FRAMING THE NEXT GENERATION OF PAYMENTS Annual Review 2018 Australian Payments Network Limited ABN 12 055 136 519 Level 23, Tower 3 International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 Telephone +61 2 9216 4888 Email [email protected] www.auspaynet.com.au ANNUAL REVIEW 2018 CONTENTS About Us 2 Chair and CEO Message 4 Highlights 5 Australian Payments Landscape 6 Payments Innovation 10 Effective Self-Regulation 13 Leadership in Collaboration 18 Board of Directors 22 Governance Framework 25 Leadership Team 26 Membership 27 Glossary 28 This Annual Review is designed to provide our members and stakeholders with a summary of what was achieved in financial year 2017-2018. References in this report to a year are to financial year ended 30 June 2018 unless otherwise stated. All location photos in this Annual Review were taken by AusPayNet staff. We are delighted to feature them in this year’s report. PAGE 1 AUSTRALIAN PAYMENTS NETWORK Australian Payments Network champions the payments system. We enable competition and innovation, promote efficiency, and manage risk to deliver improvements for all users of the payments system. We bring together a diverse range of organisations including financial institutions, major retailers, payment systems operators and technology providers. Our network includes more than 120 members and participants, and we welcome involvement from all organisations with a significant interest in payments. In our role as the self-regulatory body for payments, we take an inquisitive, front-footed approach to help frame the next generation of payments. PAGE 2 ANNUAL REVIEW 2018 FRAMING THE FUTURE Payments Innovation Consumer preferences, advances in technology and regulatory changes are The payments system is opening up new opportunities. This year, through wide collaboration, we developed evolving faster than ever as new frameworks and standards to help bring consumers, businesses, and innovative offerings to market faster with regulators embrace the digital reduced risk. world. To stay abreast of the changing landscape, we focus Effective Self-Regulation on three core areas. Alongside exciting opportunities, the rapidly changing landscape also exposes new risks. We are responding in a way that improves efficiency and competition, and ensures a robust payments system. Leadership in Collaboration Embracing new opportunities and challenges involves coordination and collaboration. We bring together a diverse set of participants to harness the benefits of change, and make payments thrive. PAGE 3 AUSTRALIAN PAYMENTS NETWORK CHAIR AND CEO MESSAGE This financial year, we saw payments evolve in ways that are accelerating change and likely to shape our industry for decades to come. New York Times columnist Thomas starting point for ongoing industry hard to ensure that our membership Friedman recently described our era as collaboration on open data. criteria and processes are inclusive. ‘the age of accelerations’. While referring We were delighted to welcome 12 new Statistics released in our fraud report to the non-linear acceleration that can members during the year. for 2017 showed that card-not-present be observed today in such areas as (CNP) fraud accounted for almost 85% technology, globalisation and climate of all fraud on Australian cards. As chip Looking ahead change, his concept is equally relevant to technology has strengthened protections Australia’s payments industry. Such rapid The force of change in our industry is for in-person fraud, criminal activity is change can be overwhelming, but we not unique to Australia. Looking offshore, migrating online. In response, AusPayNet are pleased to say that our industry has the intense interest in payments by led a collaborative initiative across the embraced the challenge. non-traditional participants – Facebook, e-commerce community to tackle CNP Snapchat, Google among them – is hard fraud. Together, we have developed a Framing fast, convenient not to miss, and a by-product of the high-impact framework, with broader ubiquity of smartphones. and secure payments consultation underway. The landscape is shifting rapidly and the A highlight of the year was the launch Digital Identity was once again a fast- payments world we know today may not in February of the New Payments Platform moving space for policy and technology be recognisable in a decade’s time. It is (NPP). We are proud of NPP’s roots within development in FY18. This too is a highly therefore critical that Australia’s world- AusPayNet, where our team led the early complex area requiring cross-industry class system – including the regulations industry collaborative work. Its success is collaboration. We are coordinating efforts governing it – continues to adapt and an example of productive multi- through the APC, including working remain fit for purpose. stakeholder collaboration in payments - with the Federal Government’s Digital congratulations go to all involved. Transformation Agency, with an agreed AusPayNet is committed to ensuring the framework expected at the end of 2018. payments system embraces innovation, This year also saw advances in open-loop while remaining efficient, competitive, payments in transport. We supported a Embracing new technologies and secure. As busy as FY18 was, the year Sydney pilot conducted by Transport for underway is shaping up to be at least as NSW, in which commuters were able to and standards challenging. We extend heartfelt thanks pay their fare using contactless cards, A large part of AusPayNet‘s focus in FY18 to our fellow directors, members, the smartphones or wearables rather than an was working to ensure that new payments RBA and other regulators, and all of our Opal card. The highly successful trial has technology – increasingly software-based stakeholders for their generous support been expanded. - is accommodated appropriately. Close and ongoing contribution. We also thank AusPayNet undertook important work to attention has been paid to encouraging the AusPayNet team for their dedication, plan for the open data regime which will best practice in the adoption of new enthusiasm and passion for making commence in Australia in mid-2019. A technologies such as blockchain, and payments thrive. successful two-day Australian Payments secure application of existing technology in Council (APC) ‘hackathon’ coordinated by new ways such as PIN on glass. AusPayNet in late 2017 provided a sound Robert Craig, Chair Of course, new technology means new payments participants. We have worked Leila Fourie, CEO PAGE 4 ANNUAL REVIEW 2018 HIGHLIGHTS In collaboration with transport authorities, we developed a Ramping up the fight against online card fraud, our NATIONAL OPEN LOOP TRANSPORT PAYMENTS ACCELERATOR EVENT held in collaboration with the FRAMEWORK Reserve Bank of Australia, The new framework is designed to ensure brought together the e-commerce a consistent customer experience as community. Participants reached transport authorities across Australia clear consensus to develop the implement contactless credit and debit CNP Fraud Mitigation Framework. card payments for transit. We lodged submissions to Government to help SHAPE THE FUTURE OF PAYMENTS REGULATION on Open Banking, Competition in the Australian Financial System, the Black Economy and the Digital Economy. Supporting new technologies, This year, we added a new flagship we contributed to the event to our calendar, holding our development of NEW INDUSTRY FIRST AUSTRALIAN STANDARDS PAYMENT SUMMIT in December 2017. More than 250 including PCI security standards experts and innovators from across for card acceptance and ISO global the payments landscape participated standards for blockchain. in the one-day event. We led the creation of an APAC / Pacific rim PAYMENTS THINK TANK - P7 for open dialogue about common themes impacting the region. PAGE 5 AUSTRALIAN PAYMENTS NETWORK AUSTRALIAN PAYMENTS LANDSCAPE The payments system is evolving faster than ever as consumers, businesses, and regulators embrace the digital world. Australia’s adoption of digital services continues increasing in both scope and number 2013 • ONLINE SHOPPING CONTINUES TO GAIN INCREASING MOMENTUM $22.7BN 2017 $26.5BN 2018 UP 16.7% Australia is ranked in the top 10 for digital readiness ONLINE SHOPPING AUSTRALIA IS CONTINUES RANKED IN THE $22.7 $26.5 2015 10th out of TO GAIN INCREASING Billion Billion TOP 10 FOR 118 countries MOMENTUM 2017 2018 16.7% DIGITAL READINESS Sources: Cisco Australian Digital Readiness Index; NAB Online Retail Sales Index • ConsumersCard payments grew are by a recordconsistently 12.7%. choosing digital payment methods 7.8 billion (2017) 8.8 billion (2018) Cheque use continues to plummet Direct entry payments grew by 4.2% to 3.9 billion 99.9 million (2017) 80.4 million (2018) - down 20% 2017 2013 8.8 2015 2016 2017 8.8 99.9 2018 Billion 2018 Billion Million 80.4 7.8 7.8 Million 2017 2017 Billion 2015 2016 2017 Billion 20154.2 2016 2017 % 2013 2017 12.7%2013 -20% PAY ± PAY 2017 2018 • ATM withdrawals dropped to 600 million - down 4.0% DebitCard DIRECTDebitCard ENTRY CHEQUE USE PAYMENTS GREW BY CONTINUES TO Card Card Credit 4.2% CreditTO 3.9 BILLION PLUMMET CARD USEDOWN GREW ATM WITHDRAWALS ¬ BY A RECORD4% DOWN DROPPED TO -4% 12.7% 600 MILLION 600 Million DOWN 4% Million Source: Reserve Bank of Australia600 PAGE 6 ANNUAL REVIEW 2018 2013 2017 9 out of 10 people own a smartphone. Mobile is leading digital adoption 7 out of 10 smartphone owners make payments2015 2016 2017 on their2015 2016 2017 phone.2015 2016 2017 2015