Payments System Board Update: August 2021 Meeting

At its meeting today, the Payments System Board discussed a number of issues, including:

• The Bank’s Review of Retail Payments Regulation. The Board reviewed responses to the Consultation Paper published in May, particularly relating to dual-network debit cards and least-cost routing, interchange fees and the ‘no-surcharge’ rules of buy now, pay later providers. The Board expects to publish a Conclusions Paper and final Standards within the next 2 months. Members noted in their discussion that new technologies are making the payments landscape more complicated and the Bank’s powers to deal with some issues were limited. A number of these issues have been raised in the Bank’s submission to the Treasury’s Review of the Australian Payments System.
• The assessment of the ASX clearing and settlement facilities against the Bank’s Financial Stability Standards. The Board approved the Bank’s 2021 assessment, which will be published after it has been provided to the Treasurer and the Australian Securities and Investments Commission (ASIC). The Board also discussed the ongoing work of the Bank and ASIC examining the incidents experienced by ASX in late 2020.
• Payment scams. Members were briefed on the growing problem of account holders being tricked into authorising a transfer of funds to a scammer, and the steps that banks and regulators are taking to combat this problem. They noted that wider use of the New Payments Platform’s PayID addressing system should help reduce the incidence of certain types of scam payments, by allowing the payer to check that the payee name matches their expectation.
• Strategic priorities for the Bank’s payments policy work. The Board endorsed an updated set of strategic priorities, which will be included in the Board’s Annual Report to be published later in the year.
• The performance of the payments system during the pandemic. Members observed that the retail payments system had again coped well with the recurrence of lockdowns in a number of states and territories and their impact on operational arrangements in financial institutions. They welcomed the use of the New Payments Platform by Services Australia and the Bank’s Banking Department to make timely COVID Disaster Payments, including on weekends. The ability to make these real-time payments is a welcome benefit of the significant investment by the Bank and the payments industry in Australia’s fast payments system.

The Board is meeting this afternoon with the Australian Payments Council.