Banking Review

Let’s have a debate about bank account portability

Australia’s payments industry has dodged a bullet in the latest review of payment system reforms, but will need to continue to develop the EFTPOS scheme and M@MBO project if it is to convince the Reserve Bank to step away entirely from interchange fee regulation.

Although the industry has revived M@MBO, and is making tentative steps towards boosting the EFTPOS brand, the Reserve Bank Payments System Board is right to argue these initiatives are a long way from exerting any pressure on interchange fees.

To succeed with either initiative the industry will need to set aside competitive differences and invest millions of dollars in network innovation, something it has been loathe to do in recent years, even in the face of competition from outside parties.

Two weeks ago BPAY general manager Andrew Arnott told Online Banking Review the group was only just “dusting off the files” from the M@MBO project which was shelved in the second half of last year after the major banks failed to come to an agreement on the scope of the project.

Originally the project looked likely to facilitate bank account number portability, addressing the concerns of the Federal Government on the issue of account switching. At the time Arnott told Online Banking Review the proposal would facilitate a “Universal address for customers at their Internet bank.”

Now discussion seems to have shifted to the role of M@MBO as an online payments facilitator, as well as a peer-to-peer payments offering.

Online debit payments are already facilitated by Centricom-owned payments brand POLi, which recently signed Air New Zealand and Jetstar, and launched a consumer facing website – www.getpoli.com

Truly portable account numbers would be the real game changer, but just as telcos resisted mobile phone number portability, it’s likely some banks are resisting any moves to make account switching easier.

Regardless of how the M@MBO scheme eventually evolves, or the ambitions yet to emerge from the newly formed EFTPOS Payments Australia, it’s clear Australia’s payments industry needs to start innovating if it is to keep up with its more quickly moving global counterparts.

This week the State Bank of Pakistan issued a directive to its member banks to start moving towards real-time payments, with five banks facilitating same-day transfers in an initial pilot. It is also encouraging banks to issue SMS alerts to notify customers when payments are made.

Real-time transfers are already a reality in the UK which is opening up the way for further payments system innovation.

Australian consumers are yet to realise the benefits of such an environment, but innovation is happening on the edges.

Javelin Strategy & Research has predicted nearly one-third of retail transactions will be made using alternative payment methods by 2013, many of which will bypass banks and traditional card schemes.

Speculation continues to mount that Facebook is preparing to launch a payments platform, but closer to home we’re watching PayPal Australia for it’s next move…