Feds look at e-payments

The federal government is moving to boost its stock of knowledge in the outlook for electronic payments, including techniques for minimising fraud, as it considers how to regulate the area in the future.

The federal government is moving to boost its stock of knowledge in the outlook for electronic payments, including techniques for minimising fraud, as it considers how to regulate the area in the future.

The Department of Communications, Information Technology and the Arts (DCITA) said it was planning to fund research into market developments in the electronic payments space, including new payment instruments, channels for existing payment instruments in domestic and international markets and security related issues such as fraud.

DCITA said Australia was experiencing "a major shift away" from paper-based payment instruments to a more electronic environment. However, "the nature of these electronic environments remains uncertain."

DCITA is seeking consultants to conduct the research, particularly focusing on business to business e-commerce, peer to peer and device to device transactions, mobile commerce and micropayments-- or payments ranging from a few cents to AU$10.

The research will also discuss possible approaches to plausible future electronic transaction marketplaces, including the "role of the government and the applicability of various policy options in facilitating the development and future adoption of efficient and secure e-payments instruments".

"This consultancy is intended to explore the structure and operation of the electronic transactions marketplace and its role as a key component of the information economy. Consumers, merchants, businesses, non-profit organisations, governments and financial institutions all rely on ICT-based transactional products and services. Yet associated issues such as security, privacy, identity and fraud-minimisation still need to be addressed in order to promote and retain trust in these economic systems," DCITA said.

Electronic payments system refer to all payments that are completed using some form of electronic communications technology with a range of payments instruments such as debit or credit cards, Internet payments, direct debiting of accounts and the use of mobile phones or set-top boxes.

Stored value, pre-paid cards and accounts, electronic money and click-through transactions are also included.

DCITA believes that electronic payments system forms a "critical component" of the information economy.

"The ability to complete payments with confidence is critical to the efficient functioning of the electronic transaction marketplace and therefore to the development of e-commerce more generally."

Although various government agencies are already working to make the electronic payments marketplace more efficient and competitive, DCITA said their interest is to investigate the "longer term potential of the future electronic payments system for the Australian information economy".

DCITA clarified that the consultancy is not intended to "make comments on current regulatory reform processes".

DCITA said that end-users are now seeking not only lower fees and transaction costs but also demanding greater innovation, flexibility and simplicity in payments facilities.

"Consumers are seeking options such as the use of online payments, micropayments, remote and secure authentication, access anywhere and integrated loyalty schemes. At the same time, direct pricing of payments instruments in a market environment is enabling many countries to realise the potential economic gains from shifting to more efficient electronic payments," DCITA said.

The final report is expected to present a comprehensive analysis of the drivers of change as well as structural barriers to innovation and productivity improvements for payments in the electronic transactions environment.

The research is also expected to include views on the possible roles that government could take in addressing any structural barriers and fostering the emergence of innovation, competition, improved efficiency and adoption rates.