Australia’s payments system is big. You just won't believe how vastly, hugely, mind-bogglingly big it is. I mean, you may think it takes effort to pay your electricity bill on a weekend, but that's just peanuts compared to managing the massive volume of payments flying around cyberspace.
Well at least that’s what the Australian Payments Clearing Association wants you to believe. It's an organisation that this week took 27 pages to tell us there’s no need for it to kill off cheques, which are no longer used by 75 per cent of Australians.
There’s no doubt it takes effort to keep Australia’s payment system on the tracks, but the efforts by a range of industry bodies, including APCA, to ‘explore innovation’ often do read like a Douglas Adams novel.
The problem for APCA, and more broadly, the major banks, is that there’s plenty of people now making a career out of innovating around the industry’s corroding payments pipes.
This includes people like Tyro Payments founder Jost Stollmann, who has again delivered the industry a reality check by reminding APCA that debit card growth is already driving Australia towards a cashless society, and the bigger issue for the boffins at APCA and banks is lifting the resilience and security standards of payments systems.
As Stollmann points out, the payment systems of the banks have failed nine times since 2010, leaving consumers and retailers without access to funds, largely as a result of years of underinvestment by the banks they pay billions of dollars in fees to every year.
And while we’re waiting for APCA to develop a “payments system roadmap” and “Milestones Project Steering Committee” to guide the banks and monitor cheque decline, PayPal is surging ahead with its own plan to revolutionise payments.
Patrick Gauthier, who heads up marketing and operations for PayPal’s global retail and prepaid services division was in Australia last month talking to our largest retailers. And by the sound of it he received a warm reception.
Gauthier says the lines around PayPal’s business are blurring – the difference between online and offline payments is disappearing, and the idea of the checkout is also being challenged, as is the traditional wallet full of plastic cards.
“Our view of the wallet is that it’s a connected platform, not just to your funding source – it’s connected on to a loyalty program or programs where you can not just pull in points but also have a personalised experience, it’s connected to promotion demand generation tools in order to not just mass distribute coupons, but do sophisticated targeting,” Gauthier told Technology Spectator.
PayPal is busy rolling out a service that allows consumers to 'check in' at various retail outlets, meaning the retailer will automatically know when they are in store and allow them to pay for products and services without having to pull out their wallets, or even their phones.
As innovative businesses get on with finding ways to meet the payments needs of consumers, the Reserve Bank is two years into its strategic review of innovation in the payments system, and most banks are lobbying to defend the status quo.
Of the many reforms the Reserve Bank has explored, the one we’re most likely to see get off the ground is a cap on surcharging – which is actually just a reversal of an earlier policy decision to remove them. It’s as if the bank was surprised some merchants would use the opportunity to make a profit out of surcharges.
As telecommunications analyst Paul Budde points out, the role of payments in the digital economy is shifting, and a large amount of money is now bypassing bank systems.
The interesting thing is for the most part banks, and the payments bodies representing them, don’t seem to care.