Media Release Payments System Board Update: November 2020 Meeting

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

• The Bank's Review of Retail Payments Regulation. Work on the Review has resumed, with Bank staff considering various policy options and re-engaging with stakeholders over recent months. The Board discussed some possible policy responses to the major issues raised in the Review, particularly related to dual-network debit cards and least-cost routing, interchange benchmarks and caps, and the no-surcharge rules of buy now, pay later providers. The staff will step up information gathering and consultation meetings over coming months as the Bank develops draft conclusions for the Review.
• Treasury's recently announced review of the Australian payments system. The Bank will make a submission to the Review and considers it timely to review the overall regulatory framework, including elements that have been largely unchanged since the late 1990s.
• The involvement of multinational technology firms (bigtechs) in payments. Large technology-focused firms are increasingly offering payments services and have transformed the payments industry in some emerging economies. In Australia, the use of mobile wallets offered by some bigtech firms has grown strongly in recent years, although most card payments are still made using a physical (plastic) card. The involvement of these firms in payments has the potential to promote a more efficient payments system by delivering services that meet the needs of end users. But it may also give rise to a range of complex issues for the industry and regulators in the period ahead.
• The Bank's 2020 assessment against the Financial Stability Standards of LCH Limited's SwapClear Service, a UK-based clearing and settlement facility licensed to operate in Australia. The Bank's assessment will be published in coming weeks.
• ASX's project to replace the CHESS clearing and settlement system for cash equities. The Board discussed ASX's revised timeline of April 2023 for implementation of the replacement system and confirmed the Bank's expectations of ASX in relation to the new system. It emphasised the need for the replacement system to be implemented as soon as this can safely be achieved by ASX and users of CHESS. The Board is concerned about the recent operational issues affecting CHESS and ASX's trading systems and will be working to understand if there are systematic underlying issues.