Payments System Board Update: August 2024 Meeting | Media Releases

At its meeting today, the Payments System Board discussed a number of issues, including:

• The annual Assessment of the ASX clearing and settlement facilities against the Financial Stability
  Standards. Members discussed the critical importance of ASX delivering its major technology
  transformation projects, including CHESS Replacement. Members also discussed the fundamental
  importance of strong risk management. The Board endorsed the RBA’s Assessment, which will be
  published after it has been provided to the Treasurer and the Australian Securities and Investments
  Commission.
• The RBA’s oversight of international financial market infrastructures including LCH SwapClear,
  CME, Clearstream Banking, Euroclear Bank, CLS and Swift. The Board noted that financial market
  infrastructures are increasingly outsourcing core services and discussed the risks associated with
  this trend. Members also discussed the importance of effective processes for managing operational
  incidents.
• Competition in the debit card market. The RBA remains strongly supportive of merchants having the
  ability to choose their preferred debit card network through least-cost routing (LCR). The RBA has
  published LCR reporting from large providers for end June 2024, which indicates that
  70 per cent of their merchant customers had LCR enabled for in-person transactions. For
  online transactions, 6 out of 12 providers have made LCR available to all of their
  merchants. While progress has been made over the past year, some providers still have much more work
  to do. As part of the upcoming Review of Retail Payments Regulation, the RBA will seek stakeholder
  views on the effectiveness of LCR and whether further regulatory intervention is appropriate. In the
  meantime, the Board expects providers to continue enabling LCR for in-person transactions for
  merchants that could benefit from it and pass the savings on to merchants. The Board also expects
  providers, including payment gateways, to accelerate progress on making LCR widely available for
  online transactions and enabling LCR for merchants that could benefit from it. The Board continues to
  expect the industry to deliver LCR functionality for mobile-wallet transactions by the end of 2024.
• Review of Retail Payments Regulation. The Board agreed to commence consultation on merchant card
  payment costs and surcharging.
• The future of cash distribution arrangements in Australia. Members discussed the challenges in the
  cash distribution system and the need for industry cooperation to formulate a more durable future
  distribution system. While the use of cash for everyday payments has declined in recent decades,
  members noted that cash remains a very important means of payment for some members of the community
  and is also held for precautionary purposes, including as a backup to electronic payments. Consistent
  with the Government’s strategic priority on maintaining adequate access to cash services for the
  public, the RBA places a high priority on banknotes being available for those who want and need to
  use them, including for rural and regional Australia.
• International and domestic work on central bank digital currency (CBDC). Members discussed the
  ongoing program of international and domestic research on CBDCs. They discussed a draft paper, to be
  jointly published with the Australian Treasury in September, that will provide a stocktake and
  roadmap on domestic CBDC research priorities. Members were supportive of the plan for the research
  program to take into account a wide range of views and perspectives on the future of money. As part
  of its research program, the RBA is exploring different settlement models for tokenised assets. This
  work on wholesale tokenised markets is now moving into a more applied phase and is likely to involve
  the development and testing of prototypes with industry partners.
• The development of the New Payments Platform (NPP). Members noted that NPP usage has grown
  significantly since it was launched in 2018. A number of new payment capabilities have also been
  added – in particular, PayTo and the International Payment Service – although their
  delivery and adoption has generally been slower and more uneven than anticipated. The Board expects
  payments service providers to accelerate their rollout of these new services. The RBA is engaging
  with industry participants to understand the opportunities for, and barriers to, the further
  development of NPP functionality. As part of this engagement, the Board met this afternoon with a
  group of fintech firms to discuss innovation and access issues relating to the NPP.
• Amendment to the policy on conflicts of interest to support oversight of the industry-led migration
  away from the Bulk Electronic Clearing System (BECS). The Board approved an amendment to the
  RBA’s policy on Managing
  Potential Conflicts of Interest Arising from the Bank’s Commercial Activities to allow
  staff from Payments Policy Department to gather information from Banking Department and jointly
  participate on working groups related to the migration away from BECS to modern payment systems. This
  will allow Payments Policy Department and the Board to better oversee risks and issues posed by the
  BECS migration, especially those related to government payments.