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Payments Systems

For many years it has been the major Australian banks that have controlled the payment systems, even though the Australian Competition and Consumer Commission (ACCC) has attempted to break this oligarchy. The market place, through the explosion in consumer driven internet activities, has resulted in major changes to the front end of the payment systems that have had flow on implications to the backbone of payment systems.

One notable consequence is the reduction in the use of cheques of all descriptions, e.g. bank cheques, travellers’ cheques, etc. The reduction in cheque usage across the community has resulted in the major clearers joining forces by combining their back office functions as part of efficiency initiatives.

In June 2012 the Strategic Review of Innovation in the Payment System was published. The review identified gaps, notably in the area of Direct Entry (DE). The Reserve Bank of Australia (RBA) has set down a time table for the banks to resolve them. The RBA wants the banks to introduce same-day settlement of all direct deposit payments from the end of 2013. By the end of 2016, the RBA expects there to be the ability to make real-time payments, including payments outside normal banking hours, so bills paid at night or on the weekend will be paid (given value) straight away.

Chairmont has conducted a number of assignments in this sector including ATM, credit card and cheque clearing. A major piece of work, over many years, followed the RBA mandating that the cheque clearing timeframe should reduce from 5 to 3 days, and the dishonour process should be automated. This industry wide change was supervised by the Australian Payment Clearing Association (APCA) and Chairmont was a member of the APCA Electronic Presentment and Dishonour Committee. This program of change took nearly 3 years and involved bi-lateral and multi-lateral testing for all tier 1 and 2 members.

Fraud has always been a problem with credit cards, EFTPOS and ATMs as fraudsters use a variety of techniques, e.g. skimmers. Until recently financial institutions have been willing to accept the loss levels with these products and transaction types, as they have been able to recover losses through higher interest rates on cards. However with the explosion in internet and mobile phone banking, these losses are mounting and it has corresponded with an increase in fraud as scammers use a variety of techniques. The introduction of two factor authentication has only slowed the fraudsters and the financial services industry will always be playing catch up, with fraudsters likely to be one step ahead of the industry as the latter strive to keep pace through security improvements.

Chairmont has conducted a number of assignments on identity and transaction authentication. Our involvement in companies such as Future Internet Technologies Security (FITS) has put us at the forefront of the issues in this space. In the evolution of secure identity authentication the next stage will be multi-factor authentication that includes hardware and software in an integrated solution with perhaps an independent 3rd party playing a role in the authentication process.


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