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Australian payments:
strategic trends and
observations
Scenarios Roundtable
Canadian Payments System Review
Chris Hamilton, CEO
4 points in 15 minutes…
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Australian payments overview
Payments “marketisation”
Promoting innovation
Industry policy implications
A quick tour of Australian payments
Australian non-cash payments 2009
Source: APCA/RBA
A quick tour of Australian payments
Non-cash payments per capita
Global positioning
Basic Typology of Payments Markets
Source: McKinsey Global Payments Map
…the ‘traditional’ view
Integrated
daily
Integrated
industry
Bilateral
links,
Open
competition:
Utility
systems,
limited
central
bank
account
governance:
central
“strong”institutions
industry
financial
contestability
(cards)
settlement
standards
bank
and others
APCA
and
a few
© 2010 Australian Payments Clearing Association
But: ‘Marketisation’ strikes!
• ‘Button’ competition
• Domestic PIN debit commercialises to compete
• Increasing competition in non-card consumer
payments BPay, PayPal etc
• Pro-competitive regulatory reform: access,
interchange caps (to go?), surcharging
• Broad industry debate on the platform
© 2010 Australian Payments Clearing Association
... the vision
Universal
APCA
minimum
Common
message
Flexible,
integrated
Multi-layered,
IP connectivity:
standards
fordynamic
open
library?
batch
and
real-time
competition
COIN
+ SWIFT
+ ??
access,
security
© 2010 Australian Payments Clearing Association
A network theory of innovation
“Classic”
theory:
incumbents
The
dilemma:
Theintegrator’s
“big
bang”:
full new
Innovator’s
dilemma:
new
Incumbents
coordinate
toeg
serve
their
best
customers
how
can
a
new
CVP
build
service
eg“pick
Faster
Payments
entrants
off”
marginal
improve
network
eg EMV/chip
loyalty
programs
BUT
critical
mass?
(UK),
SEPA
Credit
(EU)
customers
eg PayPal
© 2010 Australian Payments Clearing Association
The crystal ball: Convergence
• Smartphone app
– Cards and online
collide
– Opportunity: wallet
rationalisation
– Plethora of choice
– Lifestyle integration
• Huge challenges
– Lots of collaboration
– Security/antifraud
The policy process
•Separate instrument and platform governance
• Promote multilayered competition, allow for disruption
•Transparently integrate public and industry elements
• Don’t pick winners!
Australian payments:
strategic trends and
observations
Scenarios Roundtable
Canadian Payments System Review
Chris Hamilton, CEO