Influencing and partnering to deliver Australia’s digital future

eftpos General Counsel and Company Secretary Robyn Sanders explains how eftpos innovations and thought leadership collaborations with key stakeholders, are helping deliver Australia’s digital future in step with the Federal Government’s Digital Economy Strategy.

In previous editions of the Networker we have shared our Product Roadmap 2021 Update, which outlined how eftpos aims to drive payments competition and improve consumer experiences in Australia’s fast-growing digital economy.

Last month our CIO Ben Tabell explained how eftpos enables both real time payments for business and consumers across the Australian economy and is a company at the forefront of multiple leading edge initiatives.

With its role as a mutual and the only Australian-owned separately designated payments system, we focus in this edition on how eftpos is actively collaborating with its Members, policy makers and regulators, merchant groups and small businesses to shape Australia’s digital future, fulfilling our purpose to “do good for Australia”.

The recent Federal Budget outlines the policies and actions the Government is taking to make Australia a modern and leading digital economy by 2030.

The Budget outlined several announcements and key investment areas directly relevant to eftpos including the Digital Economy, Digital Identity, review of the Australian payments system, e-invoices, and support for FinTech’s and Digital SME’s, which are also summarised separately in this edition of the Networker.

eftpos is actively making submissions into numerous government and regulatory reviews, issues papers and inquiries that will have significant bearing on how Australia’s digital future is shaped, and the ability of Australia’s businesses to compete with Big Tech.

Mobile Payment and Digital Wallets

The Parliamentary Joint Committee Inquiry into Mobile Payment and Digital Wallet Financial Services focuses in on an area where eftpos can assist the Australian finance sector and broader economy to thrive and grow.

Through a combination of eftpos’ low cost access, mobile payments capability, ability to issue tokens, work with industry on real time digital payments and a ubiquitous Digital Identity solution, there is potential to bring many FinTech solutions to life, particularly in the mobile payments space.

eftpos is wallet agnostic and will work with FinTech’s and other digital partners to offer a fully digitised payments rail that supports a variety of competing digital wallets and other digital applications to encourage further innovation.

Recent figures show significant uptick in digital wallet usage with the likelihood of this becoming the most popular contactless way to pay in-store in less than a year.

Despite the Reserve Bank’s stated objective to enable Least Cost Routing through dual network debit cards in Australia in order to reduce merchant costs, this capability is currently not available for Mobile Point of Sale Payments (mobile), or mobile in app payments. This needs to be addressed as a matter of priority and appears to be a focus for RBA in its preliminary assessment issued 28 May that at least some issuers should be expected to continue to issue dual network debit cards with access to both networks in all relevant form factors (including mobile wallets).

eftpos has invested deeply in the mobile ecosystem, having purchased Beem It which was recently selected to build eftpos' QR code utility. While Beem It is building the infrastructure needed, eftpos continues to remain wallet and partner agnostic, and open to partnering with all FinTech’s.

Payments System and Regulation Reviews

Getting the regulatory architecture right will set Australia up for success in the digital economy for the short term and in years to come.

Substandard regulatory architecture has the potential to stall technologically driven innovation and stymie future competition, efficiencies and enhanced end user outcomes.

The aim of the Treasury Department’s Payments System Review is to ensure that the future regulatory architecture is fit-for-purpose and responsive to advances in payments technology and changes in consumer demand.

The regulatory architecture needs to address gaps, including the need to enshrine competition, choice and transparency as fundamental principles in order to drive better cost of payments outcomes, innovation and productivity benefits.

There is a need for clear rules around multi-network card/account access in all channels and form factors to ensure competition is maintained, and a requirement to make Least Cost Routing available on an opt out basis to ensure that the benefits it brings to Australian small business are realised quickly across all payment channels.

eftpos is currently reviewing the RBA consultation paper on the Review of Retail Payments Regulation released on 28 May, seeking stakeholder views on preliminary conclusions, and plans to respond to the Consultation ahead of the 9 July 2021 deadline.

eftpos believes the RBA has a great opportunity to ensure competition, provide greater transparency and simplicity of pricing for better consumer and merchant outcomes; and correct a trend for international interests to take unregulated positions that are ultimately detrimental to the industry and broader economy.

For example, the RBA had the best interests of the broader community and economy at heart when emphasising the right of merchants to control their cost by using the least cost routing (LCR) rails in 2013 and, although LCR has not yet been as successful as intended, there are various actions outlined by eftpos in its submission response that the RBA could still take to make it work better to achieve the regulatory intent.

FinTechs

As with previous issues papers by the Senate Select Committee on Australia as a Technology and Financial Centre, eftpos will respond to the upcoming third issues paper, which is looking into ways for the FinTech community to gain greater access to the real time payments system.

This issue, along with others has been discussed amongst members of the eftpos Fintech Advisory Committee, with the Committee set to deliver recommendations on how FinTech’s can access and leverage the eftpos payments network for the betterment of Australia’s digital economy.

In summary, eftpos fully understands the importance of its role as an essential part of the national payments infrastructure. We remain committed to providing efficient, cost-effective and market-specific payments solutions for the benefit of all Australians and enhance productivity across the economy.