Batch payment processing might have an enduring place in Australia’s payments mix, amid hesitancy by the Reserve Bank to embrace the industry’s plans to migrate away from the established system for direct entry.
The RBA yesterday published its Risk Assessment on the Decommissioning of the Bulk Electronic Clearing System, and as expected this assessment is rather toxic.
As industry planning stands, bulk payments – such as welfare and payroll – would be transitioned to an account-to-account payment via the more modern rails of the New Payments Platform by 2030.
BECS has been in operation for more than 30 years.
While it is a highly reliable system, “significant changes are needed to keep it fit for purpose” the RBA risk assessment says.
“Furthermore, features supported by the NPP, such as 24/7 real-time payments and more modern messaging standards, offer potential benefits for A2A users.
“However, to leverage these opportunities, there are major challenges industry would need to address before it could safely and successfully migrate payments off BECS in a way that serves the broader public interest.”
The Reserve Bank’s language on the state of play with industry preparations for the BECS migration is often damning.
“The target end state for A2A payments in Australia has not been defined” the RBA believes.
“Industry, government, the RBA and end users are yet to agree strategic objectives or a vision for the future of A2A payments. It should be clear how the vision and strategic objectives for A2A payments balances the spectrum of interests across the A2A ecosystem and serves the broader public interest.
“Alongside a vision and target end state, a governance and coordination framework is also required to enable analysis of a more comprehensive set of options.
“The governance framework should oversee feasibility (or cost benefit) analyses, planning activities and prioritisation, sequencing, and coordination. This should include accountabilities over planning and execution, a voice for all stakeholders, and mechanisms to validate the target end date for BECS as a result of the planning process.”
Most critically, “the perspectives of end users need to be directly integrated into the planning and decision-making processes.
“Decision-making processes should be designed to seek and incorporate a broad spectrum of requirements.
“This will take time, but emphasis on the speed of decision-making should not trump this priority if a durable solution is to be found.”
Australian Payments Plus, operator of the NPP, said most of the bulk files handled at present on BECS contain less than 10 payments each, “which can easily be sent today via the NPP.
“For the relatively small share of very large bulk files, used by a small number of government and corporate customers, AP+ is working closely with the industry to develop an NPP Multi-Credit Transfer service that will support the processing of these unique payment files.”
Australian Payments Network, the self-regulatory body for the payments industry in Australia, says it is working with AP+ and its wider membership on a program of work that will address the recommendations made in the report.
AusPayNet and AP+ have recently lodged an application for authorisation with the ACCC, which is currently undergoing public consultation and will enable the industry – with input from the RBA and government – to develop a vision regarding the future of account to account payments system in Australia.
“It will also help establish high-level deliverables and milestones for achieving that vision, including clear prioritisation and sequencing” AusPayNet said.
Subject to ACCC authorisation, AusPayNet will host and facilitate Roundtables between AusPayNet, AP+, the RBA and the Commonwealth Treasury to achieve these outcomes.