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Australian payments: strategic trends and observations Scenarios Roundtable Canadian Payments System Review Chris Hamilton, CEO 4 points in 15 minutes… • • • • 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