The Reserve Bank of Australia (RBA) has released a risk assessment regarding the payments industry's proposed decommissioning of the Bulk Electronic Clearing System (BECS). The assessment highlights that the industry lacks a shared vision for account-to-account payment features in Australia and notes insufficient coordination, planning, and certainty about the transition.
BECS serves as Australia's primary system for account-to-account payments, facilitating critical transactions such as welfare, pension, salary, and bill payments. Given the potential economic harm from disruptions to BECS payments, the RBA expects any transition to alternative systems to be orderly, safe, and reliable.
The risk assessment includes several recommendations deemed foundational. It urges the industry to define a vision for future account-to-account payment systems in collaboration with the government and RBA while considering public interest. Additionally, it recommends comprehensively evaluating alternatives to achieve this target state and establishing a transition plan with proper coordination and stakeholder engagement mechanisms once a target state is agreed upon.
Assistant Governor (Financial System) Brad Jones emphasized that "a serious disruption to account-to-account payments has the potential to undermine confidence in the financial system," necessitating an orderly and well-coordinated change program. He stated that "this requires industry to establish a clear vision of the future target state" while incorporating end-user needs and public interest considerations from the outset.
The RBA acknowledges recent progress made by the industry toward these recommendations and will continue overseeing transition activities through assessments of implementation efforts. The RBA also plans to support modernizing account-to-account payments by ensuring public interest considerations are reflected in strategic objectives discussions.
Although BECS has been a reliable system for over 30 years, significant changes are necessary for it to remain fit for purpose. Alternative payment rails like NPP may offer benefits for account-to-account payments. Consequently, industry announced plans in 2023 to phase out BECS by June 2030 conditionally.
The Commonwealth Treasury's 2023 Strategic Plan supports an industry-led phased transition away from BECS but notes challenges in migrating bulk payments made by businesses and governments. The need for support among large business and government users who have integrated BECS into their processes was also emphasized.
Governor Michele Bullock acknowledged significant challenges facing successful transitions from BECS during her 2023 speech but highlighted that setting a target end date could focus industry attention on planning efforts effectively.
Initial feedback received by RBA regarding its risk assessment was shared by Assistant Governor Brad Jones during his December 2024 speech: "there has been insufficient industry coordination," he said, stressing that establishing common visions underpinning desired end states is essential if programs on this scale are expectedly successful.