Transcript of Question & Answer Session The Future of Account-to-Account Payments in Australia

Now, to our next panel of the Future of Account-to-Account Payments in Australia. I would like to welcome the following panellists to the stage. First up, Sally Etherington, Acting Assistant Secretary, Payments and Financial Innovation Branch of Digital Competition and Payments Division, Treasury. Please welcome Sally to the stage. That is one mouthful of a title. You don’t want to have to fit that on your name badge, right. Okay. Next we have Ellis Connolly, Head of Payments Policy at the Reserve Bank. Ellis, come on up. Katrina Stuart, General Manager Business Payments, Australian Payments Plus. Please welcome, Katrina. Now, we don’t need to introduce Luke Wilson because he’s already been on stage but come on back, Luke, joining us for a second panel. Chief Operating Officer at AusPayNet. And moderating this panel is Jackie Kallman, Head of Payments, Industry and Engagement at ANZ. Please come on up, Jackie. She’s in charge of fielding the Q&A.

Hi everyone. Hi panel, it’s great to be here. Hi Sally, down there. It is really far away. Yeah. Good thing we have mics. So good afternoon and thanks for sticking with us. I am really excited to be moderating this panel today on the future of account-to-account payments. And I Chair the BECS Management Committee at AusPayNet and ANZ is a member of BECS and we’re also a member of NPP and there is also other systems we’re members of so I have a very, you know, relevant interest in this discussion today. So we’ve been discussing this topic for some time now and as the world moves to real-time payments, richer data, digitisation, really understanding, well, what does that mean for Australia and the future of account-to-account payments in Australia. So in 2022 at this summit actually we asked the question of, is it time to start thinking about ending BECS and it’s - the RBA has called it the workhorse of the system. It’s deferred net settlement but is it time to really move to more modern alternatives like the NPP. So last year after extensive consultation with the industry, AusPayNet communicated a conditional target end date of 2030, June 2030 for BECS, subject to ensuring there is no risk to the security, stability and resilience of the payment system and that’s really key. So the setting of this date was really important because, and I think Brad mentioned it this morning, it focused the industry and it accelerated discussions and initiatives to prepare for this eventual end date in the future. So some of those initiatives, Treasury has done some targeted consultation on bulk payments. The RBA is in the process of a risk assessment, as well as a study on account-to-account pricing. And at the same time the industry is looking at initiatives with members of BECS and other modern payment systems, like the NPP, to support payment service providers and members in adopting and realising the benefits of real-time data rich payments. So in today’s discussion I’ll be speaking with our panellists who - these are the people who think about the future of account-to-account payments daily. They’re leading a number of these initiatives and we’re just going to talk about how the industry is progressing and what the future looks like, what the next steps to get there are. So with that I’ll start with Sally. So Treasury’s strategic plan for the payment system. That was released last year. It includes payments modernisation as a priority. So can you give some colour as to the importance of modernising account-to-account payments. So the government and for Australia and Australians.

Yeah. Thanks, Jackie. So we outlined in the strategic plan last year how important it was for Australia to have a modern payment system to support a modern and digitally enabled economy. We want our payment system - in the plan we set out that we want our payment system to be safe, resilient and encourage innovation, competition and productivity. And I think why we are very interested in the account-to-account space is because I think there’s a lot of potential within it to really - if done right, to progress the competition, the innovation and therefore productivity in the payment system which will have onflows to the rest of the economy. I think the other reason that government is really interested in this area is because we are a massive end user of the BECS payment rails. We have all our welfare payments go through the BECS system. We have pensions going through there. We pay all our staff. A massive payroll, superannuation goes through there. We also collect all our tax - not all of our tax but a lot of our tax through the BECS payment rail. So we are a big end user of the system and therefore the transition is going to be quite sizable for government.

Thanks, Sally. So what do you see as Treasury’s role in, kind of, defining what the future of account-to-account looks like, and how are you doing that?

So I think the strategic plan here has been a really important document, inaugural strategic plan that was released last year. We did support the industry-led transition from the BECS system to a solution like the NPP. And when we update the strategic plan next year we would hope to be able to say a little bit more on that and really setting - working with industry and regulators to really set a clear purpose and end state for the industry and working with the industry to create a roadmap on how to get there. At the moment we’ve got one date out there but I think we want to work with industry to find a bit more of a pathway to our future end state.

Yep. Thank you. So, Ellis, the RBA. The RBA set in 2012, which a number of us will remember strategic objectives for the retail payment system in Australia and the RBA’s also made a really clear from the outset of that they want to see increased adoption of the NPP. So can you give us some insight as to why the bank sees this as a priority and what modernisation of account-to-account more broadly means to the RBA.

Absolutely. Thanks, Jackie. I think it’s important to start this with the question of why is the industry going through the process of considering and trying to achieve the decommissioning of BECS. As you mentioned earlier we love to refer to BECS as the low cost workhorse of the Australian payment system. And it has indeed been an incredible contributor to Australia’s payment system over the years. But fundamentally it’s 20th century technology. It has limitations that relate - that basically reflect the days when data exchange used to occur using magnetic tapes. So some of these limitations. It’s slow. Payments take hours, if not days, to settle. The data that can transfer with the payment is minimal. Just 18 characters. This leads to a lot more manual work arounds. It also makes it very hard to properly screen for financial crime, when you have 18 characters about the payment. And the addressing system. BSB, account numbers, it’s clunky and it’s risky. So industry would have to confront and overcome these limitations. And to do that through BECS would involve substantial investment. Instead the industry is going down the path of trying to shift account-to-account payment flows away from BECS towards alternative, more modern systems, as the way of achieving the eventual retirement of the BECS system. So then where does the NPP fit into all of this? I think the NPP has a strong case to make as a much better tool for many account-to-account payments in Australia. It provides a much better consumer experience. Just think about the speed and the 24/7 nature of it. This means that consumers and businesses in Australia can make payments whenever they want and expect the payment to be delivered almost instantaneously. It’s much more data rich. This means that you can build new services on top of the payment, which is going to be essential in our digital economy. It also means that you can automate reconciliation and other business processes. And through PayIDs we’ve got a much better addressing system there and when you combine it with confirmation of payee it also helps to make payments safer. On top of all that we now have the PayTo service as well, which has the potential to unleash another wave of payments innovation. It will modernise direct debits. It will also enable nonbank payment service providers to engage in third party payment initiation. So it’s got a lot of tremendous benefits over and above the existing systems. It can also provide potential competition for card payments for merchants and consumers. So I think there’s a strong case that there’s a lot more functionality being offered by the NPP and it can be an effective place to move a lot of account-to-account payments in Australia.

That’s great. Thank you. And I think really hearing the why is so important because also we heard from Brad this morning that the adoption of NPP does need to come with some conditions because the RBA needs to ensure it meets its mandate of controlling risk and promoting efficiency, promoting competition and ultimately enabling a stable ecosystem. So can you shed a bit more light on some of the challenges you see for the industry.

Yeah. As Brad highlighted this morning we’re currently conducting an assessment of how industry is managing the very large amount of change that would have to occur to achieve the full decommissioning of the BECS system. We’ve been conducting this risk assessment since June and we’ve engaged extensively with banks, payment service providers, payment system operators and administrators and end users, including businesses and government. So a lot of messages have come through to us, and Brad really summarised some of those in his speech which I’ll go through a little bit further here now. So the first clear message that’s come through, and it’s one that Sally has also very much emphasised, is there needs to be more planning and coordination around the BECS decommissioning. There’s that really foundational point that the industry does not yet have a clear common set of objectives, a shared vision of where account-to-account payments is going in Australia. Essentially, when we’re thinking about the BECS migration, what does success look like? Any enormous program of work like this we have to have a common clear understanding of what success looks like from the outset, if we’re going to achieve the objectives that we want to achieve. So that’s the first point. The second point is making sure that in the industry discussions that are going on, end user interests are at the heart of those discussions. We need to make sure that end user concerns are being fully taken into account. Because in the end they’re the ones that have to use the service and transition across. A good example of this is essential payments. A lot of essential payments in Australia. The majority of them are settled across the BECS system. So these payments, the people sending them, the businesses and governments, they need the assurance that these payments are going to be reliably delivered to people who really need them. So this is absolutely essential. The third point is the tricky area of dealing with bulk payments. This is an area that the industry is doing a lot of work on, which is very important. We’re talking here about welfare payments. We’re talking here about payroll. The businesses and the governments that are sending these payments are very focused on cost efficiency. It is less obvious what the speed and additional data benefits are that come with fast payments for these sorts of bulk payments. So this is a very important use case. We know the industry is working on it and that is absolutely the right thing to be doing. The fourth point is cost. The cost of a transition and the cost per transaction. This is a big concern for end users that we need to face into as an industry. What we’re trying to do at the RBA is collect some better data on what is the cost of account-to-account payments in Australia at the moment. To be honest with you, we’re finding it harder than we expected to get these data on a consistent basis across the industry. There’s more work to do here. I think we’re going to need to do that work because the end users really want transparency. It will help them get the confidence to be able to make this transition. What we can say, we’re very confident faster payments do cost more than BECS payments. This is not surprising. There’s a lot more functionality associated with fast payments than BECS payments. At the same time we absolutely acknowledge that there are hidden costs associated with BECS. You’ve got mistaken payments. You’ve got more fraud. You’ve got a lot more manual processes that could be automated that could help to reduce cost. So that needs to be taken into account as well. We also need to take into account, how much is the transition going to cost end users. This is a very big concern for them. So we need to do more work on that as an industry and as a regulator we’re ready to assist with this. And then the next issue is on resilience. This is very important, given the breadth of payments that are going across BECS. We need a resilience system. We also need to have effective contingency arrangements. We know operational outages are inevitable, and particularly the essential payments that are going through BECS. The businesses and governments sending these payments are going to need the confidence that these payments are going to arrive, even in situations where there are operational outages. And last but certainly not least is the issue of reach. At the moment there are a lot of customers out there that can send or receive payments using BECS, that are not currently connected to the NPP. We really, as an industry, need to address that issue because there are lots of use cases, you can think of bulk payments as an example of that, where businesses and government aren’t going to be prepared to transition across to the NPP until they’ve got the confidence that all the accounts they can reach on BECS they can reach through the NPP. So that’s a very big issue. Quite a foundational one that needs to be addressed. So there’s a lot of work to do for the industry to make the BECS migration a success.

Thanks. And on that, Katrina. So Katrina is the Executive Sponsor of the Move to NPP Program at AP Plus. So as part of that, how are you taking all of this, the opportunities, the challenges into consideration as you look at how we drive adoption and increase the utilisation really of the benefit and what do you think are the most important areas of change for the industry and users?

Thanks, Jackie. I think certainly we recognise this is a significant undertaking by industry, in terms of moving payments from BECS over to the NPP and the target date that was established last year was so important to start to coalesce efforts around - as an industry how we’re going to achieve that objective. One year in, I think we can all acknowledge a year in payments is not a long time. We’ve been really focusing on, kind of what I would call the two season, the RR’s from a platform perspective. So we’ve been focusing on capability. What is the capability that’s required to support the transition and to bring all of those payments across, in particular, for bulk and how are we going to deal with those large bulk files and process them in the most efficient manner across the NPP. Certainly on that front I’m really delighted to say that just in this week we have achieved alignment and agreement from industry on how we’re going to move forward with that, in terms of designing a new business service to cater to those large bulk files, and we’ll be moving into a detailed design phase in 2025. So I think that’s a really significant development, given that has been six months of work that’s been underway, involving a number of people in this room. And so as we move into that next phase, that’s going to be really - one of those, kind of, foundational, sort of, building blocks we need to put in place to support the transition. And that detailed design phase will also include, how do we ensure that we bring into those conversations a range of different stakeholders to address some of the concerns that we heard this morning, to ensure that we are hearing from different segments and different stakeholders around their needs and their requirements. We’ve also been looking at, what other kind of capability do we need to have in place. So what do we need to do from a message perspective and how we need to enhance the message that we have for NPP payments, and particularly using some of the data capability that we know is there with the ISO message to use things like batch booking indicators and other identifiers to help support the efficient processing of payments. How we know we need to put in place a returns process for bulk payments as well. So a lot of focus has been on that capability development, which I think is really going to be important contributions to helping us to formulate that shared vision that we need to articulate as an industry. Then we’ve been focusing very much on capacity, which obviously is another key area of concern in terms of as we think about the volumes that are coming across and what that means from a platform perspective. And so at the end of 2023 we did our first capacity uplift and so we can now support 50% of BECS volumes, as well as accommodating for the NPP volumes we see today of, like, 1.4 billion and also allowing for future NPP growth from other sources. And we’ve agreed with industry what the next uplift will look like by the end of 2025. So we’ve, kind of, already started to get that in train. And then moving on to the RR’s. Obviously account reach is really important. I think we’re starting to see continued great progress on that front. We now have 114 million accounts that are reachable on the NPP. That’s an improvement of about 12 million accounts since last year. Still some work to be done, particularly in certain pockets that we know we need to address together with some of the banks, but some great progress there. And then resilience is obviously a key area of focus. How do we make sure that the platform is as resilient as it needs to be, noting that we have quite high standards around the up time that’s required, in terms of our banks needing to be up and running, basically all of the time except for two minutes a month, but obviously there’s still work that needs to be done from that perspective. So that’s kind of really been what our focus has been, from a platform perspective, but also how do we start to think about the broader industry change management as well because this is a change that involves not just the banks, it’s not just is the platform ready, but it’s about the whole ecosystem and what needs to be done from a change management perspective and how do we start to work with others in the industry, and particularly those organisations that play a really key intermediary role or supporting role from a technology or a platform perspective to ensure that these payments can be transitioned across as well and starting to engage with industry there. So that’s been a lot of our focus for the year. I mean, I think we recognise there’s still a lot of work to be done. I think we certainly feel that the observations from the RBA risk assessment is really valuable at this stage in the program. This is a multi-year journey. So having early insight into some of those things enables us to ensure that we’ve got the right areas of focus moving forward as we continue this journey.

And, Katrina, you mentioned the end user, as obs Sally and Ellis have done as well, I’m interested in, sort of, we note cheques, for example, the end user has that instrument. BECS is a little bit different because the end user, there’s the members inbetween. And how are you thinking about, really engaging the whole eco system but looking at, where do we need to look specifically at end user. And I’m actually - after Katrina answers I’m interested in Luke’s view on this too being across both cheques and BECS, but I think it’s a really interesting one because the end user experience is actually controlled by the payment provider.

Absolutely, and that’s been a really, kind of, important area to make sure we’ve got the right balance because, yes, from an industry perspective obviously what financial institutions do to support their customers or payment service providers or others that are involved in that payments processing. They might do different things to support those customers in different ways, but also where do we need to ensure that there is some consistency and standardisation as well. So we’ve been focusing on things like, how do we ensure that people are also thinking about this consistently. Do we need, like, an ABA file format replacement, for example. And then also as we think beyond, kind of the payment service provider or the financial institution that’s providing those services to the end user, who are some of the key segments that we want to ensure that we’ve engaged in a conversation with, noting that obviously they have a relationship with whoever their provider is. And so government has been a really key area of focus for us to really understand, in particular, some of the needs and requirements of government agencies who are basically involved in those critical payments. That it’s really important to make sure that we get right. But also others like corporates, Fintex, others as well to make sure that they’re having a voice into the work that we’re doing as well.

Did you want to comment on that as well, Luke?

Yeah, I agree. It’s totally different to cheques, as you say, Jackie. I think whenever - and everyone in this room has probably been through this where they’ve adopted a new piece of technology or a new solution. You make a decision on how far you integrate that through to the users of the system. Sometimes you don’t want to go through that change management and you protect the users of the system from that change. Or there might be enough benefit to justify integrating that all the way through and the use of ISO20022 is a great example of that kind of a benefit that end users could take advantage of. So whilst I think there is an opportunity to do a level of protection, it should also be a level of value realisation in this change by end users as well, based on the characteristics of more modern alternatives. Yeah.

Thanks. And I think it will also depend on the end user.

Yeah, that’s right. And what they need.

So AusPayNet’s over seen BECS for over 30 years now.

Not me personally just - yeah.

But as an organisation, there’s a strong organisational memory there. So you’ve got a really deep understanding of its role as that workhorse of the Australian payment system. And you’ve also been consulting very closely with members over a number of years. So what’s your view of the progress made by the industry towards the transition, and what insights can you share about your ongoing engagement with members?

So when we did announce the date and the conditional date was - those conditions were around BECS member readiness, the viability of alternatives and end user adoption, all themes that you’ve already heard from the other members of the panel, we’d been working with our members and checking in on our members on their own progress as individual organisations but also progress against those conditions. What members continue to tell us is they bought into the why, so what Ellis described before about the reason that we’re doing this. Members have still bought into that and are very much supportive of that. We haven’t seen any change in membership numbers, transaction volume or value that’s remained flat, but that should also tell you that the natural year-on-year growth is going somewhere else as well. And we wouldn’t expect to see a significant change, given that there is more work to be done on those - on the viability of alternatives and individual institutions becoming ready. So they still believe in the why and they believe in the strategic direction and the long-term value of rationalisation of payment systems, but they’re very, very hungry for more information on the how and when. So there is a massive opportunity to do more in that space. So if our number one objective by setting a conditional target end date was to generate accelerated conversations then we’d get a massive tick, but we know that’s not enough. We now need to turn those conversations into the type of conversations that can answer the questions that have been posed by the other members of the panel to give people meaningful information so that they can plan for their individual institution and their customer’s needs to work towards that target end date.

And I think it’s also important to recognise that different organisations will move at different paces as well, according to their - you know, their customer base and their business objectives and other kind of considerations as well. So we know that some organisations already, sort of, in market are taking BECS payments today and a bulk file, moving them across to the NPP. There’s basically a lot of activity out there around PayTo and the adoption there and there will be others that will take longer, in terms of what that journey looks like for them and what that sequencing of activity looks like as well.

So, I mean, I think this has been really great to get the perspectives from really the four key bodies around the table here, and hopefully it’s given everyone a better understanding of where things are today and roughly where - what we need to do to figure out where we’re going next, but I guess I’ll ask this next question of each of you really, what you think the next key steps are for the industry and we’ll start with Sally and go down. But, yeah, what do we need to do next as an industry?

Thanks, Jackie. I have to agree with what the Assistant Governor said earlier today. I think there’s really the next layer down of planning needs to happen. So it’s working out the vision of what the end goal is and the transition of how we get there. I noted down some preconditions of kind of switching off BECS and how we get there and they’re almost exactly the same as what Ellis outlined. So making sure we’ve got appropriate account access, making sure we’ve got a bulk solution, contingency and resilience plans, making sure the costs economics works and then the only additional thing there I had was, do we have appropriate regulation. So I think these are kind of questions that we need to grapple with in developing the plan going forward and a more detailed transition plan.

Thanks. Ellis.

I’ll just second that last point that you made, Sally. We did appropriate regulation, I think that’s an excellent one so we’ll add that to our list.

You forgot it.

Yeah, that’s right. It’s a good point. Yeah. So in terms of what our next steps are to help contribute to this process, we’re completed our risk assessment. We’ll take it to the March payment system Board meeting and then we intend to be reporting it back to industry. So we’ve been very collaborative with this process. So you can expect to be hearing more between now and March and after the March Board meeting. In the meantime I’d strongly encourage you to all read Brad’s speech over and over again. Excellent list of things that the industry should be working on to help to achieve a successful BECS migration.

And then we go to the people who are bringing the industry together to work on such things. So, Katrina, what do you see as the next steps for AP Plus, NPP and the industry?

So our priority areas of focus are continuing that work around the capability development. So the detailed design work around bulk for next year. We’ve also got some work planned to look at contingency. We know that that’s going to be really important as we think about the transition over to the NPP. But also equally important, how do we think about recoverability, in the event when there is an incident as well and how as an industry we get ready for that and we start to operationalise that within our current, sort of, frameworks and plans. So that’s a really kind of key area of focus for us in 2025, is to really finalise some of that work and then that also provides some of that certainty to banks and payment service providers and others as well as they think about their plans and how they’re going to continue their migration journey.

And, Luke, what do you see as the next steps for AusPayNet for the industry, and also I’m going to throw in there because we just came off of this conversation about cheques and coordination, is there a potential to take a coordinated approach here?

As you’d expect, Jackie, as a self-regulatory body we’re constantly juggling the issues of coordination and competition, and rightly so. But, yes. The short answer we do think there’s an opportunity. I mean, if you listened to the why and our participants in BECS are telling us they believe in the why but they need more information in the how and what we’re struggling to do is understanding what that scope would look like, what those key next steps are, what that roadmap would look like. Then you need to dig into that next level of detail in order to get that information. So we think it’s about weaving the threads together. You know, the threads of the work that AP Plus are doing, the threads of the work the RBA are doing, the threads of the work the Treasury are doing and AusPayNet and doing is also our members are doing and, importantly, our member’s customers, the end users. So we kind of need to weave that together. How do we do that? Well, we have been thinking about that and the word coordination has come up multiple times this morning and we’ve been in discussions with key stakeholders, in particular, the likes of AP Plus about how we can better coordinate as an industry to try and provide everyone that more information on how we get to that end outcome. Now, that would obviously come with some serious considerations around competition. It would require the appropriate regulatory approvals. But we think that could look like some form of a roundtable discussion where we can bring all of this really good and positive work together to help form that vision for account-to-account payments in the future. So we’re not there yet, in terms of knowing exactly what it would look like, but we know it would have to have really good and strong governance. We know that we’d have to have the right stakeholders round the table, the right inputs for those stakeholders to make sure we give the right consideration to all the people that would be impacted by this and it would require regulatory approval and we’re in the process of trying to shape that up and work that out. And if we can, we’d love to host those type of discussions in 2025 at the right time.

Yeah. Great. So I think we really covered - you know, we sort of covered the why, the challenges, the fact that having a date was really important to mobilise, so thank you AusPayNet and the industry for that, but then that is just the date. So really we need to get to the how and the plan and the what does it look like in detail and you’ve talked about the ways we’ll get there so that’s excellent. Thank you. We can now really move to questions. And so I’m going to kick off with one, which there are many bulk ACH systems in the world, there are also many real-time systems. So I’m going to ask you this, Luke, given AusPayNet’s role in global engagement as well. Have you seen this sort of thing in other countries and other payment systems and what can we learn from other payment system migrations or considerations of not the same, and I think that’s important.

Yeah.

But maybe similar or similar thinking, what are we learning and seeing overseas?

I think in markets similar to ours, we’re quite advanced in our thinking. But when we talk to those markets they go, yeah, that is an issue that we’re going to have to stare into and face into at some point. I think in other markets that we’re possibly less advanced up until more recent times, we’re seeing a leap frog effect. Where potentially they haven’t embraced digital payments as much as we have in Australia and now they’re moving to broad, quick adoption of faster payment system-type solutions. So there’s two things that are happening. It’s always easy to build a brand new house on a blank block of land but it’s a lot harder to renovate, and I think we’re in that challenge of renovating where we still need to find places to live. We need to deal with the existing foundations of the home, the plumbing, the electricity and all the rest of it. That makes change harder. So there’s markets that are dealing with that type of change, like us or at least starting to think about it, there’s other markets that are building from afresh and leap frogging from a technology perspective.

Thanks. Anyone else have observations? I’m sure you all look outside the country.

I mean, I think - the NPP, I think when it went live, is kind of seen as world leading and I know with the development of PayTo, many markets have been looking at us in terms of that service and what that capability can do and I think this is just the next step in that journey, in terms of as Australia moves forward and we think about what does our modern payment system look like and so a number of markets are looking to us. They’re all dealing with similar kind of issues but maybe a little bit further behind.

So I’ve got a question here for Ellis probably, it doesn’t have a name but how do we encourage banks that are not yet connected to the NPP to connect and would the RBA mandate this?

We’ve been directly engaging with the ADIs that are connected with BECS. They are not connected to the NPP. We’ve written to them all. We’ve had discussions with them to understand their plans and their timelines. Some of them do have plans that are reasonably well developed to move across to the NPP and some are not as well developed. It’s a tricky space because for very small institutions it can be quite a significant tech uplift to move to the NPP. So there’s a role for regulators here but there’s also a role for infrastructure and technology in thinking about what’s the right sizing of the ask for very small institutions to connect to the NPP. We also are in discussions with APRA around these issues as well.

So on that, this is maybe one for Katrina, will addressing a system of BSB and account number, do you think that will continue into the future?

I think probably at least for the foreseeable future. I think BSB and account numbers are fairly well embedded in many processes related to payments and that was part of the decision, why we decided to look to develop confirmation of PayU service because even though we had PayID that provided the ability to validate who you’re paying before you make a payment, we were still only seeing a certain percentage of payments being made using a PayID. So we acknowledge that there are a lot of people who still use BSB and account numbers. We think that will still continue into the future. I think there’s an opportunity with the transition for us to think about, can we clean up maybe how some of those are used in certain processes as well and so where are there opportunities to make some of that better as well, but I don’t see them disappearing anytime soon.

So real-time payments - sorry. Real-time payment mandates in Europe are seeing fraud sky rocket. Is that a concern if we force volume on to NPP, given there is more fraud now on NPP than BECS? I might throw this to - I mean, I’m sure anyone could answer this but I might throw this to Sally. Is that a worry from a government perspective and as we look at fraud and scams, that a move to NPP increases that in any way?

I think it’s definitely a concern. There is - we heard from the panel earlier, scams and fraud is a big priority of regulators and government at the moment. I don’t think - at the moment we have not got any regulation mandating NPP adoption and it is really a commercial choice that we are trusting industry to make in the best interests of their customers.

Here’s one, and Ellis I think you spoke to some of the benefits of what we see in the NPP and real-time payments. Why not let account-to-account evolve organically and let users use what suits them best?

So if we took that approach to everything then you end up maintaining a lot of infrastructure. And if banks have to maintain a lot of infrastructure then there’s a lot of cost. So there are potentially some efficiencies here, say on the - with BECS where it does have these limitations around speed and addressing and data, that the choices are invest in it or decommission it. And that is a tough choice that the industry has to face. Essentially those are the alternatives that are on the table here. Industry’s proposal is to decommission it and move to alternative systems. Fewer systems should then involve less cost for banks. I think that’s a relevant argument.

And then subsequently for end users.

Absolutely.

So, Katrina, what about bulk direct debit PayTo, what are the plans? Surely you would set a milestone date for bulk direct debit ahead of any bulk credit?

So that’s a topic that will go into further discussion in detailed design. So there has been quite a lot of conversation around that and so we need to do some further work to really, kind of, analyse that and look at what we think is going to be the best approach. So bulk at the moment is focused predominantly on credit but we still know that we need to address debit, in terms of is that included or is it not included. Also recognising that we do have PayTo and so how do we bring that all together.

So this one’s from [audience member], when talking account-to-account payments how do regulators make sure the requirements of accounts themselves, so the pools of fund at each end, are properly considered too? It’s a sniper.

Who’s the lucky winner?

Well, I don’t know. It’s about regulators.

It might be RBA banking.

It’s about regulators so I think there’s a regulator.

It’s basically a question of how do you ensure the funds are there.

I think the question is there’s a payment but then because it’s account-to-account and it’s going all the way through, how are the accounts and the liquidity, the interest, the requirements around accounts set up to support account-to-account payments and the changes in them.

Excellent question for a banker to answer.

More for APRA.

Such as [audience member].

Maybe I’ll let you take that offline. Thank you for putting your name on that.

Maybe it’s a conversation for the break.

Yeah.

And while we’re at it just another one from [audience member], are there any myths about BECS you think it’s important to bust to help users and banks transition away? That is a great question and I think a really good one to wrap up with. So should we start with Luke there?

I can’t name a specific myth but I do think that we gloss over some challenges associated with BECS because we’re so used to it. And in this conversation we need to realise to Ellis’ point that it’s been around for a long time. We’ve probably had a long time to smooth over the cracks but it’s certainly not a perfect payment system.

The RBA is probably the other one who knows BECS pretty well.

Yeah. I mean, I would emphasise the cost point because people just look at the headline cost of a BECS payment. It’s really, really low and they don’t necessarily - well, no-one’s really well quantified the hidden costs, the manual processes, particularly when it’s not clear who the payment came from, and also the additional mistaken payments and the fraud. Here it takes a lot of time to resolve those issues but really hard to quantify that into a number to then compare to the cost of vast payments where you’ve got - we’ve got rich data and you don’t have those problems.

And we also don’t think about the costs that you would need to - what you would need to invest in BECS to keep it running for a longer time period as well.

I think that’s a really great point, that one of the myths is that we can just keep BECS running as it is. And I think you called that out, Ellis. Sally, you have too. That’s not an option. So if you’re going to have to uplift, are you going to uplift the older system or one that’s purpose built.

And I think to that point, Jackie, it’s really making sure that people do understand the benefits of the NPP and it’s nots just about speed. It’s actually so much broader than that. It is about the processing efficiency as well. We’ve heard that organisations see reduction in their call centre volumes. They’ve seen a reduction in the cost of capital. They’re also seeing the ability to deliver and enhance customer experiences. It’s around the payment certainty. It’s some of those benefits and we need to really bring some of that to life, I think, to really help drive the case for change.

The indirect benefits of payments really. All right. We’ll wrap up there but thanks, everyone. Thanks to the panel. Takes all of you.