Banking Review

The importance of payments choice

The Reserve Bank of Australia must surely be watching closely BPAY’s plan to develop a unique code for Internet banking users that would facilitate online payments.

Both the RBA and the Australian Bankers’ Association are preparing to lodge submissions to the Australian Competition & Consumer Commission outlining why consumers should not be prevented from using direct deposits or cheques to pay for the things they buy on eBay.

eBay Australia is seeking to mandate PayPal as the only method available for buyers and sellers to make or accept payment for goods. eBay is arguing PayPal is a more secure method of payment, and one that causes less disputes between buyers and sellers.

The Reserve Bank has been pushing the banking industry to provide more payments alternatives for consumers shopping online, so it’s no surprise it is interested in eBay’s plans. It’s possible the ABA is also making its submission with the proposed new online payments tool in mind.

Consumers can already use online banking to pay for things they buy online through POLi, which facilitates a secure transaction between a customer and their bank’s Internet banking platform.

Although New Zealand’s TSB Bank has endorsed POLi, Australian banks have been hesitant to support it, concerned about phishing implications and a loss of control of the user experience.

BPAY’s plan could result in a viable alternative to POLi and PayPal, which the banks would no doubt seek to benefit from, particularly if as is the case with BPAY bill payments, they can generate transaction revenue from every payment.

Either way, when you add in virtual debit cards and mobile payments, consumers in Australia will finally be offered more choice for online payments.

UPDATE 9 May

The Reserve Bank has today published its submission to the ACCC making the point that “It is possible that the proposed conduct might limit competition between PayPal and other existing on-line payment systems, and reduce the ability of new on-line payment systems to become established.”

Likewise Centricom has also lodged a submission arguing against eBay’s assertion that direct deposit payments by Internet banking are inherently less secure than PayPal, and warning of the reduced choice consumers could be left with if eBay were given approval.

The Australian Bankers’ Association has also levelled strong criticism of PayPal in its submission, arguing that by forcing eBay users to establish PayPal accounts eBay would be making it less convenient for buyers and sellers to adopt other payment services for off-eBay transactions.

Several other submissions have been lodged by eBay users, many threatening to boycott eBay and calling the move “un-Australian”.