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Connexus : Issue 41
parent brand, the new Google Wallet is attracting publicity. It converts an Android mobile phone into a credit card for contactless payments, letting consumers simply wave their smartphone near a merchant’s terminal to make a transfer. PayPal has also been improving merchant pay ment platfor ms to make it easier for shoppers to pay for goods via a mobile phone. Even more innovative perhaps is Square, which offers a credit card reader that plugs into smar tphone jacks and enables vendor s to accept credit card payments via a mobile. The reader is free, but Square charges 2.75 per cent on ever y credit card transaction. Amid the changes, banks and leading transactional banking product providers such as Cuscal and Indue are weighing up their prospects. Cuscal is developing a platform to match the likes of goMoney, while Indue has been trialling mobile phone apps for use on Blackber r y phones and iPhones. It’s impor tant for those in traditional banking ser vices to match developments elsewhere in the market, says Cuscal general manager of strategy and communications Adrian Lovney. “ We may need to do this by partnering with non-traditional financial ser vices players like the technology companies, or become technology-centric companies ourselves.” The new methods of payment also provide access to r icher data that may help ser v ice customers, he says. “If we can gather more information on what and how consumers are purchasing then we have the ability to target and influence them after the payment. This is where organisations like Amazon excel - by making appropriate recommendations and upselling. Manuel Garcia, chief executive officer at Indue, agrees that the inventive ways to facilitate payments are creating oppor tunities for new income streams. He war ns though that long-term success will be based on customer acceptance. “Ultimately even the best and most well-thought-out technology platfor m is irrelevant unless the consumer wants it.” Chief among the considerations when rolling out new payment solutions will be secur ity checks, according to Garcia, who says consumers are still ner vous about accessing virtual wallets over wi-fi networks. “So there’s a challenge for the industry around security and I expect there will be significant investment to enhance secur ity,” Garcia says. Regulatory review The Reserve Bank, in its recent Strategic Review of Innovation in the Payments System, has acknowledged that the ageing national payment infrastructure needs refor m, and that there have been some coordination problems in the system over the years that justify calls for more ef fective cooperation between stakeholders and regulators. The paper sets some initial strategic objectives: same-day settlement of direct entry payments; early progress towards real-time retail payments; availability of pay ment systems out of nor mal banking hours; the ability to transmit additional remittance data with payments; and the capacity to more easily address payments. If the RBA’s targets are met, Australians will be able to make real- time payments outside of normal banking hours by the end of 2016. The Australian Payments Clearing Association, the industr y’s self- regulator y body, has welcomed the RBA’s conclusions and endorses a consultative approach to issues of pay ment system evolution and the suggestion that a new industr y-wide coordination body should build on A PCA’s existing ar rangements. APCA CEO Chris Hamilton says that, while Australia has been well ser ved by its payments infrastructure, change is now required. “ What the RBA is saying is that there are some basic infrastructures or platforms which are getting long in the tooth and which need to be renovated, and I think there would be a lot of general agreement with that proposition in the industry. The challenge is to work out how best to do that renovation.” Hamilton says the sector must respond to two key forces. First, there is a move towards hyper-networking @ We are seeing a change in the way people think of money and banking, and the way they interact in the retail space. www.abacus.org.au 13