Payments in a Global, Digital World THE AUSTRALIAN PAYMENTS COUNCIL STRATEGIC AGENDA Contents Message from the Chairman 3 Australian Payments in 2025 4 Summary of Initiatives: APC and Ongoing Industry Work 6 Focus Area 1: Systemic Resilience 8 Focus Area 2: Combatting Financial Crime 10 Focus Area 3: Social Accessibility and Inclusion 12 Focus Area 4: Interoperability 14 Focus Area 5: Sustainable Innovation 16 Getting Involved 18 Concluding Material 19 152.5 C ARSS CI SA IP CODE FROM A AMO PRPOS 0152 635486565 4526589 60045 THE USE OF CHEQUES HAS -82% fallen by 82% OVER THE LAST 10 YEARS AND COULD REACH ZERO BY 2022:ii ATM withdrawals have fallen by a third ATM WITHDRAWALSin the past ten years, HAVE from 889million to 605million. fallen by a third FROM 889 MILLION TO 605 MILLION.i IN JUNE 2019, APC RELEASED A TrustID framework, TO IMPROVE CUSTOMER CONVENIENCE DOWN AND ENHANCE THE PRIVACY BY A AND SECURITY OF ONLINE THIRD TRANSACTIONS. 889 605 Million Million 2008 2018 2 / For more than three years, the APC’s Australian Payments Plan has The Australian payments provided strategic direction for the payments community to ensure system is a foundational that the payments system continues to meet the evolving needs of all users. During this period of rapid change, the APC has progressed component of our financial and finalised significant projects in a number of critical areas – the changing payments mix, digital identity and cyber-security, among sector, our economy others. and daily life. As such, Our new strategic agenda builds on that work, and also represents engendering trust and a step change in our approach. Our world is increasingly globalised, digitalised and inter-connected; our lives are increasingly shaped by confidence is critical. global platforms. Within this changing world, the payments system is rapidly becoming the point of integration for a range of services and products. This changing context points us towards the need for a new direction in our strategic thinking. The new strategic agenda was prepared by the APC, and informed by input from a public consultation process, to ensure that the payments system continues to meet the changing requirements of the Australian economy and community. ROBERT MILLINER Chariman, Australian Payments Council The NPP has seen a rapid rise in payments since launch, from 2.6million in March 2018 to 15.9million in March 2019.iv THE NPP HAS SEEN A rapid 15.9 Million Payments rise in IS THE MOST IMPORTANT FINTECH payments iii CATEGORY BY ADOPTION RATE: SINCE LAUNCH.iv 1. MONEY TRANSFER AND PAYMENTS 75% 2.6 Million March 2018 March 2019 2. INSURANCE 48% 3. SAVINGS AND INVESTMENTS 34% 4. BUDGETING AND FINANCIAL PLANNING 29% 5. BORROWING 27% The Australian Payments Council Strategic Agenda / 3 Australian Payments in 2025 Our Vision The 2015 Australian Payments Plan outlined a future in which digital payments would become integrated and, ultimately, embedded into our everyday lives.v In the three years since that original vision was laid out, this view has been borne out. The Australian payments system is increasingly a platform for innovation, supporting the digital economy. As a cornerstone of our financial system, the payments system underpins all facets of economic activity. Individuals interact with the payments system on a daily basis and, as rapid adopters of mobile and digital technology, consumers expect the payments system will simply work, in any context, at any time. This is a fair expectation; an effective payments system must meet the needs of all users, encompassing rapid adoption of new technology as well as providing appropriate support for customers who are more comfortable with traditional methods. The “always on” nature of the payments system is important for individuals and organisations. Further, the increasingly interconnected and digital nature of the payments system prompts us to look for strategic insight in areas outside of our traditional purview, to ensure continuous availability. This is because the resilience of the payments system is increasingly dependent on factors outside of the direct influence of the financial sector. The clearest examples of these are the dependencies on the telecommunications and energy sectors. Reliance on these core infrastructures brings with it exposure to the same disruptions that impact these services, such as investment in new technology, as well as broader environmental factors. Our industry is also affected by shifts in the global financial and economic centres of power. There are countervailing trends towards both globalisation and regionalisation of payments services. We have seen the emergence of social media platforms that operate at both the global and regional level, and a growing concentration of power around major technology hubs. Likewise, the growth of migration has heralded the emergence of global citizens, who are global consumers of payment products. Moreover, a renewed focus on social inclusion prompts us to consider our role in continuing to provide accessible and appropriate payment methods for all. Our vision for the future encapsulates a payments system that continues to inspire trust and confidence and is able to meet the changing needs of the economy, in this dynamic global context. 4 / Areas for Strategic Consideration The Foundations Towards Our Next Strategic Agenda The 2015 Australian Payments Plan outlined a vision Following our 2019 consultation, and based on of a payments system that is resilient, efficient, community feedback, we are confident that this vision, accessible and adaptable and in order to ensure that based on the four key characteristics of Resilience, the payments system continues to meet these key Efficiency, Accessibility and Adaptability should characteristics, the APC has: continue to animate our strategic agenda. • Researched community attitudes towards the Our objective is to ensure that the Australian consumer led decline of cheques, and made payments system continues to engender trust and recommendations to make appropriate alternatives confidence by exhibiting these key characteristics, available, prior to the removal of cheques. notwithstanding the changing and increasingly fragmented landscape. Our strategic agenda builds • Coordinated 18 organisations, including the on the work undertaken over the last three years, Digital Transformation Agency (DTA), to create and outlines five key focus areas (see table below) to an open and contestable framework to support ensure we meet this objective. interoperable digital identity services, that will enable individuals and businesses to interact Additionally, during the consultation, several meta- conveniently and securely online. themes emerged. These included the impact of technology, such as 5G, the Internet of Things • Led early strategic thinking on data-sharing by and artificial intelligence, as well as the continued developing a set of high-level principles facilitating decline of cash and the potential use of shared international learnings and holding an open data infrastructure. Developments in these areas will be hackathon. taken into consideration as we progress our strategic • Identifiedcyber-security requirements and worked agenda. closely with Government to consider how these requirements could be jointly met. Characteristic Relevant Focus Areas Systemic Resilience Resilience Combatting Financial Crime Efficiency Interoperability Accessibility Social Inclusion and Accessibility Adaptability Scalable Innovation The Australian Payments Council Strategic Agenda / 5 Summary of Initiatives: APC and Ongoing Industry Work APC Focus Area Area The APC will: Systemic Resilience Ensure that we have a design for a resilient payments system and lead a programme of work for the continuous identification, management and reduction of risks to payments system resilience. Combatting Financial Crime Develop a two-pronged approach to combatting financial crime: based on prevention and detection and customer protection. Scalable Innovation Ensure there are clear guidelines for innovation and auditable processes that allow a wide range of service providers to identify and appropriately manage risk. Social Inclusion and Develop guiding principles for financial inclusion and technology impact Accessibility assessment guidelines. Interoperability Deliver a vision and roadmap for increasing payments interoperability and reducing friction. Other Work Affecting the Industry Payment Rails Roadmap In parallel and informed by the APC’s work, AusPayNet is developing a roadmap for Australia’s payment clearing systems. Card Not Present Fraud Developed by AusPayNet, the industry CNP Fraud Mitigation Framework defines an approach to reduce online card fraud in Australia. RBA – RITS/ISO20022 Following SWIFT’s plans to cease ongoing support of some messages used for cross-border payments after November 2025, the APC and RBA are consulting to assist the industry in coming to agreement on key strategic decisions for an ISO20022 migration project. Consumer Data Right The Australian Government’s CDR is progressing, with consumer data for mortgage accounts, credit and debit cards, and deposit and transaction accounts currently slated to be made available by 1 February 2020. 6 / Moving Forward In progressing this strategic agenda, the APC will • Provide an initial direction for financial inclusion undertake a sectoral assessment in the second half and accessibility by examining the current levels of 2019. This will create a comprehensive landscape