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Australia ‘about two years ahead’ of UK on national payments strategy: AusPayNet chief

AusPayNet's Andy White: speaking with the Payment Association's Tody Craddock (right) at the 'Pay360' conference in London | Credit: Ian Hall

Australia is ‘about two years ahead’ of the UK in implementing a national payments strategy, the chief executive of AusPayNet (Australian Payments Network) has said during a conference in London.

Andy White, who has been at the helm of the payments industry association and self-regulatory body for the past five years, spoke on the topic of ‘A National Payments Strategy That Solves For Scams? What Can We Learn From Australia?’ at the ‘Pay360’ event.

Australia’s government published its ‘Strategic Plan for Australia’s Payments System’ in June 2023. The UK government is planning to publish a ‘National Payments Vision’ later this year as its ‘full response’ to the government-commissioned ‘Future of Payments Review’ published in November 2023.

“We [Australia] are behind [the UK] in some ways, don’t get me wrong, but in the case of a national payments strategy, I think we’re probably about two years ahead of you [UK] on that,” said White – who actually hails from the UK – during a ‘fireside chat’ (19 March) with Tony Craddock, director-general of the Payments Association, which organised the two-day conference.

In the UK the planned ‘Vision’ aims to ‘provide clarity on the government’s ambition for UK payments’. Its creation was proposed by the ‘Future of Payments Review’, which was led by former Nationwide Building Society chief executive Joe Garner. This described the UK’s payments landscape as ‘congested’ and said it would ‘benefit from a clear overall strategy’.

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Aussie plan: more than a ‘vision’

The ‘Strategic Plan for Australia’s Payments System’ has five overarching priorities: promoting a ‘safe and resilient’ system; updating the payments regulatory framework; modernising payments infrastructure; boosting competition, productivity and innovation; and promoting Australia ‘as a leader in the global payments landscape’.

“Our [AusPayNet’s] worry was that the initial version of the Strategic Plan wouldn’t go far enough,” White told the audience. “We thought it might be a bit ‘woolly’ and, actually, we [AusPayNet] kind of gave government a bit of an ‘out’ on that to say: ‘well, look, if the first version is a ‘plan for a plan’, that might actually be OK, so long as you lay out the process as to how you’re actually going to get to a plan.”

“Our Strategic Plan is exactly that,” he continued. “It isn’t just a strategy and vision – it actually prioritises initiatives in the Australian payments landscape […] they produce[d] a roadmap, and that added really helpful clarity on things like scams and payments modernisation, etc.” Overall he described the Strategic Plan as “pretty well set up” and “very well embraced”, including a commitment to review the strategy every 18 months (which, he said, would “really help”).

But, White said, the Strategic Plan also contained “elements that not everybody loved”, for example related to licensing of payment service providers (PSPs). “Most people really liked the idea of a level playing-field for licensing across those that were already regulated and those that weren’t. Of course, some pushed back on that – they didn’t see licensing as a positive thing,” he said. “The government’s view was that licensing demonstrably protects consumers. And, as we’ve seen with e-money licences elsewhere, [it] actually boosts innovation because, as an innovator, I have more credibility [if] I’m licensed than if I wasn’t.”

Asked by Craddock whether it was actually the role of any government to ‘show leadership’ in payments, White answered positively. “[But] there’s then a question around ‘where does government start and stop?”, he continued. “Government is doing more than it did previously but there was certainly a real concern that government would step into some of the day-to-day regulation of payments policy, which sits with our central bank, as it does here [in the UK] and in other places. The UK has obviously got a Payment System Regulator as well. So, there was that concern.”

He pointed out that Australia had a change of government (2022: from a conservative coalition to Labor) as the Strategic Plan was being developed but that the process had “bi-partisan support”. “Actually, Labor – particularly when they were then implementing the idea of the Strategic Plan – made it very clear that they didn’t want to step into that regulatory space, they wanted to leave that to the central bank,” White continued. “That was doubly helpful because the central bank actually needed some backing to perform that role in a modern payments world.

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Scams: mandatory industry codes on way

Australia’s Strategic Plan gave prominence to tackling financial scams, noting that Australians lost a record A$3.1 billion (about £1.67bn) to scams in 2022.

A National Anti-Scam Centre (NASC) was established on 1 July 2023 as ‘virtual’ centre within the Australian Competition & Consumer Commission (ACCC). White highlighted positive developments as including the sectoral breadth of the NASC’s 12-strong advisory board and, similarly, the “absolutely key” involvement of regulators, for example the Australian Communications and Media Authority (ACMA), from beyond the payments and banking world.

He also highlighted the use of ‘fusion cells’: short‑term taskforces to tackle specific scams. The first is focused on tackling investment scams – not only “biggest problem” but also one that, White said, “demonstrably proved that this isn’t a payment [sector] problem because you’ve got to deal with where those investments are being put up – things like malicious websites, how are those can be taken down, etc.”

Australia’s government has committed to introduce new mandatory industry codes setting out the responsibilities of the private sector in relation to scams, with a focus on not only banks but also digital communications (social media) platforms and telecoms providers. A Treasury consultation ran from November 2023 to 29 January 2024.

“Some of the obligations will be common across all three, and then some of them will be specific depending on which sector you’re in,” explained White. “We love that idea,” he said. “The only point that we make on that is that, actually – considered that [is] just being the first stage – we’d like to see ISPs (internet service providers) in there as well. And that’s really to try and deal with malicious websites, deal with email in the same way that you’re dealing with SMS and calls by having the telcos in there. And we’d like to see PSPs in there, because we worry [that] if it’s just banks, effectively the payments will just shift to PSPs.”

RELATED ARTICLE Hong Kong authorities launch public-private alliance to fight scams – a news story (4 December 2023) on the establishment of the Anti-Deception Alliance in Hong Kong

UK and Australia’s different approaches

In the UK a mandatory reimbursement scheme is being introduced later this year by the Payment Systems Regulator (PSR) to compensate victims of what is known as ‘authorised push payment’ fraud (often referred to as ‘APP fraud’ or ‘APP scams’): when someone is tricked into sending money to a fraudster posing as a genuine payee. This is scheduled to come into force on 7 October.

Asked whether Australia has a‘mandatory reimbursement model’, White responded that this was “a possible outcome of the [incoming industry] codes”. He said: “There is this question about ‘well, if I’m subject to the code, and I don’t meet my obligation, what happens to me?’. Logically some kind of penalty, and logically those penalties could then reimburse the consumer.”

More broadly, when it comes to tackling scams, White believes that Australia’s approach is more likely to be successful than the UK’s.  

“If you look at the UK government’s stated objective with scams, they want to stop scams at source,” he said. “I think we have a lot more chance in Australia with [our] model than you do with the current model here [in the UK] because if you’re focused on one sector which is at the end of the lifecycle, you’re not even trying to stop them [scams] at source, actually. And if you focus on reimbursement then well, you can argue all sorts of things about moral hazard and consumer obligation, but you’re also guaranteeing the revenue to the scammer.” (The reference to ‘moral hazard’ is to a risk that mandatory reimbursement could lead to an increase in payments where customers have taken insufficient caution, in the knowledge that any losses are likely to be fully reimbursed).

The Payments Association and four further trade associations had, Craddock responded, jointly written a letter (the day before Pay360) to the chair of the UK Parliament’s Treasury select committee on this topic.

RELATED ARTICLE Fraud fighters: public authorities look to fuse technology with data to battle criminals – write-up of a Global Government Fintech webinar on 7 November 2023 on the topic of Following the money: how can data and technology combine to help governments beat fraudsters?’ (the panel included representatives from the German and Spanish governments)

Australia putting ‘horse before cart’

Given that Australia does not yet have mandatory reimbursement, an audience member asked how Australian banks ‘can really focus their view in the same way that this PSR regulation has done in the UK’.

“We’ve seen the [Australian] Banking Association focusing on this, for example, in that they have actively anticipated the scams code by seeking to bring in Confirmation of Payee,” White responded.

“I think the interesting thing is, [that] – simply put – if data-sharing could be across the whole ecosystem or lifecycle, that’s going to be better. And that’s really one of the main things [that] the scam code is trying to incentivise,” he continued.

“There are some trials and pilots underway of information-sharing here between digital communication platforms and financial institutions, which is excellent and I just think that by having the scam code, effectively it becomes regulated, and therefore you’ve got the natural incentives there,” White continued.

“In respect of reimbursement, I think the good piece here is that we’re [Australia] thinking about regulating that whole lifecycle before we get to reimbursement whereas [in the UK], I have some sympathy for the Payment Systems Regulator in the sense that they were told it’s a reimbursement model and the only people they can regulate are the banks,” he said. “So, I think we’re [Australia] getting the ‘horse before the cart’, and then we can work out what penalties and reimbursement might look like.”

RELATED ARTICLE AI-enabled criminality ‘probably’ biggest growing risk in financial fraud battle – a news report on a ‘Financial crime, fraud and payment scams’ session at the ‘Payments Regulation and Innovation Summit’ event in London on 25 January 2024

‘Things we are doing are working’: Jones

White’s appearance at Pay360 came seven days after the NASC’s second quarterly report (42 pages) was published, showed scam losses from October-December 2023 as having almost halved compared to the same period in 2022.

Australia’s assistant treasurer and minister for financial services, Stephen Jones, launched the report during at a UK government-hosted ‘Global Fraud Summit’ (11-12 March). At a press conference Jones highlighted the Australian government’s recent actions in tackling fraud, such as the establishment of NASC and empowering the Australian Securities & Investments Commission (ASIC) to ‘pull down’ fraudulent investment websites (more than 4,000 have been taken down, Jones said).

“There [aren’t] many countries that could say that as a result of their interventions, losses are coming down,” he told journalists. “It was ourselves and Singapore who were able to say the things that we are doing are working and things that the Singaporean government have put in place are almost identical to what we’ve put in place.”

Asked by a journalist when the mandatory industry codes would be introduced, Jones responded that a ‘whole-of-government decision’ would be “hopefully within the next month or two”. He hoped that draft legislation would be “out by mid‑year with a view to parliamentary introduction after.”

“I’m really keen on ensuring that with those participants in the ecosystem, they don’t have to wait,” he continued, referencing the ‘online fraud charter’ published in November 2023 in the UK. This is a voluntary agreement between the UK government and big tech companies that aims to reduce fraud on the latter’s platforms and services. “In the UK they’ve got their code of practice signed up with major IT players who are the same players down in Aus,” he said. “There’s things that they can be doing collectively and voluntarily.”