19/20 is integration into eftpos’ Token Service Provider (TSP). Through this integration, Indue will be able to offer its eftpos card issuing clients the opportunity to provide Apple Pay or Google Pay to their customers.
The eftpos TSP is responsible for tokenisation, which is the removal and transposition of confidential card data to a unique digital ID or token. This is a fundamental component in enabling mobile and digital payments whilst ensuring consumers are not compromising security for convenience.
eftpos has been working with the industry and merchants to implement the ability for cardholders to use their proprietary debit card or access their savings account through their multi-network debit card in an online environment. The use of eftpos’ TSP for token provisioning will be essential to enable this functionality. Cardholders will create an account with a registered merchant and provide their eftpos card details. The merchant subsequently confirms the card details with the card issuer and upon successful confirmation, the eftpos TSP tokenises the card number. Only the token number is stored at the merchant for future use. Customers can initiate future purchases from this merchant without the requirement to enter card details and merchants can also initiate payments with previous authorisation from the cardholder (i.e. recurring gym payment).
Indue has received detailed requirements to support the merchant token requestor functionality and is currently undertaking further analysis to understand the changes, which will be included in the eftpos 19.04 release. Indue will engage First Data and our eftpos card-issuing clients once we commence the planning phase of our program of work.
Since the last quarterly industry update, Indue has successfully launched our Mobile Payments solution with Apple Pay and Google Pay alongside our lead client, BankVic. There was strong customer uptake on from the outset with a steady increasing trend in both customer sign-up and mobile transactions. So which mobile payments initiatives are next?
Indue is now gearing up for the launch of the first wave of new mobile clients scheduled for July-September 2019. The client list for the second wave is close to capacity and Indue is currently in the scheduling phase with these partners. In addition to enabling physical payment cards to be used for mobile transactions, Indue is working closely with a key client to commence the issuance of virtual gift cards. All processes relating to account setup, token provisioning and transaction processing is completed in the digital space enabling a quick and streamlined cardholder journey from card establishment to shopping cart.
Indue will be focusing on three key mobile payments initiatives for the Mobile Payments Product Roadmap:
1. eftpos Integration – Indue is currently working closely with eftpos to finalise requirements to integrate into the eftpos Token Service Provider (TSP). This project will see the establishment of secure infrastructure between Indue and eftpos to support the provisioning of mobile tokens for proprietary cards and multi-network debit cards.
2. In-App provisioning enables cardholders to provision their credit or debit card directly from their banking app to either Apple Pay or Google Pay mobile wallet by clicking on a button, which improves the customer experience by removing the need for cardholders to manually provision their card to an mobile wallet.
3. Instant Issuance – When a credit or debit card needs to be replaced lost/stolen scenarios, instant issuance enables a cardholder to continue to transact via their mobile wallet while waiting for their physical replacement card to arrive in the mail and then activate for use.
Indue will also look to commence the work to support other OEM wallets such as Samsung Pay, Garmin Pay and Fitbit Pay, thus broadening the Mobile Payments reach and adding to the value proposition our Mobile clients can offer to their customers.
The industry is establishing a framework to promote security and interoperability within card payments in a remote payment environment, which is currently referred to as the Secure Remote Commerce (SRC) protocol. One of the key tenets for this initiative is the use of tokenisation, which Indue already fully supports with our Mobile Payments offering. Tokenisation involves the transposition of original payment credentials (i.e. payment card number) with a digital ID or token. This removes the sensitive nature of the payment data and renders the information useless if compromised. Indue anticipates that the card schemes will mandate the use of tokenisation technology to target card-not-present fraud for ecommerce transactions, which will further leverage our Mobile Payments tokenisation infrastructure to support this industry initiative.
In 2015, the International Organization for Standardization (ISO) first announced a possible extension of BINs. Its intent is to migrate from the current six-digit Institution Identifier Number (IIN) standard to an eight-digit standard and published the new standard in 2017. The IIN is the ISO term for a Bank Identifier Number (BIN). BINs are the six-digit numeric identifiers assigned to card-issuing financial institutions in the card payments ecosystem.
BINs are a fundamental component of electronic payments. A continuous supply of BINs is essential to help ensure a sustainable global payments ecosystem, enabling growth and innovation in an increasingly digital world. Increasing BIN demand across the card payments network has created the need for the extension of BINs from the first six-digits of a Primary Account Number (PAN) to the first eight-digits of a PAN. Emerging payment technologies, including tokenisation, is a key example of an initiative that has impacted BIN demand. This new standard will ensure an adequate global supply of BINs for the card payments industry.
Visa has endorsed the new standard and is well progressed in the design and analysis phase of their program of work. The card scheme has confirmed that an increase to the length of card numbers will not occur as part of this new initiative.
As of April 2022, Visa will migrate from the existing six-digit issuing BIN structure to the new eight-digit issuing BIN structure. Each individual six-digit issuing BIN within the Visa system will be migrated to 100 corresponding eight-digit issuing BINs – with each new eight-digit issuing BIN starting with the same first six digits as the original six-digit issuing BIN.[/vc_column_text][vc_single_image image=”19059″ img_size=”full”][vc_column_text]Given that the PAN length is not changing, reissuing existing cards will not be required. After the migration, existing 16-digit PANs will belong to new eight-digit issuing BINs that correspond to the original six-digit issuing BIN.
Below is a table of potential impacts to processes and systems that card issuers should consider as part of this migration:
|Reporting||PAN Assignment Logic|
|Call Centre Systems||Product-specific Reporting/Processing|
|Fraud/Risk Management Systems||Cardholder Benefits|
|Dispute Resolution Systems||Loyalty Programs|
|Card Manufacturing & Personalisation|
Effective April 2022, Visa will begin assigning eight-digit issuer BINs and will require all clients to process using the new eight-digit BIN structure. Although a few years away, ISO has recommended schemes, issuers, acquirers and processers begin preparation and analysis work to identify potential impacts to established systems and processes. This is a seismic change to back-end processing, but should be as transparent as possible to the end cardholder.
Visa plans to complete its planning and development effort by 2019 after which a client-facing testing environment will be made available for all clients and third party processors.
Indue has raised an internal program to review these imminent BIN changes that will affect our card-issuing clients. Indue will work closely with Visa and third party partners (i.e. First Data, Placard) to ensure all impacts and implications are identified and addressed as part of the overarching program of work. As Indue progresses through our planning stage, we will provide timely updates to our clients and will raise individual projects as appropriate.
In May 2019, the Australian Securities & Investments Commission (ASIC) announced a number of new measures to strengthen the integrity and effectiveness of the internal dispute resolution (IDR) systems of financial firms. This was on the back of the regulatory body publishing its findings into the customer experiences of the IDR process across a range of financial service sectors in late 2018.
The report highlighted inadequacies across a number of components within the IDR process implemented within financial firms. A major theme across most of the obstacles facing a consumer when raising a complaint was the lack of transparency of the process and the lack of visibility of the status of a complaint.
ASIC is responsible for overseeing the operation of Australia’s financial services dispute resolution framework, which includes:
Based on the report findings, ASIC is proposing changes to Regulatory Guide 165 (RG 165): ‘Licensing: Internal and external dispute resolution‘, which set out requirements for IDR processes.
Some of the noteworthy proposed changes are:
ASIC has published the detailed proposed changes in a consultation paper and has invited the public to comment on the document. ASIC will also be holding stakeholder meetings with key financial firms to discuss the proposals. Below is a timeline of events for the consultation process:
|Stage 1||15 May 2019||ASIC consultation paper released|
|Stage 2||May – August 2019||IDR stakeholder meetings|
|Stage 3||9 August 2019||Comments due on the consultation paper|
|Stage 4||December 2019||Revised regulatory guide and legislative instruments released|
AFCA has supported the proposed changes to the IDR processes across multiple financial services sectors. In a recent media release, AFCA Chief Ombudsman and CEO David Locke welcomed the proposed changes to the policy, “Increased transparency is good news” he said. “It will help firms to continuously improve, and that will be good for the firms and their customers alike”.
To view the consultation paper, please visit the ASIC website.
Almost 30 per cent of banking revenue at Commonwealth Bank, or $6.7 billion, is under threat from global technology – such as smartphone digital wallets – seeking to cut banks off from their retail customers, which could also raise the cost of deposits, the report says. It finds CBA is best placed to respond given its large technology budget and the functionality of its banking app, which Morgan Stanley rates as best among the big four.
The report, the latest in the investment bank’s “Australia in Transition” series, comes a day after CBA chief executive Matt Comyn announced the bank would add a host of new features to its app to drive customers towards its own digital wallet. He said CBA had 2 million customers already using its digital wallet.
But Morgan Stanley said customers could find smartphone digital wallets provided by Google Pay, Apple Pay, Samsung Pay and PayPal more attractive, because they allow various cards and accounts from different financial firms to be linked, whereas the banks’ wallets only offer their own products.
Source: This article first appeared on Australianfntech.com.au
Find out more about Indue’s Mobile Payments solutions.
Seismic shifts in Australia’s demographic trends this year will mean that Generations Y and beyond (Australians born since 1980) will become the largest proportion of the population. Our regional cities will emerge as lifestyle cities. Our cultural diversity and generational change will, in an election year, reshape the national conversation and shake-up the traditional Australian self-image.
Here are 6 key social and demographic trends for 2019 from Mark McCrindle.
After a decade of digital disruption and increasing velocity of change, 2019 will mark a year of Australians seeking simplicity. The ABS states that 35% of Australian men and 42% of Australian women state that they are always or often rushed or pressed for time.
In a world of screen saturation, 24/7 expectations and always-on technologies, the year ahead will see Australians not so much turn technology off, but to turn on apps and solutions to make their life function more efficiently. People are increasingly happy to spend money to gain time. More than just an extension of the outsourcing trend, consumers will pay a premium for simplicity and seek ways to reduce the chaos and rebalance life.
The year ahead will bring a federal election and a state election in NSW and with these, lots of policy discussions and national conversations in who we are, and as a nation, where we want to go. In addition, the republic/monarchy debate will continue along as well as our place in the world and our ongoing connection with Europe and North America amidst our increasing connection with Asia.
As the most culturally diverse nation in the developed world, the discussions about migration, population growth and the Australian identity will have a more reflective tone in a nation that rarely gets introspective.
From 2019, there will be more Australians born since 1980 than before 1980. This means that Generation Y (born from 1980 to 1994) and Generation Z (born from 1995 to 2009) and Generation Alpha (born since 2010) will comprise more than half of the population. Additionally, from 2019, Generations Y and Z will comprise the majority of the workforce- outnumbering Generations X and the Baby Boomers for the first time. This demographic and economic strength will see Gen Y and Z dominate as workers, consumers, new household formers and therefore as the key demographic to engage with.
The Australian economy is performing solidly with low unemployment at 5%, low interest rates and positive, though modest economic growth. However, 2019 will continue to reveal a loss in capital city house price value, high rental and utilities costs and slow wages growth. All of this will heighten the perception of Australians having wealth declines and tight household budgets.
While Australia is entering its 28th year since the last recession, and the fundamentals are a long way from a contraction, the consumer sentiment is starting to respond as though we are in a mild one. From a householder perspective, spending behaviours will be prudent, big expenses delayed and the general consumer attitude be not quite recessionary- but perhaps recessionette.
While Australia’s capital cities are home to 16 million people, more than 8 million, live in regional Australia. Of the one in three Australians living outside of the capitals, most of them live in regional cities which are Australia’s lifestyle cities offering the benefits of the capitals without the congestion, infrastructure bottlenecks and affordability challenges. 2019 will see a continued focus on the regions from policy and spending initiatives to better transport connections to open up the opportunities for the regions.
Many of these regional centres were the first to get NBN and with this a booming business economy, a thriving tertiary sector and the relocation of business and government offices. The new focus on getting migrants into the regions, matching investment and services to this population growth, and the affordability premium offered by the regions will see Australians take another look at these growing lifestyle cities.
The last few years have seen Royal Commissions and other inquiries refocus and recalibrate Australians’ trust. Few sectors have been immune, from religious and political entities to corporations in the financial sector, to aged care providers to social media and tech companies, trust has been eroded. The year ahead will see a number of social and demographic trends play out. Consumers value trust, whether it be in a brand, person or entity above price, promise or experience.
Those who can gain and keep trust, through transparency, and values-based offerings will thrive in the trust-as-premium environment.
Is experience really everything? Yes, according to respondents of PwC’s 10th annual Global Consumer Insights Survey (GCIS).
Canvassing more than 21,000 consumers from 27 territories, the survey found consumers the world over want good customer experience when they shop. And what’s more, with the technology they have access to, they can now demand it.
On their wish list is an experience that is curated, channel-agnostic, socially conscious and social-media-powered. For some businesses, this is a tall order, and not one that has gotten enough attention in the past. Gone are the days when a pleasant smile is enough to gain customer favour.
Consumers, with technology at their fingertips, are redefining what good customer experience means.
Technology is infiltrating daily life at breakneck speed. Mobiles, tablets and PCs are all being used for online shopping. This year, for the first time since the study has been run, mobiles overtook all other digital devices as the preferred shopping tool. Smartphones were reported as the go-to tech for purchasing, with 24% of respondents using a phone to shop at least weekly. The trusty PC is still close, though falling in favour, at 23% of consumers, while tablets bring up the rear at 16%
Online shopping is now the norm, with only 7% of people saying they never purchase products online.
As anyone who has coached a tech-wary relative on the ease of online banking can attest, people eventually become comfortable with the online experience. Over half of those surveyed paid bills or invoices online in the last year, with similar numbers transferring money. Entertainment, such as streaming movies and TV, is also booming, with 54% watching two to three times a week or more (over half of Gen Z streams daily).
Smartphones are also increasingly being used for payment, particularly in emerging regions where mobile phone use has leapfrogged traditional landline systems. While the technology’s prevalence is different depending on the country, globally, 34% of consumers have paid for a purchase via their mobile in 2018, up 10% on the previous year.
Newton’s first law of motion states that a body in motion will continue to remain in motion until it is acted upon by an external force, that is, until it encounters friction. Customers, it turns out, are much the same. The less friction in their purchase journey, the more they’ll shop, and the more they’ll spend. Thirty-four percent of those surveyed said they shop more frequently due to having used Amazon, suggesting the experience – and likely its ease – encourages online shopping.
Voice assistants, such as Google Home or Amazon’s Alexa, are increasingly relevant to online shoppers with their AI hearts built around predictive, frictionless interaction (even if reality is still catching up with the promise). Nine percent of the global sample said they use the technology weekly or more. As the report notes, however, “as shopping by voice continues to catch on, companies should be thinking beyond mobile to consider how voice technology in homes, cars, and elsewhere will affect customer experience”.
Anything that adds friction will not be looked upon kindly. Click-and-collect functions, already adopted by 42% of Australian retailers, are gaining favour in the US (under the acronym BOPUS, or ‘Buy Online and Pick Up in Store’), but customers need to be helped through the experience before they will trust it – and that’s where employees come in.^
While customers want to interact with brands via digital means, this doesn’t mean they want humans out of the picture entirely.
This year, smartphones have proven more popular than PCs when it comes to purchasing online, but in-store shopping is still popular. How can brands manage the mix of in-person and digital experiences?
In PwC’s Consumer Intelligence Series report on customer experience last year we found that 59% of those surveyed believed that companies had lost touch with the human element by focusing too much on tech. One of the takeaways was that brands needed to have a good mix of technology and staff, and in particular, have tech that empowered employees to provide superior service.This finding is echoed in the current survey, particularly as regards financial services, where only 15% had purchased insurance via a digital channel, only 13% had gotten a loan and only 12% made a financial planning decision. For this industry, and others, more education is required by the customer before they feel comfortable in making a purchase. A blended experience, where in-person interaction is mixed with digital experiences throughout the journey, can prove far more fruitful in these instances.
When it comes to redefining customer experience, it is also apparent that not only are consumers increasingly more willing to try online purchasing, they’re ready to increase what they do online in other ways. Almost 75% of consumers have installed as many as three health or wellness apps on their phones, and two-thirds of those surveyed are willing to access such services through nontraditional players – such as Facebook, Apple or Amazon.
Health is not the only example when it comes to pushing traditional boundaries. Forty-six percent of consumers would like to have, or will consider having, an autonomous vehicle. Fifty-eight percent would consider investing in or using bitcoin or another digital currency.
It’s clear that customers are expanding their digital horizons and, as they explore, their expectations will grow with them. For brands, this means delivering a superior customer experience the entire length of the journey customers take.
SYDNEY, NSW — 2 April, 2019
Apple Pay is transforming mobile payments with an easy, secure and private way to pay, that’s fast and convenient, and is available for Indue’s clients and their customers who have an eligible Visa debit and credit card from today. By introducing Apple Pay, Indue’s clients across financial services, retail, fintech and government sectors can provide customers a simpler and more engaging payment experience and BankVic members will be the first to benefit.
Security and privacy is at the core of Apple Pay. When you use a credit or debit card with Apple Pay, the actual card numbers are not stored on the device, nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your device. Each transaction is authorized with a one-time unique dynamic security code.
Derek Weatherley, Indue CEO said, “Consumers expect fast, convenient and secure payments and Indue is very excited to introduce Apple Pay. Indue’s mission is to ensure that the millions of Australians that access their money through our client companies have access to market leading payment products and we are proud to have delivered on that again today with the launch of Apple Pay’.”
BankVic CEO Anthony De Fazio said, “At BankVic, we are always looking to provide simple and more convenient ways for our members to bank with us, thanks to the support from Indue, we are pleased to offer Apple Pay as a new mobile payment solution.”
Apple Pay is easy to set up and users will continue to receive all of the rewards and beneﬁts offered by credit and debit cards. In stores, Apple Pay works with iPhone SE, iPhone 6 and later, and Apple Watch.
Online shopping in apps and on websites accepting Apple Pay is simple with Touch ID, or just double-click the side button and authenticate with a glance with Face ID. There’s no need to manually fill out lengthy account forms or repeatedly type in shipping and billing information with Apple Pay. When paying for goods and services in apps or Safari, Apple Pay works with iPhone 6 and later, iPhone SE, iPad Pro, iPad (5th Generation and later), iPad Air 2, and iPad mini 3 and later. You can also use Apple Pay in Safari on any Mac introduced in or after 2012 running macOS Sierra and confirm the payment with iPhone 6 or later or Apple Watch, or with Touch ID on the new MacBook Pro.
For more information on Apple Pay, visit: www.apple.com/au/apple-pay
About Indue: Indue is a bank regulated by the Australian Prudential Regulation Authority. Australian owned and operated, Indue has over 45 years’ experience in the payment industry and provides payment solutions to a broad range of organisations. Indue is wholly owned by financial institutions, all of which have their heritage in the mutual and credit union sector.
For further information please contact:
The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill was passed on 18 February 2019. The amendments increase penalties or introduce new penalties for offences committed by companies, financial services providers, insurers and credit providers. The bill was a result of recommendations in response to the Financial System Inquiry. Treasurer Josh Frydenberg stated that “The Government is committed to ensuring ASIC is properly armed to effectively deter, prosecute and punish those who do the wrong thing, to improve community confidence and outcomes for consumers and investors in the financial services and corporate sectors”.
Some of the key amendments are outlined below:
|The benefit derived because of the contravention multiplied by 3; or|
|10% of the annual turnover of the company|
(Up to a maximum of $525 million)
It is recommended that affected institutions review the Bill at their earliest to understand changes to obligations to customers and associated liabilities and ensure compliance to relevant acts.
The majority of the amendments commence as soon as the Bill receives Royal Assent.
Source: Treasurer Josh Frydenberg media release 26/09/2018
The NPP rang in its first birthday last month, which marks one year from the launch of the New Payments Platform and its first overlay service, Osko. Since its launch, there are now 75 banks offering NPP in the Australian market and a month-by-month growth of approximately 20%^.
It is clear that the banks, consumers and payment industry in general have all embraced the first product offering on these real-time payment rails. Now the real excitement comes from what new and innovative ideas will surface to take advantage of this new payment stream.
The NPPA have been busily collaborating with NPP Participants to implement additional functionality on top of the standard NPP payment offering – Consent and Mandate Service (CMS). The NPP CMS is a direct debit alternative enabling consumers to setup recurring payments with service providers. This process is similar to the establishment of a direct debit request, but in the real-time and digital context.
The other departure from the current direct debit model where the merchant holds the authority is the fact that the consumer is in control of the payments. The consumer specifies the amounts, the related merchants and the cadence and duration of the payments. Consumers will be required to provide their consent and instructions for a particular recurring payment, which will be securely stored in a central repository that can been accessed via APIs by the financial institutions or authorised third parties involved with the transaction. The use of this central store will be extensible to non-payment related transactions, which could include account information (i.e. account balance).
The NPPA have undertaken extensive research and engagement of merchants and consumers to understand current experiences with direct debit and key pain points from both end points. This information will feed into multiple working groups that are currently taking place amongst all NPP Participants to develop the technical solution and business processes that will underpin this initiative. Indue is heavily involved with these ongoing industry workshops to ensure the final solution is aligned with our value proposition to our clients.
Indue will be holding a complimentary webinar May 1 where we will consider the impacts one year on from the launch of the NPP and look ahead to the next 12 months, which will include the new consent management service. Find out more about the webinar here.
As the scope and project timelines are established at an industry level, Indue will reach out to all of our NPP clients to keep them up-to-date on progress and next steps.
^ Source: Reserve Bank of Australia
The initial 1 July 2019 public launch date has now been revised, with open banking delayed to encompass only a ‘pilot program’ to test the system. I
nstead of the commencement of actual data sharing capabilities for consumers, the ACCC and Data61 will collaborate closely with the Big Four banks to test the security, performance and reliability of the system. Other banks, fintechs and consumers who have expressed interest in participating in the pilot test will also be invited to contribute.
Open Banking is the first instalment of the Consumer Data Right (CDR) legislation in Australia, which gives individuals more control over their own data. This legislation will allow individuals and businesses the right to obtain certain types of their data, which they have already shared with their financial institution, as well as provide authorised third parties access to this data.
The revised requirement timelines are as follows:
1 July 2019
1 February 2020
1 July 2020
1 February 2021
1 July 2021
The revised timeline follows the release of the Rules Outline for the Consumer Data Right by the ACCC late December 2018. The Consumer Data Right bill has not yet been introduced into parliament. Once the bill is formally passed, the rules will be formally implemented into practice.
Industry feedback on the delay has been varied. The FinTech sector will likely not be too impressed with the delay as Open Banking has been touted as an industry “game-changer” that will level the playing field and allow traditionally smaller players to be competitive on more fronts. However, most stakeholders including consumers will see the value in the delay if it ensures that the industry is implementing a robust, reliable and secure system given the content that is being shared.
Open Banking can only be successful if there is inherent trust in the system and this new test phase will likely strengthen that confidence.
The Australian payment industry has seen a seismic shift in the past few years from traditional retail store purchases to online shopping. This migration coupled with the strong fraud protection provided by EMV chip technology for in-person transactions has unfortunately prompted an adverse mirrored trend – an increase of fraud in card not present channels. Card not present (CNP) fraud now accounts for almost 85% of all card payment fraud in Australia and further to this, CNP fraud seems to be growing 13% year on year at an industry level.
To combat this increased threat, AusPayNet in conjunction with key industry stakeholders have initiated an industry-wide collaboration program entitled the ‘Card Not Present Fraud Mitigation Framework’. This Framework sets out the industry approach to mitigate CNP payments fraud for all members across the payment value chain – merchants, consumers, Issuers, Acquirers, card schemes, payment gateways, payment system providers, and regulators. It is a framework designed to reduce fraud in CNP online channels, while also ensuring that online transactions continue to grow and thrive. The key tenets of this framework have been established by the industry:
1. Consistently apply Strong Customer Authentication (defined below)
2. Leverage global standards and best practice from other jurisdictions where possible
3. Be technology neutral to provide choice and ease of implementation
4. Use dynamic data wherever possible to reduce fraud
5. Act now, plan for the future – deal with the current fraud issues with the ability to review and update the Framework over time.
This framework requires participants across the payment value chain to take a more active role in reducing Card Not Present (CNP) fraud. For Card Issuers in particular, the two main obligations within this new framework are as follows:
• Ensure fraud rate remains below Issuer Fraud Threshold
• Perform Strong Customer Authentication or Risk Based Authentication when requested by the Merchant
This framework has set an industry fraud benchmark for an acceptable level of Issuer and merchant risk. Quarterly reporting to AusPayNet of fraud rates will be mandated as part of this framework. Issuers and merchants with fraud rates under the established threshold will not be required to perform any additional fraud mitigation activities. Issuers and merchants operating over the industry fraud rate will be required to perform Strong Customer Authentication. Should Issuers and merchants continue to breach industry thresholds over consecutive quarters, fines and sanctions can be imposed.
SCA is an authentication method requiring the cardholder’s identity to be verified with at least two independent factors from the following categories:
1. Something only the cardholder knows (knowledge factor) – a password, an answer to a secret question or a PIN
2. Something only the cardholder possesses (possession factor) – a credit card, a hardware token or a smartphone
3. Something the cardholder is (inherence factor) – a biometric feature such as a fingerprint scan, an iris scan, or facial recognition; or a behavioural feature such as type or swipe dynamics.
Although cardholder authentication will actively reduce the occurrence of fraudulent activity, the industry must also consider the user experience when implementing an authentication solution. The framework should provide the consumer with confidence that online transactions are secure without adding a disproportionate degree of friction to the transaction journey.
The industry timeline for the implementation of the framework is outlined below:
Indue has been involved with developing the industry-wide framework via representation and collaboration at forums and consultation submissions. Indue has commenced an internal program of work to build the capability to support the required AusPayNet reporting. We will work closely with all of our card issuers in the next few months to ensure understanding of the initiative requirements and next steps to comply with the new framework.
The banking industry has commenced the execution phase of this framework, which aims to tackle the most prevalent type of card fraud Read our follow up article here.
For many consumers, smartphones are an integral aspect of their lives. According to Pew Research Center, 77 percent of Americans now own smartphones, up from just 35 percent from the organization’s 2011 smartphone ownership survey. As consumers have become more comfortable utilizing their smartphones for everyday tasks, many companies have simultaneously enhanced their pay by mobile wallet capabilities to cater to consumer preference. This offering includes any technology that stores payment card information, whether native to your smartphone, or via downloadable third-party payment methods.
(Source “Speedpay Pulse Trend Reports”)
According to the Speedpay® Pulse, a consumer billing and payments trend survey of 3,000 U.S. adults responsible for two or more household payments a month, one in four consumers currently use mobile wallet payment methods and nearly half (47.6 percent) of those people use mobile wallet offerings multiple times a week. Due to an increase in mobile wallet usage, retailers have begun offering loyalty rewards and other incentives, and based on their research, these strategies seem to be working. Of those who use mobile payment methods, 82.2 percent report using one to three methods and applications on a regular basis. The numbers were almost the same for non-payment items, as 80 percent of those who use mobile wallets also take advantage of options such as digital tickets and boarding passes.
Due to the ease and convenience of these offerings, mobile wallets are becoming the new normal, which could eventually remove the need for consumers to pack a physical wallet and smartphone each day.
The growing adoption of smartphones and apps has essentially shifted consumer attitudes. Due to this change, mobile wallet payment options have become a necessity for companies, especially because this particular type of transaction is gaining traction for bill pay. Many consumers find that mobile wallet payments provide a simple, convenient payment option, unlike traditional cash and check payments. According to their most recent report, approximately 33 percent of consumers said they would consider using a mobile wallet to pay bills in the future. The top two reasons reported were speed (55 percent) and convenience (51 percent).
Many companies are still reluctant to adopt mobile wallet payments; however, in order to meet the needs of consumers, they should consider implementing mobile wallet offerings. By catering to consumer preference and interacting with them via their smartphones, companies can help ensure an easier and more seamless payments experience. Additionally, the reminders offered via mobile wallet are very beneficial and provide a convenient way to remind their customers to pay. Many mobile wallets have the capability to send monthly statements and notifications directly to a customer’s smartphone, which offers an additional communications channel. Lastly, if companies consider adopting mobile wallets, they will be able to increase self-service and digital engagement among customers, which can lead to a decrease in paper usage and overall operational costs.
Mobile wallet payments will continue to gain popularity in the foreseeable future. Whether customers are paying their bill with a physical debit/credit card or via mobile wallet, it’s recommended that companies constantly communicate with their customers to provide them with a convenient and seamless payments experience.
Article first published 19 February 2019, www.paymentsjournal.com Author Alexis Blackstead
With 75 banks now offering NPP, more than 2 million PayIDs registered and month-on-month growth around 20%1, it’s clear financial institutions are recognising the benefits this platform offers their customers. This week, the NPP turns 1!
“Indue is one of the 13 founding members of the NPP initiative, and we’re proud to see the NPP adopted among our diverse client base, including a mix of smaller banks supporting retail customers. It’s been an incredible year of innovation in payments and we would like to congratulate all involved in reaching this milestone anniversary.” (Indue CEO Derek Weatherley)
And our customers’ customers are enjoying the benefits. Just like how this Queensland Country Credit Union customer realised his dreams of owning a boat in an (almost) instant thanks to Real-time payments.
How Australians are using real-time payments 2
Osko by BPAY is the NPP’s first overlay service being used by consumers, businesses and fintechs. Since launching, Australians are enjoying the benefits of real-time payments and paying family and friends in under a minute, 24/7, even on weekends and public holidays.
“People transfer money at all times of the day – after dinner, on the weekends, at a footy match or cinema or even when buying something on Gumtree. Increasingly, they are expecting to access their money immediately. Most people will notice they have made an Osko payment when they get their payment receipt in online banking.” (Mark Williams, Chief Strategy Officer of BPAY Group.)
BPAY reports that Osko payments are not just limited to consumer to consumer transactions, with 30% of payments are to, or from, businesses and between businesses.
Mark adds: “Consumer expectations about how they pay and get paid are changing and we have been innovating to offer solutions that meet their needs. Osko Requests is in the pipeline, which will enable you to request a payment from within your online banking – making it much easier for someone to pay you back. We are also working to allow businesses to use Osko Requests and include documents such as invoices. So the NPP turns 1, is it too late to join the New Payments Platform?
The short answer is, of course, it’s not too late…yet. But savvy players in the industry recognise the importance of staying relevant in the face of digital disruption, and keeping the end-customer top of mind. If you are not providing the benefits of a simpler, faster and safe payment system to your customers, it’s likely a competitor or substitute will.
Find out More
Find out more about how Indue can help you participate in our new Real-time payments world.
1 Source Reserve Bank of Australia https://www.rba.gov.au/statistics/tables/
2 Source (OSKO by BPAY media release 13/2/19)
Article first published 5 February 2019, Finder.com.au. Author Elizabeth Barry
The final report of The Royal Commission into the Banking, Superannuation and Financial Services Industry has been handed down by Kenneth Hayne AC QC, and all firms in Australia’s financial industry, which includes fintechs, are taking it in.
The report made made 76 recommendations in total, including that borrowers should pay mortgage broker fees and that consumer protection laws should be extended to small business loans of under $5 million. The recommendations were focused on Australia’s financial regulators and financial institutions, but depending on the changes that are made, the recommendations would have an impact on the entire financial services industry.
CEO and founder of Australian neobank Xinja Eric Wilson said the reality is that we have “reached a new low”.
“But the report is a line in the sand and marks a real opportunity to shake up the industry and redesign it in the interests of customers,” said Wilson.
Wilson believes the rise of fintechs like Xinja and open banking, due to begin in Australia later this year, will offer a different model for consumers.
“Competition is the silver bullet. The emergence of neobanks like Xinja, which offer a different model, means that people poorly treated by their banks will be able to shop around. It will also become much easier to switch, with the rollout of open banking.”
The introduction in Australia later this year of open banking, which will hand consumers their data allowing them to aggregate information and shift banks or financial services providers more easily, will go a long way to easing the legwork around switching.
Brett King, advisor to the Xinja board and management and former banking adviser to the Obama White House said: “The Royal Commission identified a range of problems and inadequacies in the current system, addressing them requires more than just putting a new face on old banks.
“The emergence of challenger banks, like Xinja, enable us to design, from the ground up ethical, modern and inclusive financial services, without the baggage of the traditional players.”
“Fintech startups and investors with rent seeking, ethically questionable business models, based on selling private individual data, having high or hidden fees, exploiting customer ignorance or financial desperation, should be on notice and will face the risk of criminal charges. Change is coming and it is not just going to impact the big banks.
“Fintech needs to build around ethical, sustainable business models. In a sector devoid of trust, fintech startups can differentiate themselves and shine a new light of openness and transparency.”[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_column_text el_class=”ind-textBox”]Founder and CEO of Roll-it-Super, Mark MacLeod, said the Royal Commission evidenced a financial services sector “riddled with conflicts of interest and greed” and that any fintechs with similar notions should take notice.
“Fintech startups and investors with rent seeking, ethically questionable business models, based on selling private individual data, having high or hidden fees, exploiting customer ignorance or financial desperation, should be on notice and will face the risk of criminal charges. Change is coming and it is not just going to impact the big banks.
“Fintech needs to build around ethical, sustainable business models. In a sector devoid of trust, fintech startups can differentiate themselves and shine a new light of openness and transparency.”
Source: www.finder.com.au Read full article here.
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