Australia's NPP continues apace

Innovation is appearing on the Australian payments landscape's horizon, with the ever-widening use of contactless payments merely "the most obvious recent example", according to Reserve Bank of Australia governor Glenn Stevens.

In an address to the Australian Payments Clearing Association's annual general meeting yesterday he said the Reserve Bank regarded its Strategic Review of Innovation in the Payments System, and the process that led up to it, "as a landmark for the payments system in Australia."

"In mid-2012 relatively few of us would have made a contactless payment. Now they have become second nature to most of us and Australia has become the leading contactless market in the world," Stevens said.

"We are also now seeing the roll-out by several players of mobile-phone-based point-of-sale card acceptance facilities, where an intermediary provides a merchant some form of attachment to a smartphone or tablet, turning that phone or tablet into a card-acceptance device. This has significant potential to spread further the appeal of electronic payments to smaller businesses."

At the same time, a clear trend towards online commerce and online banking is leading to a rapid increase in remote  (as opposed to point-of-sale) payments, alongside increased efforts to improve the security of payments.

In contrast, one area where there had been less progress than expected was "mobile wallets" for point-of-sale payment, Stevens suggested. That is where a consumer's card or account information is incorporated into a phone application and the phone becomes the consumer's payment device.

Turning to the New Payments Platform, Stevens said the Reserve Bank was "fully aware of how complex and far-reaching this project is, and how costly. Our own contribution to the settlements architecture is a major project for us as well."

He said delivering the NPP was in the interests of Australian financial institutions, as the network, when up and running, could be expected to lead to further growth in electronic payments and a reduction in costs.

Stevens concluded that the biggest risk with the project was probably not a technical one, but "the risk that, in ten or 15 years' time, we will look back and see that we missed an important opportunity to provide something that will fully and efficiently support the payments needs of our economy."