Australian Payments Clearing Association breakin round

Annual Review 2014 APCA is the self-regulatory body and industry association for Australian payments. At APCA, payments organisations work together to improve the safety, reliability, equity, convenience As a community, we are and efficiency of the Australianbreaking new ground: payments system. laying the foundations for the Australian payments navigating this report system of the future. Go to contents

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Roll mouse over Australian Payments Clearing Association Limited pullouts to discover ABN 12 055 136 519 more information APCA exists to advance the APCA and the payments system infrastructure Australia’s payments system is financial plumbing for the economy. It is a complex mix of collaboration on regulation, common interest of our standards, processes and infrastructure, and competition in the operation of payment systems and the delivery of payment members and the interests of services. Part of APCA’s role is to manage non-competitive clearing systems and frameworks for the efficient exchange and settlement of funds among financial institutions and other the Australian public in improving payment providers. the Australian payments system. APCA clearing systems and frameworks

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We do this through: Our role includes: Australian Paper Clearing Bulk Electronic Clearing System • enabling competition and • thought leadership and advocacy; System for cheques for electronic payments including innovation; • industry collaboration; direct debit and direct credit • promoting efficiency; and • self-regulation; and (direct entry) • controlling risk • system-wide standards 100 members

APCA has nearly 100 members including the CECS HVCS Reserve Bank of Australia, major and regional banks, building societies, credit unions, major retailers and Consumer Electronic High Value Clearing System other payments service providers. This year, we Clearing System for for settlement of high value, welcomed payment system operators as a new class aspects of ATM and real-time payments POS transactions of member, and four operators have joined so far.

¢ $$ ¢¢ We work with government and public regulators ACDES and undertake our activities with transparency, fairness, rigour and integrity. Australian Cash The COIN infrastructure Distribution and Exchange system providing connectivity System for trading of for APCS, BECS, CECS and bulk coin and notes potentially other payments between banks

01 2014 APCA annual review 17 17 billion 2014 17 June 2014, Australian In the 12 months to payments for avalue consumers and of nearly $100 trillion. $100 nearly of businesses made

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02 2014 Australia has three bitcoin ATMs – one each in Sydney, Canberra and Melbourne. There are over 826,000 POS terminals in Australia. This is equivalent to four terminals for every 100 CR Australians over the 54% of Australian age of 15. adults own a contactless card – one of the 11 highest rates in the There are eleven $100 world. These cards Australian notes in can now be used at circulation for every more than 320,000 man, woman and contactless terminals child in Australia. across Australia. snapshot highlights

Released reports on Australia’s progress in transitioning Produced a new payments to the publication to digital economy, increase awareness including a landmark among businesses TRANSFER study on the evolution and consumers about of cash, to ensure how they can help in those relying on the fight against FROM TO cheques and cash Made industry payments fraud in don’t get left behind. submissions on Australia. Introduced same-day payments system settlement for direct issues including to debit and direct credit the Financial System AMOUNT $ payments paving the Inquiry tasked with way for the future establishing a direction evolution of low-value for the future of payments in Australia. Australia’s financial system.

03 2014 APCA annual review Australians have a proud history of • Industry collaboration to develop home-grown adaptability in the face of reliable, secure and ubiquitous new challenges, from the portable reel line operational platforms for Australian chair that first saved the lives of surf swimmers payments to support future innovation on Bondi Beach in 1906 to polymer in payment services, particularly the proposed New Payments Platform banknotes setting a new global standard ceo (page 15); and for fraud resistance and durability of the • APCA’s own evolution as a more national currency from 1988. inclusive, industry body with the The theme of our 2014 review, “breaking capability to drive future industry message ground”, recognises the new world facing us all collaborative efforts, particularly as a result of the explosion of cloud, network and the adoption of a new Constitution (page 21). mobile technologies. Our payments system has served us well, but thanks to the “always on, Developing the payments network is always linked” world being ushered in by our not a task that ever ends. Continuous mobile devices, it must adapt, and fast. We are improvement is needed in response to not alone, of course: nearly every industry faces a changing environment and changing similar challenges in relation to digital disruption. user expectations. That said, systemic But “breaking ground” is also a metaphor for the evolution usually goes in cycles, with payments industry response to this new world. periods of intense systemic development We have in the last year or so begun laying the alternating with periods of rapid collaborative foundations for new industry market-driven product and service infrastructure that, we hope, will position us for innovation using the system. Our future adaptation, innovation and competition. perception is that at least for the Australian industry those cycles are The first part of the review captures the evolution shortening and merging. Increasing payments of the Australian payments industry in competition is driving new product development 2013–2014 through key milestones, statistical even as the industry is collaborating to trends and significant developments in the innovate at the systems level. marketplace for payment services. There is ample evidence of growth, innovation and new This makes for exhilarating but also exhausting competition in our industry. times for those engaged in payments industry collaboration. This year, even more staff and Thanks to our departing Chair Russ Rechner and directors The remainder of the review explores our The Board of APCA changed significantly in the year of review, as the executives of Australia’s payments institutions Members/ Community section describes. I would like to recognise “breaking ground’ theme from three distinct, have given their time to APCA, NPP and and pay tribute to the important contribution of departing directors but interrelated, perspectives: John Murphy and Tim Buckett, who served on the Board through other industry efforts, working alongside APCA a period of major change including fundamental governance reform. • Industry collaboration to chart the future staff. In these extraordinary times, both Personal thanks and appreciation, not only from me but from the entire Board, must go to Russ Rechner, who stepped down as Chair after six evolution of the payments system and members and staff have worked wonders, years. His support was unstinting, his style collegiate. Russ had the its regulatory framework, particularly the and we are deeply grateful for their efforts. knack of promoting robust debate but always with personal respect. His steady guiding hand has helped make us what we are today. creation of the Australian Payments Council (page 9);

04 2014 APCA annual review Open-loop contactless – “tap and go” cards – OVERVIEW OF CONSUMER PAYMENTS Source: APCA, RBA using near field communications (NFC) 150 technology to communicate with a sales terminal the have exploded in popularity with support from 120 the international card schemes, issuers, acquirers and major retailers. Over half of all Visa 90 and MasterCard transactions under $100 at 60 australian point-of-sale are now estimated to be contactless. There is also a maturing of closed-loop 30 contactless card systems with the introduction of

Opal transit cards in Sydney completing the PER CAPITA NON-CASH PAYMENTS 0 96 98 00 02 04 06 08 10 12 14 payments rollout to capital cities on the mainland. BPAY Direct Debits Direct Credits Debit Cards Credit Cards Cheques Financial institutions now offer a bevy of mobile banking and mobile payment initiatives including In comparison, cash use as a payment method environment those that enable the mobile phone to replace is declining. New research commissioned by the need for a physical card. An exciting APCA and conducted by RFi Consulting found a New technology and new ideas are development has been the emergence of host significant drop in relative cash use in recent fostering significant innovation within card emulation (HCE) which, in simplest terms, years, with less than half of all point-of-sale Australian payments. Both established enables the secure element used for an NFC purchases now made with cash. This concurred providers and newcomers are driving transaction to be stored in the cloud rather than with separate research by the Reserve Bank of enhanced and new offerings that are on the SIM. Apple has recently announced the Australia (RBA). The APCA/RFi Consulting study use of NFC technology for a new service, fundamentally changing the way we pay. also found that cash as a share of total payments ApplePay, through its iPhone 6. volume dropped from 73% in 2005 to 59% in 2013, with a further decline forecast to 43% in The card schemes have been developing and 2018. This strongly suggests a “less cash”, but offering new products often targeted at the not “cashless” Australian society in the future. online market, such as Visa Checkout. The past Australians are continuing to embrace electronic year saw a wealth of new entrants in Australia including Stripe, and a tweet from Communications AUSTRALIAN PAYMENT SYSTEMS TRANSACTIONS 1 JULY 2013 – 30 JUNE 2014 and card-based payments. Fewer and fewer Source: APCA Minister Malcolm Turnbull declared that high- High people are using cheques and a move away from value Cheques Cheques cash is also apparent. While it is now possible to profile mobile POS provider Square would be predict the disappearance of cheques from daily coming to Australia soon. Direct life within the next few years, cash is likely to While product developments grabbed much of Entry decline in use but remain a default or reserve Direct Cards the limelight, infrastructure development also Entry payment method. In particular, contactless card made ground. In addition to the major industry Cards payments appear to have driven significant card project to collaboratively develop the New High growth, while dampening the use of cash at Payments Platform, eftpos Payments Australia value point-of-sale for smaller value transactions. made significant progress on its hub, which will support new offerings such as contactless debit and online options by 2015. VOLUME VALUE

05 2014 APCA annual review Cheques Direct debits and direct credits In Australia, cheques volumes have been steadily declining for The direct entry system remains the workhorse of the Australian more than a decade. In 2014, there were 700,000 cheques payments system. Volumes for both direct credit and direct written per business day. This represents a 46 per cent debit are up in 2014, likely reflecting improved economic decline from the 1.3 million cheques written in 2010. conditions. Values are also up, having been relatively steady for the past four years, reflecting the maturity of the system. Cheque values have been declining at a somewhat slower rate, reflecting the rapidly declining personal use but the resilience This year, direct credit volumes rose by 6.0 per cent to of cheques for increasingly specific business purposes. Values 5.3 million items per day. The value of these items also actually rose between 2013 and 2014 from $4.1 billion to increased slightly from $23.9 billion to $24.3 billion. Direct $4.8 billion per business day. This could reflect higher value debit volumes rose by 8.3 per cent to 2.6 million items per day. cheques being used in particular circumstances, for instance Direct debit values also increased slightly from $19.2 billion to as a result of the recent residential property boom. Despite this $19.9 billion per day. Consumer payment jump, since 2010 cheque values have declined by 23 per cent trends in nominal terms. AVERAGE NUMBER OF CHEQUES PER BUSINESS DAY IN MAY AVERAGE NUMBER OF DIRECT ENTRY TRANSACTIONS PER BUSINESS DAY IN MAY Source: APCA – www.apca.com.au Source: APCA – www.apca.com.au

Australian consumers continue to embrace 2 6 Cheques Direct credits card and electronic payments. And while economic conditions can impact on 1.5 % 4.5 % year-to-year statistics, the overall trends are 12.5 6 clear – the future is digital and cheques will eventually become obsolete. 1 3 Direct debits

Australia's economic growth continued to be strong 0.5 1.5 % in the 12 months to March 2014. GDP growth for 8.3 that period was 3.5 per cent, an improvement on 0 0 MILLIONS MILLIONS Direct credits the previous 12 month period of 2.5 per cent. 2010 2011 2012 2013 2014 * 2010 2011 2012 2013 2014 Direct debits In this strong economic environment, more than 17.1 billion transactions for a value of $97.1 trillion dollars were carried by the Australian payments AVERAGE VALUE OF CHEQUES PER BUSINESS DAY IN MAY AVERAGE VALUE OF DIRECT ENTRY TRANSACTIONS PER BUSINESS DAY IN MAY system in 2013–2014. High value payments Source: APCA – www.apca.com.au Source: APCA – www.apca.com.au 8 28 Direct credits accounted for $75.9 trillion, but only 21.1 million Cheques transactions. Non-cash retail payments accounted % for the remaining 17.0 billion transactions for a value 6 % 21 1.7 of $22.3 trillion. A breakdown of these transactions 17.1 by the most commonly used payments instruments 4 14 Direct debits follows. % 2 7 3.6

0 0 $ BILLIONS

$ BILLIONS Direct credits 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 * Direct debits

* There is a break in the series due to revised data collection methodology

06 2014 APCA annual review Debit cards Credit cards and charge cards Debit cards at point-of-sale have seen an extraordinary Credit card volumes have increased slightly in May 2014, increase in Australia, with annual double-digit increases in following years of reasonably strong growth in the post-GFC transaction volumes for much of the last decade. In 2014, period. Since 2010, credit card volumes have grown 25.9 per there were slightly more than three debit card transactions per cent. The modest growth between 2013 and 2014 may reflect week for every person in Australia. Values have also risen, declining consumer confidence throughout the first half of 2014. though at a slightly lower rate, suggesting increasing use of debit cards for lower value transactions. Credit card values have declined slightly in May 2014 again possibly due to the decline in consumer sentiment. Since The volume of ATM withdrawals has been steadily declining 2010, credit card values have grown 13.3 per cent and over from a peak of 72.9 million in May 2008 down to 63.3 million the past decade, they have doubled. in May 2014. More recently, values have joined in the decline dropping from $12.8 billion in May 2012 to $12.0 billion in May 2014. This significant decline is likely a reflection of the related decline in cash use at point-of-sale as well as the rapid take up of "tap and go" cards.

TOTAL NUMBER OF DEBIT (EFTPOS, MASTERCARD & VISA) TOTAL NUMBER OF CREDIT/CHARGE CARD TRANSACTIONS IN MAY CARD TRANSACTIONS IN MAY Source: Reserve Bank of Australia – www.rba.gov.au Source: Reserve Bank of Australia – www.rba.gov.au 180 320 POS terminal transactions Purchases and cash advances % 135 240 10.4 % 90 1.2 160 ATM withdrawals % 45 80 6.1 0 MILLIONS 0

MILLIONS POS terminal 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 transactions ATM withdrawals

TOTAL VALUE OF DEBIT (EFTPOS, MASTERCARD & VISA) TOTAL VALUE OF CREDIT/CHARGE CARD TRANSACTIONS IN MAY CARD TRANSACTIONS IN MAY Source: Reserve Bank of Australia – www.rba.gov.au Source: Reserve Bank of Australia – www.rba.gov.au POS terminal 28 20 transactions Purchases and cash advances % 21 15 7.1 % 14 5.2 ATM 10 withdrawals % 7 5 3.2 0 $ BILLIONS 0 2010 2011 2012 2013 2014

$ BILLIONS POS terminal 2010 2011 2012 2013 2014 transactions ATM withdrawals

07 2014 APCA annual review evolution direction of payments

Improving the Australian payments system is a never-ending road, and one that payments organisations travel together. APCA’s unique contribution to the journey is to help the industry work collaboratively together to decide what direction to take through research and thought leadership, and to provide the decision-making processes to make the best possible decisions on future direction. In this section, we review both the directional decisions taken in the year of review, and some important developments designed to improve the clarity and quality of industry decision-making.

08 2014 APCA annual review evolution direction of payments

Working with the Reserve Bank of Australia Second, the RBA and APCA have worked In 2012, the Reserve Bank of Australia (RBA) together to establish the Australian Payments released its Strategic Review of Innovation in the Council, which brings together key industry Payments System: Conclusions. The centrepiece stakeholders within a new strategic forum for was a set of five initial strategic objectives which addressing the challenges facing the Australian established targets and timeframes for specific payments system. The first meeting of the enhancements and asked the industry to work Australian Payments Council will be convened together to deliver them (see below).The in October 2014 (see page 10). Submissions received Payments System Board (PSB) also proposed a Third and most challenging has been the from stakeholders better way of working with the industry to large-scale industry collaboration of the New establish systemic priorities in the future. Payments Platform (NPP) Program, designed to address the remaining four initial strategic RBA's Initial Strategic Objectives for objectives (see page 16). Australian payments • Same-day settlement of all Direct Entry Consultation and stakeholder engagement payments (by end 2013) APCA and the RBA jointly initiated a formal • Real-time retail payments (by end 2016) public consultation process in October 2013 • Low-value payments outside normal banking to seek views on the proposed governance hours (by end 2016) arrangements. These included a proposed • Send more complete remittance information Council structure made up of representatives with payments (by end of 2016) from leading payments organisations and a • Address payments in simple manner broader Payments Community of interested (by end 2017) The Australian parties, from which the Council would be drawn.

The industry’s response to the RBA Conclusions Payments Council At the close of the consultation in November has been three-fold. 2013, 20 submissions had been received from stakeholders including financial institutions, First has been the implementation of multiple A key focus for APCA this year has been payment schemes and alternative payments same-day settlement within the direct entry working jointly with the RBA to establish providers. All respondents generally supported system in November 2013, which has met a new strategic body for the Australian the establishment of the new Council and the the first of the initial strategic objectives payments industry, the Australian proposed membership and voting arrangements. (see page 18). Payments Council. APCA and the RBA held further discussions with respondents in early 2014, with a view to finalising The Council’s purpose is to foster ongoing a Participation Agreement. The formal consultation improvements to the Australian payments system process was completed in April 2014. to ensure it continues to meet the changing payments needs of Australian businesses and consumers, and to provide a forum for direct engagement with the PSB.

09 2014 APCA annual review evolution direction of payments

A new Payments Community Financial System Inquiry The FSI will be making its recommendations to Payments organisations have been invited to join The Financial System Inquiry (FSI), chaired by Government by November 2014. APCA looks the Payments Community by subscribing to the David Murray, was established by the Government forward to working with Government and Participation Agreement. In addition to having an in late 2013 to review the Australian financial stakeholders on the outcomes of the final report. opportunity to provide representatives to the system and make recommendations on its Submissions and policy representations Council, the Payments Community provides future direction. APCA also made submissions to the RBA on organisations with a venue to participate in the APCA made two submissions to the FSI, an initial proposed changes to the MasterCard and Visa free exchange of information with the Council submission in March 2014 and a second round access regimes. The RBA has proposed removal on its activities. By the end of September 2014, submission in response to the FSI Interim Report of the Specialist Credit Card Issuer (SCCI) the Payments Community had 33 member released in August 2014. The APCA submission category, which provided a prudential oversight organisations, the RBA and APCA. Membership was built around three principles: regulation by mechanism to enable non-ADIs to become a continues to be open to any organisation with a functional equivalence, the benefits of a card issuer and/or acquirer. While APCA significant interest in the Australian payments system. co-regulatory approach and the promotion of acknowledged its preference for market-based Announcing the Australian Payments electronic payments. APCA also engaged directly and self-regulatory outcomes, the proposed Council with the FSI panel and secretariat as well as change has broader regulatory framework The formation of the Australian Payments Council other stakeholders throughout the year. implications that require attention, as illustrated was announced in August 2014 with the by the Murray Inquiry’s work on the “regulatory The FSI Interim Report, released in July 2014, appointment of Christine McLoughlin as its perimeter”. APCA continues to work with RBA on picked up on a number of issues and themes inaugural independent chairman. Ms McLoughlin the proposal. raised in APCA’s first submission (amongst will lead a Council of members comprising senior others), in particular the changing nature of APCA also made a submission to the Commonwealth executives drawn from a range of significant payments, the impact of new technology and the Competition Review, chaired by Professor Ian organisations in the Payments Community challenge of regulating in a rapidly evolving Harper. In a brief submission, APCA raised including financial institutions, card schemes, environment. concerns about regulatory coordination and major retailers and other payment service complexity in competition issues, given the providers as well as APCA and the RBA. Ms networked nature of the payments system. McLoughlin will also serve as Chairman of the Payments Community. APCA also participated in a number of other Christine McLoughlin industry forums including as the representative Australian Payments The Council provides a new industry forum for Council Chairman of payment system service providers on the ASX debating the implications of a dynamic payments Forum for the Code of Practice for Clearing and environment and for identifying strategic industry council Settlement of Cash Equities in Australia. issues. The Council will work to generate common industry positions for action and adoption by the of industry, with endorsement by the PSB, through APCA and other industry vehicles. APCA is 14 providing secretariat and support services to the Council and the Payments Community. The Council will hold its first meeting in October 2014. members

10 2014 APCA annual review evolution direction of payments

Fraud prevention New fraud prevention forum By , cash APCA releases industry-wide card and cheque As part of its role in promoting the safety and fraud data twice-yearly as part of the industry’s integrity of Australian payments, APCA has commitment to counter payments fraud and to established the Fraud in Banking Forum. This usage predicted to help the public understand payments fraud forum (which meets four times a year) is issues. This year, to complement the 2013 fraud designed to provide a regular informal setting in drop by data release, APCA produced a new report which to promote open dialogue between the providing a graphical overview of payments fraud fraud teams in Australia’s financial institutions 20 trends over the last six years and information on and those in Australia’s law enforcement effective measures and practices to help combat community. The intention is to share information fraud. Australian Payments Fraud Details and at a strategic level on current and emerging Data will be released on an annual basis. banking fraud trends which will allow the opportunity to explore specific issues and share Towards a digital economy Improving security measures information about new methods used by APCA issued Milestones Reports in December The payment fraud figures for 2013 show that fraudsters. 2013 and August 2014 on the progress of Australian card fraud is increasing as part of a transitioning payments to the digital economy. global trend, but that detection and prevention Both reports outline the accelerating decline in measures employed by the industry are showing Australia’s cheque use and note industry promising results in keeping fraud levels down. initiatives to ensure a smooth transition to electronic alternatives. Australia’s progressive migration to chip technology and the extensive use of PINs is The Milestones Report issued in August 2014 having a significant impact on reducing has a particular focus on cash and was released counterfeit/skimming fraud. During the year, together with APCA-commissioned research The industry stakeholders worked together to Evolution of Cash: An Investigative Study. The introduce new PIN requirements at the new research undertaken by by RFI Consulting point-of-sale, phasing out signatures as an shows that Australians are using less cash as the authentication option from August 2014. The uptake of contactless and other electronic industry is also working to move the Australian payments continues to gain pace. The number of ATM system away from magnetic stripe to chip cash payments has declined 5% since 2005 – technology to help combat skimming fraud. reflecting the changing way consumers pay. This decline is predicted to accelerate, dropping a further 20% over the next few years before it plateaus in 2018. APCA will continue to issue regular Milestones Reports to track the decline in paper payments, present the digital alternatives and ensure that those that still rely on cheques and cash are not left behind in the growing digital economy.

11 2014 APCA annual review evolution direction of payments

Issuers and Acquirers Forum APCA Stakeholder Forum APCA has established the new Issuers and The APCA Stakeholder Forum (ASF) provides a Acquirers Forum to support the rapid evolution venue to share information with a wide range of of Australia’s card payment systems. stakeholders, enabling stakeholders to contribute to and provide feedback to APCA on payments The new forum is part of APCA’s broader drive to matters. Paul Lahiff has been independent chair replace its current regime for the cards payments of the ASF since mid-2013. Two Stakeholder system – CECS – with a framework that allows Forum meetings were held in 2013-14. The July participants to better manage collaboration 2013 meeting focused on the newly established across all card payments, including credit and New Payments Platform Program. The February charge cards, debit cards and prepaid cards. 2014 meeting dealt with the Financial System The Forum provides a venue for card issuers Inquiry as well as updates on the New Payments and acquirers to debate and co-ordinate those Platform and the Australian Payments Council. non-competitive card and other card International liaison scheme-related issues that are not addressed Liaising with overseas payment associations and by other regimes. It will facilitate discussions bodies provides an invaluable opportunity to on system direction and evolution, applicable share experiences and explore issues and regulatory policy and other topics of mutual developments. APCA continues to participate interest. The Forum held its first meeting actively in the International Council of Payment in August 2014. Association Chief Executives (ICPACE). This body includes payment associations from other Australian Payments Forum countries, including the US, UK, Canada, Ireland, The Australian Payments Forum (APF) was South Africa and New Zealand, and provides a established by APCA in 2008 to bring together valuable forum for information sharing. ICPACE key payment stakeholders to consider ways to also facilitates joint research, including publishing promote innovation and system evolution over research on ISO 20022 implementation. The the long term while ensuring healthy competition. ICPACE organisations met in June 2014 in Ireland. This year, the APF gave away to the broader In 2015, the UK Payments Council will host the remit of the newly established Australian annual ICPACE meeting. Payments Council and Payments Community. Its APCA regularly hosts international visitors and final meeting was held in August 2014 at which actively participates in overseas payments events. participants discussed the Financial System In 2013-14, APCA hosted groups of senior Inquiry Interim Report. banking officials from Indonesia and Thailand. Professor Ian Harper had been the Convener APCA also participated in a World Bank / Bank of the APF since its inception. He brought an Indonesia forum on payments in Jakarta in exceptional consultative approach to the APF, February 2014 and presented at events such as ensuring its success over the past six years. SIBOS 2013 in Dubai, NACHA in April 2014 and APCA thanks Professor Harper for his the Canadian Payments Association’s Payments important contribution. Panorama in June 2014.

12 2014 APCA annual review evolution NEW PAYMENT SECURITY PAYMENT SECURITY NEW direction WORLD RETAIL PAYMENTS of payments STANDARDS RELEASED STANDARDS AUSTRALIA TO LEAD

Communications and media 29/08/2013) Finance & Banking (Australian Part of APCA’s job is to raise public awareness of payments issues. It does this through its quarterly newsletter Payments Monitor, annual reviews and website as well as specialist AUSTRALIAN NEW publications and media coverage. In 2013–2014, PAYMENTS PLATFORM the number of visitors to the website increased by 35% to over 235,000. Media coverage also CLAIMS NOVEL increased significantly with most of the interest ARCHITECTURE centred on the New Payments Platform Program, (Finextra 29/07/2013) the decline of cheques, payments fraud trends and the Australian Payments Council. The Banks and retailers sign on for APCA-commissioned landmark study on cash use attracted heightened media attention, new Australian Payments Council 12/11/2013) Day (Banking making front page of mainstream newspapers (Finextra 27/08/2014) on 27 August 2014.

(Australian Financial Review 05/08/2013) FAST BANKING IS COMING SOON WIDER PAYMENTS INDUSTRY PAYMENTS WIDER APCA OPENS ITS DOORS TO THE (Banking Day 07/07/2014) Day (Banking (news.com.au 25/10/2013) $10 BILLION UNDER THE BED: TAXPAYERS THE LOSERS IN AUSTRALIA’S GREAT BLACK MARKET CASH STASH RBA, APCA consult on (Daily Telegraph 27/08/2014) TO FIVE TIMES A DAY SETTLEMENT MOVES MOVES SETTLEMENT (Australian Financial Review 26/11/2013) Review Financial (Australian payments council (Australian Banking & Finance 22/10/2013)

(Australian Financial Review 22/01/2014) CASH NO LONGER KING, CHEQUES ON DEATH ROW: STUDY BANKS SEEK BUILDERS FOR THE (Sydney Morning Herald 06/08/2014) FOUNDATIONS OF PAYMENT SYSTEMS (Australian Financial Review 20/02/2014)

13 2014 APCA annual review evolution direction of payments

Media releases

CECS APCA Website Advisory Stakeholder Council Industry forums Forum

Statistics Engagement for improving the Forum liasion Applications payments system Industry The payments system touches everyone consultation connected with the Australian economy. Australian If APCA is to identify emerging needs Payments effectively, secure industry collaboration Council for change promptly, and execute seamlessly, it needs to work with a wide range of stakeholders. Everyone has a contribution to make. Submissions Proposals

Community Consumers and businesses Industry research White papers Public Payments stakeholders Australian consultation Vendors, suppliers, consumer representative Payments Community bodies, merchants, government departments Applications Payments system RBA, financial institutions, card schemes, industry associations, major retailers & service providers Regulators RBA, ASIC, ACCC, APRA, Treasury

Public awarenesss campaigns 14 2014 APCA annual review a good infrastructure platform for the future The best industry discussion and debate is necessary, but not sufficient, for payment system improvement. Collaborative decisions must be translated into collaborative action. In the modern payments system, this means developing and improving ubiquitous infrastructure to support diverse, competitive payment services. The year in review saw the industry completing renovation of long-standing payments infrastructure and breaking ground on entirely new infrastructure.

15 2014 APCA annual review a good infrastructure platform for the future

Towards a New Phase Payments Platform

The New Payments Platform (NPP) The New Payments Platform Phase 1: Define and Plan Program is a major industry initiative to The NPP comprises ubiquitous new basic A broad cross-section of industry executives collaboratively develop new, fast, flexible infrastructure which will support payments led by KPMG worked collaboratively over a and data-rich payments infrastructure for innovation and the delivery of new services to six-month period to develop detailed business Australia. The Program aims to develop Australian business and consumers. New and technical requirements to underpin the and deliver the business concept payment services – called “overlay services” – high-level business concept and develop a plan developed by a special purpose Real-Time will use the basic infrastructure to provide for the Program. Some 40 workshops were held Payments Committee and endorsed by the tailored services incorporating payments during this phase. Payments System Board in early 2013. between the customers of participating ADIs. The intention is that a range of overlay services In addition, three plenary workshops – known as The Program kicked-off with the first meeting will be developed and offered to customers. In “U-Collaborate” events – were facilitated by of the NPP Steering Committee on 20 June this way, the NPP has the potential to meet a KPMG. These collaborative events promoted a Paul Lahiff 2013. This peak body comprises senior wide range of needs including ones we don’t shared understanding of the Program and each NPP Steering Committee Chair representatives from the Australian banking yet know about. cycle of work. Up to 75 executives from across and mutual sector, an alternative payments the 17 participants attended each of the two-day The first overlay service will be an “initial provider and APCA. An independent chair, Paul workshops which were held in Sydney in August convenience service”, to provide a compelling Lahiff, was appointed on 26 September 2013. and November 2013, and in Melbourne in proposition for use of the basic infrastructure. October 2013. The NPP is being developed collaboratively by It will be available at the same time as the 17 authorised deposit-taking institutions (ADIs). basic infrastructure. Other, potentially competitive, Development work for the first phase was The participants include Australia’s four major overlay services are expected to develop successfully completed in December 2013. banks, the mutual sector, regional banks, over time. More than 300 business requirements and a international banks, alternative payment The NPP will be available to all ADIs who choose conceptual architecture for the proposed providers and the Reserve Bank of Australia. to participate and will enable them to process a platform had been adopted, together with a All participants have the opportunity to review wide variety of fast data-rich payments for their detailed plan and indicative budget for future plans, budgeting, business requirements and customers. Development of the NPP has been phases of development. High-level decisions technical concepts for the NPP as they develop, split into eight phases – the first two were about vendor engagement, to take place in the get involved in working groups and other forums undertaken during the year. next phase, were also agreed. and provide input to NPP decision-making. APCA is administering the Program and has worked closely with KPMG which is acting as a Project Management Support Office.

16 2014 APCA annual review a good infrastructure platform for the future

Phase 2: Sourcing, Planning and The utility company NPP key milestones Mobilisation Alongside the sourcing work, participants have In January 2014, the Program began sourcing also been working closely with KPMG to 2013 JUL The NPP Program activities for the basic Infrastructure and the develop a participation structure for the utility kicks-off Phase initial convenience service as well as planning for company, NPP Australia Limited. This new the utility company. To ensure participants were special purpose entity will administer the 9 additional organisations join the AUG across the three work streams, a “Town Hall” ongoing operation of the basic infrastructure. Program’s initial 8 participants was hosted by KPMG in March 2014 bringing The first U-Collaborate event is together more than 80 representatives. Towards the next phase held in Sydney As at September 2014, the Program is engaged The Program undertook a rigorous process to in legal review and participant commitment SEP Paul Lahiff is appointed independent chair select proposed solutions for the basic processes. All 17 participants are conducting their own assessment of the final fully costed infrastructure and initial convenience service The second U-Collaborate OCT based on detailed business requirements proposal, including its implications for their own event is held in Melbourne. developed collaboratively by the industry. internal systems development programs. At the 100 workshops were held during this phase. same time, the formal legal structure for the NOV Phase 1’s final U-Collaborate Program is being finalised. This entails both event is held in Sydney. Basic Infrastructure conclusion of contracting arrangements with “Define and Plan” phase is From a wide range of initial expressions of vendors and establishing the final participation DEC successfully completed. interest in February 2014, six vendor groups structure for NPP Australia Limited. responded to a detailed Request for Proposal Commencement of the Program’s Phase 3, The vendor sourcing approach (RFP). These were then shortlisted to three Design and Elaborate, is planned for fourth JAN 2014 is defined and approved. proposals which were assessed through quarter 2014. presentations and documentation. The Program selected two-full service proposals for detailed The pre-qualification process for basic FEB infrastructure sourcing is conducted. solutioning and commercial negotiation in July and August 2014. At each stage, many Engagement process for the initial convenience service commences. technical and business representatives across the 17 participants were engaged in the MAR RFP for the basic infrastructure is selection process. issued. Initial Convenience Service Program receives expressions of Interest for the ICS. The sourcing process for payments providers with innovative concepts for the initial Robust evaluation of 6 vendor groups APR-MAY convenience service was undertaken in parallel responses to RFP. with the basic infrastructure vendor sourcing. JUN Two vendors proceed to commercial Following a pre-qualification process in March negotiation and solutioning stage. 2014, the RFP was released to successful payments providers in May 2014 with responses received the following month.

17 2014 APCA annual review a good infrastructure platform for the future

Same-day settlement for direct entry Connecting payments to the NBN The ISO20022 messaging standard has In November 2013, Australia’s direct entry APCA has been assisting ATM and EFTPOS continued to grow in use globally and will be a system moved from one settlement a day to deployers prepare for the National Broadband key part of the New Payments Platform. Over five same-day settlements. This reform accords Network (NBN) rollout. Deployers must ensure 350 message definitions have been developed with an objective set by the Payments System their devices continue to work reliably once using ISO20022 for numerous financial service Board in the Innovation Review Conclusions as connected via the NBN, following which their contexts including payments, securities, foreign well as an industry policy position adopted by old Telstra lines become due for disconnection. exchange, trade services and cards. APCA. The project, which was coordinated by Although the NBN rollout has been underway APCA working closely with the RBA, involved for some time, disconnections of old Telstra internal operational and system changes by lines began in May 2014 and will continue for participants, industry testing and amendments several years. APCA held a number of industry to the direct entry procedures. workshops with NBN Co during the year and will continue to monitor progress to help The move to multiple same-day settlement facilitate a smooth transition of ATM and POS enhances a critical element of Australian terminal connectivity to the NBN. payments infrastructure. Moving value during the day mitigates counterparty and operational Global messaging standards risk and gives financial institutions flexibility in APCA continues to be involved in the global tailoring products to suit customer needs. development and maintenance process of The new settlement model moves the system new ISO20022 payment messages, representing forward, taking advantage of the functionality Australia at the Payments Standards Evaluation provided by the RBA's Low Value Settlement Group and in the ongoing governance of Service. ISO20022 through the Registration Management Group. Digital cheque clearing As in other jurisdictions, cheque use in Australia continues to decline rapidly. APCA has been investigating ways to improve the efficiencies of cheque processing to help reduce the inevitable increase in margin costs as cheque volumes continue to drop. This year, participants of the Australian Paper Clearing System (Australia’s cheques system) agreed to progress “digital cheque clearing”, with completion expected in May 2015. This industry project will provide the capability to capture images of cheques at branches or centralised processing areas, removing the need to physically transport cheques as part of processing.

18 2014 APCA annual review a good infrastructure platform for the future

Securing card payments infrastructure Shaping industry standards Security standards are intrinsic to the safe APCA plays an important role representing working of the payments system. APCA is at the industry on domestic and global standards the front line in the development of financial bodies including: services standards at the domestic and • ISO/TC68 Financial Services international level. It is vital that standards • ISO/TC68 Financial Services/ Working Group strike a balance between ensuring safety, 7 – ISO20022 reliability and efficiency and allowing for • ISO/TC68 Financial Services/ Technical innovation in payment systems. Group 1 – ISO20022 APCA has participated in updating key ISO • ISO/TC68/SC2 Financial Services Security and PCI standards providing for stronger • ISO/TC68/SC7 Core Banking cryptography (such as updated PIN encryption • ISO/ TC68/SC2/Working Group 11 using the new AES algorithm) and more • ISO/TC68/SC2/Working Group 13 resilient payment devices. New ISO standards • ISO/TC68/SC7/Working Group 10 are also being developed to ensure the ongoing • Standards Australia Committee IT/5 security of mobile payments as this market • Standards Australia Committee IT/5/3 continues to grow at a rapid pace. • Standards Australia Working Group IT/5/4 APCA’s device evaluation and approval process • Standards Australia Working Group IT/5/8 ensures PIN entry devices used for domestic • SWIFT Australian National Member Group card transactions meet best global practice for • SWIFT Australian User Group security. Approved Evaluation Facilities are • Payments Card Industry Security Standards accredited by APCA to perform evaluations of Council (PCI SSC) (Affiliate member) ATMs, POS terminals and other cryptographic • PCI SSC PIN Transaction Security Working devices against security standards. This year, Group APCA accredited German firm SRC Security • PCI SSC Terminal Application Security Research. There are now seven AEFs: one in Australia, four in Europe and two in North America.

19 2014 APCA annual review members community

Despite a growing community role, APCA remains a member-driven organisation. Having the widest possible membership amongst payments organisations, and the best possible relations with members, is critical to fulfilling our mission.

20 2014 APCA annual review members community

On 1 January 2014, APCA adopted a new Operator membership recognises the increasing Constitution designed to recognise the growing importance of commercial operators of payments diversity of interests in payments arising from systems in the Australian economy. It seeks to structural and technological change and to engage them in industry strategy and policy provide a more inclusive and representative objectives to improve the Australian payments association of the Australian payments system. system. By September 2014, American Express, Austraclear, BPAY and eftpos Payments had The new Constitution has opened APCA joined this important new membership category. APCA renewed membership to all participants and operators of recognised Australian payments systems. It has An expanded Board also introduced new voting entitlements for a The way in which directors are selected and the broader range of system participants and number of votes they each hold more accurately The new Constitution has positioned provided for three independent directors with reflect levels of participation across the various APCA for the future with a structure substantial voting power. payment systems. Three independent directors with voting rights ensure public interest and that better supports industry New membership structure broader community benefits are effectively initiatives to meet the payments There are now two major categories of considered in Board decision-making. needs of Australians. membership: Participant Members and Operator Members. Membership APCA members work together on many different Participant membership is open to any aspects of the safe, efficient operation and organisation that directly participates in at least continuous enhancement of the Australian one recognised Australian payment system. payments system. Through consultation papers, These currently comprise payment systems forums, committees and working groups we seek managed by APCA, the card schemes, BPAY members’ engagement on all aspects of APCA’s and Austraclear and represent around 99% by work to improve the Australian payments system. volume and value of all Australian non-cash As at September 2014, APCA has 99 members payments. and 17 COIN participants. Participant members are either “appointing” members or “electing” members, depending on the level of activity in these recognised payment systems. The first elected directors were welcomed to the Board in June 2014.

21 2014 APCA annual review members community

Robert D Craig Stuart A Woodward Paul J Apolony Lindsay F Boulton Board of Directors BSc (Hons), BCA, MAICD BA (Hons), F Fin, GAICD F Fin, FAIM, FIPA, MAICD BA (Soc. Sc.), B Ec (Hons), (Chair) (Deputy chair) (Non-executive director) There were a number of changes to the board GAICD (Non-executive director) during the year including as a result of changes Robert Craig has over 25 years’ General Manager, Representation, Deputy General Manager - to the APCA Constitution. broad financial services experience Credit Cards, Payments and Retail Operations, The Bank of Tokyo - Head of Banking, Reserve Bank of across Australia, New Zealand and Strategy, Retail Banking Services, Mitsubishi UFJ, Ltd Australia Russell Rechner resigned as Chair in December the United Kingdom in retail, of Australia 2013 after serving six years. Mr Rechner Paul Apolony has over 32 years’ Lindsay Boulton has over 30 years’ business, payments, institutional presided over a period of steady expansion in Stuart Woodward has over 35 years’ experience in the banking industry experience in central banking banking, insurance and wealth APCA’s workload and increased value to the experience within the Commonwealth including roles in Operations, covering economic analysis, management. He has been payments industry and its participants. This Bank Group, including retail and Product Development and Strategy, financial markets, banking services, consulting to mid-sized and large culminated in members voting for major corporate banking, payment specialising in Payments. Mr and risk management. He is corporates, specialising in leading constitutional changes to enhance industry systems and merchant acquiring. Apolony was initially appointed as a non-executive director of Note large scale organisational governance in his last general meeting as Chair. He is a director of BPAY Pty Ltd, director of APCA in June 2007 and Printing Australia Ltd and a member transformation programmes since APCA thanks him for his significant contribution Cardlink Services Ltd, Charge Card was elected by Electing Members in of its Audit & Risk Committee. Mr 2010. Currently, Mr Craig is and service. Services Ltd, EFTPOS Access June 2014. Boulton was appointed as a director Practice Leader – Transformation Australia Ltd and eftpos Payments of APCA by the RBA in June 2013. Following Mr Rechner’s resignation, Robert Craig with Internal Consulting Group Chairman of the High Value Clearing Australia Limited and is a Councillor was appointed as APCA’s first voting independent (ICG). Mr Craig was appointed as System and Australian Cash Member of the Audit, Risk & on the Northern Sydney UnitingCare Chair effective 1 January 2014. John Murphy Chair and independent director of Distribution and Exchange System Finance Committee, Nomination Ageing Council. Mr Woodward was resigned from the board in August 2013 and was APCA in January 2014. Management Committees. Member Committee and Remuneration appointed as a director of APCA by replaced by Steve Baric. Mr Baric resigned in of the Audit, Risk & Finance Committee. Chairman of the Remuneration the CBA in February 2005. February 2014 and was replaced by Brett Committee, Remuneration Committee. Watson. Tim Buckett resigned from the board in Chairman and member of the Committee and Payments Policy May 2014 and was replaced by David Carter who Nomination Committee and Committee. was elected by members. Jennifer Clark and Payments Policy Committee. Kate Mulligan were appointed to the board in Chairman of the Fraud Committee June 2014 as voting independent directors. and the COIN Management Committee. The names and details of directors in office as at September 2014 follow.

23 2014 APCA annual review members community

Chris G Campbell David A Carter Jennifer R Clark Chris J Hamilton Paul A Inglis B Ec, M Bus (Finance), MAICD B Com, GDip App Fin and FAICD BA, LLM, AAICD B Ec (Hons), MAICD (Non-executive director) Investment, CPA, F Fin, MAICD (Independent director) (Chief Executive Officer & Executive (Non-executive director) (Non-executive director) director) Head of Payments Policy and Jennifer Clark has over 20 years’ Head of Payments Industry, Strategy, Group. Executive General Manager, experience as a banker specialising Chris Hamilton has over 20 years’ Australia and New Zealand Banking Customer Development, in financing major companies experience in financial services, Group Limited. Chris Campbell has over 23 years’ Suncorp-Metway Limited. and infrastructure projects, and particularly financial markets experience in banking and economics, Paul Inglis has over 25 years’ undertaking advisory roles to the infrastructure, and six years’ including payments policy, finance, David Carter is a member of Suncorp experience in the banking industry in Commonwealth Government. She experience in securities law. He is product management, operational Bank’s Executive Committee and is payments and economics; five years has been a non-executive director a non-executive director of NPP risk and related areas, strategy and accountable for the payment streams, in government service, including since 1991. Ms Clark is currently Australia Limited. Mr Hamilton was regulation. He is a non-executive product management, segment and Federal Treasury. He is a non-executive a member of the boards of the appointed chief executive officer director of NPP Australia Limited channel strategy, and marketing director of EFTPOS Access Australia National ICT Australia Ltd (NICTA) and executive director of APCA in and Chairman of EFTPOS Access functions. He has over 24 years Limited, Chairman of NPP Australia and the Australian Maritime January 2006. Australia Limited. Mr Campbell was financial services experience in Limited, and a member of the global Safety Authority (AMSA) and an appointed as a director of APCA by banking, life insurance, and wealth Member of the Audit, Risk & Payments Market Practice Group independent member of a number Westpac in April 2003. management at both Suncorp and Finance Committee, Remuneration and of the SWIFT Payments of audit and risk committees. ANZ. Mr Carter was elected a Committee, Payments Policy Maintenance Working Group. Chairman of the Consumer Ms Clark was appointed as an director of APCA by Electing Committee and Consumer Mr Inglis was appointed as a director Electronic Clearing System independent director of APCA in Members in June 2014. Payments Committee. of APCA by ANZ in July 1998. Management Committee. Chairman June 2014. and member of the Consumer Member of the Payments Policy Chairman of the Bulk Electronic Payments Committee and member Committee. Clearing System Management of the Payments Policy Committee. Committee. Member of the Audit, Risk & Finance Committee, Consumer Payments Committee, Nomination Committee, Payments Policy Committee, Remuneration Committee, Consumer Electronic Clearing System Management Committee, High Value Clearing System Management Committee and COIN Management Committee.

24 2014 APCA annual review members community

David C Jay Adrian Lovney Kate A Mulligan Brett J Watson B Ec, MBA, FCPA, F Fin, FAMI, LLB (Hons), MBA (Melbourne), BA, LLB (Hons), MAICD BSc (Hons), Graduate Diploma MIIA, MAICD AMP (Harvard), MAICD (Independent director) Banking and Finance, MAICD (Non-executive director) (Non-Executive Director) (Non-executive director) Managing Director of King Irving Chief Executive Officer, Australian General Manager, Product and Consulting Group. General Manager, Transaction Settlements Limited. Service, Cuscal Limited. Products and Payments Everyday Kate Mulligan has over 28 years’ Banking & Payments, Product & David Jay has over 25 years’ Adrian Lovney has over 15 years experience in financial services law Markets, experience in the banking industry experience in financial services and and business, including senior roles Limited. with various ADIs which has is responsible for all product at Allens, St George and ANZ, and included roles in financial markets, management and operational managing director of fund managers Mr Watson has over 20 years’ internal audit and retail banking. He functions, marketing, sales, Advance Asset Management and experience in banking and finance is a non-executive director of the customer relationships and growth. Ventura Investment Management. in product management, technology Australian Rugby League Referees Previously, he was General Manager, She is a non-executive director of delivery and project management Association and eftpos Payments Strategy & Communication, Netwealth Group Ltd and its roles and with a specific focus on Australia Limited. Mr Jay was responsible for leading the successful associated companies; Chair of payments. He is a non-executive appointed as a director of APCA by migration and transition of Cuscal’s Netwealth’s Audit Committee and director of EFTPOS Access Building Societies members in customers to a new and innovative member of its Remuneration, Australia Ltd. Mr Watson was August 2010. payments platform. Mr Lovney was Investment and Compliance and appointed as a director of APCA by chief executive of Abacus Australian Risk Management Committees. NAB in April 2014. Chairman and member of the Audit, Mutuals from 2006 to 2008. He is Ms Mulligan was appointed as an Risk & Finance Committee. Member Chairman of the Australian Paper a non-executive director of EFTPOS independent director of APCA in of the Nomination Committee, Clearing System Management Access Australia Limited. Mr Lovney June 2014. Payments Policy Committee and Committee. Member of the was appointed as a director of APCA Remuneration Committee. Consumer Payments Committee by Credit Unions Members in and the Payments Policy Committee. February 2013. Member of the Payments Policy Committee and Consumer Payments Committee.

25 2014 APCA annual review members community

Management committees Committee. Its responsibilities are to establish Governance In accordance with the company’s constitution, remuneration policies and practices for the the board has established a management company generally and to recommend remuneration framework committee for each of the frameworks levels and contractual arrangements for the CEO. administered by the company, including its The board of directors Board charter clearing systems and its infrastructure system The board comprises an independent chairman, The board carries out its functions and exercises (COIN). Acting under delegated authority from the chief executive officer, non-executive its powers in accordance with the board charter, the board, management committees are directors appointed by the company’s members, which sets out the role, responsibilities and responsible for the efficient operation and and two additional independent directors. The functions of the board. The board reviews the management of each framework. board is responsible for setting the company’s charter annually. strategic direction and corporate governance. Board and management committee Code of Conduct self-assessment The current Chair, Robert Craig, was appointed All directors, management committee members APCA promotes continuous self-assessment and in January 2014 and is an independent voting and senior executive staff must comply with a also provides self-assessment tools for directors, director. Directors’ and Officers’ Code of Conduct. The management committee members and the Code was developed using a model from the The CEO is a board-appointed, non-voting, internal management team. Australian Institute of Company Directors. executive director. The CEO manages the Other board committees Directors and management committee members company’s affairs under the broad guidance of The board is empowered to establish other review adherence to the Code annually. the board. The CEO’s performance against committees as it sees fit to assist in managing agreed goals is assessed on an annual basis by Ethics, policies and procedures the company’s affairs including the Audit, Risk the board. APCA promotes adherence to best practice and and Finance Committee, the Nomination a high professional and ethical standard. A Reserve Bank of Australia (RBA) liaison Committee and the Remuneration Committee for framework of management policies covers arrangements good corporate governance, the Payments Policy human resources, technology, external matters, Senior staff of the RBA and APCA consult on a Committee and the Fraud Committee. finance and general management. It is reviewed regular basis on issues of industry policy. The The Audit, Risk and Finance Committee’s by the Audit, Risk and Finance Committee and RBA has automatic rights to appoint primary functions are to review the company’s supported by management procedures that representatives to the board of directors and internal financial practices and audit results, cover detailed implementation. management committees, and currently has a monitor the effectiveness of the company’s representative on the board. As a substantial Risk management financial controls and administrative policies, user of payment systems, the RBA is eligible for APCA has a well-defined risk management monitor various risk exposures and statutory representation on the same basis as other framework which is overseen by the board. Key compliance matters, and review the company’s members. risks are regularly reviewed and APCA’s risk budget and monitor expenditure against it. appetite is reassessed annually. Management The Nomination Committee’s primary has refined an externally developed risk responsibility is to support and advise the board framework to address changing risk appetites on matters relating to the eligibility, appointment and environmental risks, and has submitted the and election of directors. The Remuneration risk framework to both internal and external audit Committee comprises the chairman and the review with positive results. members of the Audit, Risk and Finance

26 2014 APCA annual review members community

Decision-making bodies APCA’s work is done through collaborative groups of industry experts. There are BOARD OF standing committees with decision-making DIRECTORS and oversight responsibilities for payments frameworks, project and program steering committees for significant industry change programs, and a range of industry working groups. Consumer Audit Risk & Nomination Payments Policy Remuneration Payments Finance Committee Committee Committee Committee Committee

APCS BECS CECS HVCS ACDES COIN Fraud Issuers & APCA Management Management Management Management Management Management Committee Acquirers Forum Stakeholder Committee Committee Committee Committee Committee Committee Forum

APCS Printing CECS Advisory CECS Evaluation CECS Standards CECS Capacity Standards Council Review Sub-Committee Planning Sub-Committee Sub-Committee Sub-Committee

CECS Technical CECS Technical Message Formats Security Working Group Working Group

27 2014 APCA annual review members community

Our Team APCA has benefited from an extremely As at September 2014 stable organisational structure and very low staff turnover, even as our environment and role have changed markedly. The major changes catalogued in this Review have Executive Communications CHIEF EXECUTIVE OFFICER promoted a structural review to ensure we Assistant Ida Turner Chris Hamilton remain well-positioned for new challenges. Lesley Terry The outcome of this is likely to emerge in the coming year.

Web Administration Administration Anastasia Fengaros Jeremy Bojman

TECHNOLOGY INDUSTRY CHANGE INDUSTRY POLICY SELF-REGULATION FRAUD & SECURITY FINANCE & RISK & OPERATIONS MANAGEMENT Brad Pragnell Susan Bray Caroline Pearce Rodney Clark Bob Masina Michael Forey

Technology Projects Industry Policy Legal Fraud & Security Gavin Bollard Rob Magee Arun Kendall Vanessa Chapman Rory Brennan Robin Trulock Shannon Lewis Paul Creswick Operations Shirley Young Governance & Legal Trish McGinness Lynda Gajic Elizabeth Fox Angelina Maurice Catherine Maxwell Louise Lonergan Membership System Development & Governance Tony Giang Rob Cirotto Tanya Davey Information Kim Gillen Rhonda Hunter Kellie Oastler

Statistical Analysis Petter Ingemarsson

28 2014 APCA annual review members community

Participant Members Participant Members Operator Members Membership Commonwealth Bank of Australia Police Bank Limited American Express Australia Limited As at September 2014 Community First Credit Union Limited Police & Nurses Limited Austraclear Limited Community Mutual Ltd QT Mutual Bank Ltd BPAY Pty Limited

Credit Union Australia Limited Queensland Police Credit Union Limited eftpos Payments Australia Limited COIN Participants Participant Members Cuscal Limited Queensland Professional Credit Union Limited Cabcharge Australia Limited AMP Bank Limited Delphi Bank (a division of Bendigo and Adelaide Bank Rabobank Australia Limited Limited) Arab Limited Rabobank, Australia Branch (Co-Operative Centrale Cardlink Services Limited Deutsche Bank AG Raiffeisen-Boerenleenbank B.A.) Australia and New Zealand Banking Fiserv Solutions of Australia Pty Ltd Group Limited ECU Australia Limited Railways Credit Union Limited First Data International

Australian Defence Credit Union Limited Encompass Credit Union Limited Reserve Bank of Australia Fuji Xerox Australia Pty Limited

Australian Settlements Limited (ASL) Gateway Credit Union Limited Rock Building Society Limited (The) Strategic Payments Services Pty Ltd Unisys Credit Services Pty Limited B&E Ltd Greater Building Society Ltd Royal Bank of Canada

Bananacoast Community Credit Union Ltd Limited Royal Bank of Scotland N.V., (The) (Australia) Branch

BankVic Heritage Isle Credit Union Limited Royal Bank of Scotland plc, (The) Australia Branch

Bankwest (a division of Commonwealth Bank of Holiday Coast Credit Union Limited Select Credit Union Ltd Australia) Also a COIN Participant Hong Kong and Shanghai Banking Corporation Limited SGE Credit Union Limited Bank of America, National Association (The) - Australian Branch Southern Cross Credit Union Ltd Bank of China HSBC Bank Australia Limited Standard Chartered Bank Bank of China (Australia) Limited Limited State Bank of India Bank of Communications Co., Ltd Sydney Branch IMB Ltd State Street Bank and Trust Company Limited Indue Ltd Sumitomo Mitsui Banking Corporation, Sydney Branch Bank of Sydney Ltd Industrial and Commercial Bank of China Limited Summerland Credit Union Ltd Bank of Tokyo-Mitsubishi UFJ, Ltd (The) ING Bank (Australia) Limited Suncorp-Metway Limited Barclays Bank plc ING Bank NV (Sydney Branch) Sutherland Credit Union Ltd Bendigo and Adelaide Bank Limited JPMorgan Chase Bank, National Association Taiwan Business Bank, Sydney Branch Big Sky Building Society Limited Macquarie Bank Limited Limited BNP Paribas Maitland Mutual Building Society Limited Tyro Payments Limited BNP Paribas Securities Services Maritime Mining & Power Credit Union Limited UBS AG, Australia Branch BOQ Specialist Bank Limited mecu Limited United Overseas Bank Limited Capricornian Ltd (The) Mega International Commercial Bank Co, Ltd Uniting Financial Services Cashcard Australia Limited Members Equity Bank Pty Limited Victoria Teachers Mutual Bank China Construction Bank Corporation, Sydney Branch Mizuho Bank, Ltd Warwick Credit Union Ltd Citigroup Pty Ltd National Australia Bank Limited Westpac Banking Corporation CLS Bank International Newcastle Permanent Building Society Ltd Wide Bay Australia Ltd Coles Group Limited Oversea-Chinese Banking Corporation Limited Woolworths Limited

22 2014 APCA annual review glossary contact

Glossary ADIs Authorised deposit-taking institutions A list of abbreviations and meanings AES Advanced Encryption Standard throughout the Annual Review. APCS Australian Paper Clearing System ATM Automatic Teller Machine BECS Bulk Electronic Clearing System CECS Consumer Electronic Clearing System COIN Community of Interest Network Direct Entry Payments system for direct debits and direct credits eftpos Domestic debit card system FSI Financial System Inquiry GDP Gross domestic product HCE Host card emulation ISO International Organization for Standardization NFC Near field communications NPP New Payments Platform PCI Payment Card Industry PIN Personal Identification Number POS Point-of-sale PSB Payments System Board RBA Reserve Bank of Australia SWIFT Society for Worldwide Interbank Financial Telecommunications

29 2014 APCA annual review Australian Payments Clearing Association

Australian Payments Clearing Association Limited ABN 12 055 136 519 Registered Office Level 6 14 Martin Place Sydney NSW 2000 Telephone: +61 2 9216 4888 Email: [email protected] www.apca.com.au GPO Box 4893 Sydney NSW 2001 Solicitors King & Wood Mallesons, Sydney Auditors Deloitte, Sydney