RBA warns industry payments transition has become 'foundational issue'
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The news: Reserve Bank assistant governor Brad Jones says that industry's payments transition from Bulk Electronic Clearing System (BECS) to the New Payments Platform (NPP) has become a "foundational issue".
The context: Speaking at the AusPayNet Summit in Sydney today, Jones noted that RBA staff have heard "plenty of support for the migration to modern payment rails", including to the industry-wide, open access NPP.
However, after consulting a range of stakeholders, the RBA believes the "central challenge" currently is that the industry is yet to arrive at a shared vision of the desired features of account-to-account payments in Australia.
"Once a consensus has emerged here, a roadmap with milestones can guide industry progress toward the ultimate objective," Jones said.
The RBA received the following feedback from stakeholders:
- There has been insufficient industry coordination, planning and certainty regarding the transition;
- There is scope for the needs of end users to be given more prominence in industry discussions on the future of account-to-account payments;
- A solution for the processing of bulk payments will be important;
- The cost of the transition and per transaction costs in the future system are a concern for some stakeholders;
- Many stakeholders have expressed a desire for resilience to feature prominently in future account-to-account system arrangements; and
- End users will be unable to move payments from BECS until all customers can receive payments via an alternative channel.
Elsewhere, Jones said that the decline in cash usage, increased prevalence of surcharging and changes in the way merchants are charged for card payments have led to "reasonable concerns" about the RBA's current Retail Payments Regulation.
In particular, stakeholders told the RBA that:
- Fewer consumers transact with cash today and are therefore unable to avoid card surcharges at the point-of-sale;
- Many small merchants are now on blended or single-rate payment plans that charge the same fee to merchants for accepting all types of cards — which can dull the price signal to consumers, and mean users of cheaper card payments cross-subsidise users of more expensive cards; and
- Consumers are sometimes unaware of the surcharge amount before paying and/or surcharged for amounts in excess of merchants’ cost of acceptance.
The source: RBA
