At its meeting today, the Payments System Board discussed several issues, including:
The annual assessment of the ASX clearing and settlement facilities against the Financial Stability Standards. Members emphasized the critical importance of ASX delivering its major technology transformation projects, including CHESS Replacement. They 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 associated risks. Members also highlighted the importance of effective processes for managing operational incidents.
Competition in the debit card market was another key topic. 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, indicating that 70 percent 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 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 LCR's effectiveness 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 savings on to merchants. Additionally, they expect providers to accelerate progress on making LCR widely available for online transactions and enabling it for mobile-wallet transactions by end-2024.
The Board agreed to commence consultation on merchant card payment costs and surcharging as part of its Review of Retail Payments Regulation.
Members also discussed challenges in cash distribution arrangements in Australia and stressed industry cooperation to formulate a more durable future distribution system. Despite a decline in everyday cash use over recent decades, members noted that cash remains important for some community members and is held as a precautionary measure.
Internationally and domestically ongoing work on central bank digital currency (CBDC) was reviewed. Members discussed a draft paper jointly with Australian Treasury set for publication in September that will provide a stocktake and roadmap on domestic CBDC research priorities.
Development progress regarding New Payments Platform (NPP) was noted; since its launch in 2018 usage has grown significantly though adoption has been slower than anticipated for new capabilities like PayTo and International Payment Service.
Finally, an amendment was approved concerning conflicts-of-interest policy supporting oversight during migration away from Bulk Electronic Clearing System (BECS). This allows staff from Payments Policy Department to gather information from Banking Department related to BECS migration risks especially those concerning government payments.
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