Govt pressured over access card network strategy

Govt pressured to use group's' networks for access card

A group of banks and e-payment providers lobbying the government to use their payment networks for the national access card project, today claimed that the construction of new infrastructure would cost over AU$500 million.

The welfare access card will replace 17 health and social service cards, including the popular Medicare card, and will hold a person's name, address, date of birth, Medicare number and concessional status.

Representatives for the big four banks said any government move to build its own access card payments network instead of using their payments networks represented a 'humongous' IT project risk.

The banks -- ANZ, Commonwealth, National Australia Bank (NAB) and Westpac -- credit providers Visa and Mastercard, and vendors Giesecke & Devrient and Keycorp, have formed a group called the Australian Smartcard Users' Forum. The Forum is pressing the government to use its existing private networks for welfare payments ahead of an industry briefing on December 13.

However, the government has previously said it may reject the proposal if it can't agree on the fee it will pay the companies for each transaction on their network. It recently offered banks 23 cents per transaction to refund electronic Medicare claims via their networks, according to the Forum.

Jane Mussared, executive officer of the Forum, said it would cost government AU$500 million to setup its own network, AU$100 million for a switch mechanism to enable transactions, plus AU$60 million per annum for maintenance.

These were conservative estimates, she said.

"None of these figures include upgrades, ongoing maintenance, staffing, any of those issues," Mussared said.

Bruce Munro, Forum representative and NAB regional general manager, specialised business, echoed Mussared's sentiments.

Using existing infrastructure was a safe alternative to the risks of building a new network before the access card launches in early 2008, according to Munro.

"My understanding is [the government] is heading down the path of building their own infrastructure. They've had some budget allocation to start down the track. "But the real risk is the IT project risk associated with the project...it'd be humongous," he said.

Despite its concerns, the Forum expected the government to dictate the transaction cost it would be prepared to pay private operators for the use of their networks at the industry briefing next week.

Yet, the Forum was not prepared to say what it wants to charge government until more details on the access card are provided.

The transaction cost would depend on the type of transaction the access card used, according to NAB's Munro. Medicare e-claiming, for example, was a complex transaction, according to Munro.

"[But] if it is just validating the card they want, that'll probably be cheaper than 23 cents," he said.