We believe that the digital revolution will change the way Australian consumers and businesses will pay. But what technology, products and solutions will ultimately prevail is unclear. In payments, many grand ambitions by big industry players, from the big telcos and retailers to global technology players, have failed over the years.
Rather than having an opinion on winners, winning technologies or business models, Tyro has always advocated for an open and competitive payment environment and for an engaged regulator ensuring consumer protection, stability, access and level playing field. In such an environment, many feel encouraged to give new ideas a go and the best ideas will finally prevail, locally and globally.
Tyro calls on the industry to change course. The New Payments Platform (NPP) is a proof point on whether the major banks opt for protecting their turf by raising access barriers or open up to enable innovation and competition.
- The membership of the NPP is limited to Australian Deposit-taking Institutions (ADIs), which means except for PayPal as Purchased Payment Facility (PPF) and service providers to general banks, access is restricted to general banks. That eliminates de-facto memberships for new entrants because innovative new participants cannot, from the start, compete in the broad field of general banking, ie: transacting, taking deposits and advancing money.
- The access and service are discriminating because the scope of real-time or near real-time settlement mandated by the Reserve Bank is limited to the interbank settlement between ADIs. Non-ADIs are forced to use more or less performing and expensive overlay services offered by their competitors to make their funds available to their own customers.
Technological advancements and increasing numbers and types of bank and non-bank participants have increased the complexity and vulnerability of the payment landscape.
An innovative and competitive payment system – essential for productivity gains and growth – requires the industry, regulator and competition authority to work together to ensure open and fair access. All participants should share an interest in opening up the core payment system for innovation and competition to happen while preserving the reliability, confidence in and integrity of the overall system.