The Reserve Bank of Australia (RBA) has become increasingly frustrated, as have many consumers and businesses, over the slowness of Australia's payments system.
With some transactions taking days to be processed in this digital age, the RBA wants all banks to be able to make real-time payments by the end of 2016. It seems crazy that transactions between different Australian banks and businesses take at least one day to 'hit' accounts.
But it seems the biggest obstacle to achieving the RBA's goal is getting the participants to coordinate and work together to change the current system. In association with the Australian Payments Clearing Association (APCA), the RBA has published a joint paper recommending the setup of a high level body called the Australian Payments Council. The Council's goal is to get stakeholders and regulators working more closely together and foster innovation in an effort to improve Australia's payment's system.
The move comes after the Payments System Board (PSB), which is focused on promoting efficiency and competition in the payments system, found that there were inherent challenges in achieving industry coordination on major strategic issues.
The Australian Payments Council will be made up of a diverse range of stakeholders including a participant from each of the major banks ANZ Bank (ASX: ANZ), Commonwealth Bank (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac Banking Corporation (ASX: WBC), two representatives from other financial institutions, two representatives from payment schemes, one representative from self-acquirers and two representatives from facilitators and 'others'. The RBA will be represented by an Assistant Governor and the APCA by its CEO.
In November 2012, the RBA outlined its core criteria for a Fast Payments Solution, which included real-time payments between authorised deposit-taking institutions, enable the payer to receive confirmation that payment has been made into the correct account, and the ability to send more complete information about the transaction with payments.
Foolish takeaway
While it may seem that another 'council' or body is the last thing we need, anything that will get Australia to a real-time payments system should be applauded.
Every Aussie investor knows Telstra, but only the smart money is on the move now… Discover whether you should buy, sell or hold Telstra shares in our brand-new report, written by a top Motley Fool analyst. It's free, click here for your instant download!
More reading
- Telstra launches low-cost internet carrier
- 5 great buying opportunities right now
- 5 core stocks for new investors
- 4 high earnings growers to pick up your portfolio
Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.
