MY SAY: New banking plan will transform payment system
HAVE you ever wondered why some banking transactions take a day or two to complete and others happen almost instantaneously?
It has everything to do with Australia's payment system - the underlying rules, processes and technology that enable us to buy, sell, pay and settle.
Don't be misled. Our payment system is not "the banks", although they are a major user.
It is much larger than our banks and includes things like the eftpos terminals, ATMs, security token providers, encryption and the underpinning communication systems.
Each country is different and Australia's payment system is about to undergo a major overhaul. Driving the need for change is the growth in digital and mobile transactions.
Last week the Australian Payments Council released the Australian Payments Plan. The council is made up of key payment system stakeholders, including the RBA, the banks, online and physical payment facilities, such as PayPal and even Woolworths.
Its role is to ensure Australia's payment system meets the changing needs of Australian businesses and consumers with "innovative, safe and competitive payment services".
It's fair to say that consumers and business now expect payments to be instantaneous and not delayed a day or two. This is a particular rub for staff waiting on salaries or contractors waiting for their invoices to be paid.
The plan foreshadows that the new payment system is not just about solving the speed issue, it's about optimising the convergence of mobile solutions and payment channels.
It's about recognising that the internet is changing the meaning of everyday household items.
The new payment system is going to have to cope with the prospect that our fridge in the future can do our shopping on our behalf. These devices will know when we're low on certain items, know our shopping days and know when to place the order and for how much we're willing to spend.
The New Payment System will rely on authenticating and knowing our digital identity via intelligent devices, as opposed to the old fashion way of each of us having to produce the driver's licence, Medicare card and bankcard to a person.
It won't be long before the likes of our major telcos decide to compete with our major banks.
I don't mean in terms of becoming a bank as we know it. Our telcos are likely to be in a position to cut out the bank altogether and create innovative financial and payment alternatives that rely on replacing your payment card with a payment device (aka your Smart Phone).
All of this will necessarily place enormous pressure on authenticating your digital identity instantaneously.
The way forward within the plan recognises that much more work needs to be done in understanding the cyber risks, the digital identity risks and the likely impacts and demands on the system when things inevitably go wrong for a small percentage of us.
I'm looking forward to the challenge.
I'm a believer in technology and its usage to benefit the community and individual lives. But I'm also a big believer of testing for vulnerabilities and never remaining satisfied that we've achieved the very best response to our challenges.
Dr David Lacey is a Senior Research Fellow at the University of the Sunshine Coast and director of iDcare, Australia & New Zealand's national identity support service.