1. Australian payments: strategic trends and observations Scenarios Roundtable Canadian Payments System Review Chris Hamilton, CEO

2. 4 points in 15 minutes… Australian payments overview Payments “marketisation” Promoting innovation Industry policy implications

3. A quick tour of Australian payments Australian non-cash payments 2009 Source: APCA/RBA

4. A quick tour of Australian payments Non-cash payments per capita

5. Global positioning Basic Typology of Payments Markets Source: McKinsey Global Payments Map

6. …the ‘traditional’ view Integrated industry governance: central bank and APCA Integrated daily central bank account settlement Bilateral links, “strong” industry standards Utility systems, limited contestability (cards) Open competition: financial institutions and a few others © 2010 Australian Payments Clearing Association

7. ‘Button’ competition Domestic PIN debit commercialises to compete Increasing competition in non-card consumer payments BPay, PayPal etc Pro-competitive regulatory reform: access, interchange caps (to go?), surcharging Broad industry debate on the platform But: ‘Marketisation’ strikes! © 2010 Australian Payments Clearing Association

8. Flexible, integrated batch and real-time Common message library? APCA minimum standards for open access, security... the vision Universal IP connectivity: COIN + SWIFT + ?? Multi-layered, dynamic competition © 2010 Australian Payments Clearing Association

9. A network theory of innovation The integrator’s dilemma: how can a new CVP build critical mass? The “big bang”: full new service eg Faster Payments (UK), SEPA Credit (EU) Incumbents coordinate to improve network eg EMV/chip Innovator’s dilemma: new entrants “pick off” marginal customers eg PayPal “Classic” theory: incumbents serve their best customers eg loyalty programs BUT © 2010 Australian Payments Clearing Association

10. The crystal ball: Convergence Smartphone app –Cards and online collide –Opportunity: wallet rationalisation –Plethora of choice –Lifestyle integration Huge challenges –Lots of collaboration –Security/antifraud

11. Separate instrument and platform governance Promote multilayered competition, allow for disruption Transparently integrate public and industry elements Don’t pick winners! The policy process

12. Australian payments: strategic trends and observations Scenarios Roundtable Canadian Payments System Review Chris Hamilton, CEO