The Reserve Bank’s Payment Systems Board has published its 2019 Annual Report highlighting trends in payments, clearing and settlement systems and retail payments regulation and policy issues.

The Report identifies the following matters of concern:

• the New Payments Platform (NPP): the full roll-out of NPP services by the major banks has been slower than expected. With some banks still focusing on building out their initial offerings, the development of additional NPP functionality is occurring more slowly than was hoped for;
• the need to reduce fraud in card payments systems, especially for card-not-present transactions;
• the reliability of retail payment systems. The Reserve Bank has been concerned about the recent significant increase in the number of operational outages in retail payment services. The Bank will be working with the industry and the Australian Prudential Regulation Authority on a standard set of operational performance statistics to be disclosed by individual institutions;
• Buy now, pay later (BNPL) services: as merchants are paid upfront by the BNPL provider, they do not bear the risk of fraud or customer non-payment. However, merchants pay fees to the BNPL provider that are typically much higher than the fees they would pay on other payment methods, such as credit and debit cards. Most BNPL providers also have rules that prevent merchants from levying a surcharge on the customer to recover those fees. This can be problematic for merchants that feel compelled to offer BNPL services as a payment option for competitive reasons but are unable to recoup the merchant fees from the customers that directly benefit from the service. The Bank will be considering if there are any policy issues associated with the growth of BNPL services as part of its 2020 review of card payments regulation.