The Reserve Bank has called for input from the finance sector in its ongoing review into how technology is affecting Australia's payments system, releasing a discussion paper late last Friday.
The paper aims to discuss issues surrounding financial innovation, including replacements for cash and cheques, the benefits of data transmission during the settlement of payments and the need for real-time payment settlements. It also looks to identify constraints of innovative new technologies, like person-to-person and contactless payments.
The Reserve Bank observed that an effective person-to-person payments system in Australia has been slow to develop, adding that the only effective system had been borne from the proliferation of web-enabled smartphones.
"To date, there have been few effective electronic alternatives to the paper-based products of cash and cheques. Direct entry payments, initiated through internet banking, have been a reasonably popular method in recent times, but these suffer from the problems discussed in the previous section, and funds might not be available until the next day," the Reserve Bank said.
The RBA adds that if the concept of an electronic, near field communication-enabled payment system were to get off the ground in the near future, it could see telecommunications providers offer credit facilities stretching into the realm of financial services.
"In addition to traditional payment sources, mobile payments raise the possibility of telecommunications companies expanding their role as holders of stored value or providers of credit.
"For instance, in some models, payments made on a mobile phone are charged directly to the user's mobile phone bill, drawing funds from stored value on a pre-paid phone account, or a line of credit on a post-paid account. In Australia, mobile premium services are the principal example of such a model, but this is currently limited to digital goods and services," the Reserve Bank said.
The Reserve Bank's Strategic Review of Innovation in the Payments System kicked off mid-last year, and sees the RBA looking into "how innovation in the Australian payments system may be improved through more effective co-operation between stakeholders and regulators".
Responses to the discussion paper are open until 31 August.