Different Payment Systems in Australia

Every financial transaction involves the movement of money from one party to another. What are the different payment systems in Australia that facilitate this movement? In this guide, we’ll cover the country’s payment systems as well as the role of the RBA in regulating payments.

What is a payments system?

Australia’s payment systems allow consumers or businesses to transfer funds from one account to another. These funds include a variety of different payment types and methods like electronic funds transfers, cash, and debit cards. Some payment systems are designed to facilitate bank transfers, while others are used to process card transactions – but most operate behind the scenes of banking transactions.

What role does the RBA play in Australia’s payments system?

The RBA, or Reserve Bank of Australia, is the country’s central bank responsible for issuing currency and creating monetary policy. It also provides banking services to government agencies and manages the country’s gold and foreign exchange reserves.

The Reserve Bank Act of 1959 split the RBA into two separate boards:

• Reserve Bank Board

• Payments System Board

So, what role does the RBA play in Australia’s payments system? It ensures that payment systems are secure and efficient through legislated management. The Bank works closely with industry committees to facilitate payments clearing systems, ensuring funds are settled in a way that promotes overall financial stability.

In terms of efficiency, the Reserve Bank works on regulations that reduce cheque clearing times and boost direct debits, while improving the competitiveness of card systems. This includes lowering interchange fees and removing merchant restrictions on card payments. In addition to making these systems more efficient, the RBA continuously monitors payment technologies and preferences with regular consumer surveys.

What are different payment systems in Australia?

There are numerous methods of transferring funds and accepting payments within Australia’s various payments systems.

Cash: According to the Reserve Bank’s most recent Consumer Payments Survey in 2019, cash payments accounted for 27% of consumer payments. This number continues to decline as consumers move towards more efficient electronic payment methods, however.

Credit cards: Retail transactions using either credit or debit cards increased by 60% from five years earlier, according to RBA figures. Credit card payment systems include the big names like Visa, MasterCard, Diners Club, and American Express as well as bank-specific cards from Australian financial institutions like Commonwealth Bank and others.

Direct Entry: Direct entry payments enable the transfer of funds between bank accounts using the Bulk Electronic Clearing System (BECS) to make recurring payments, engage in third-party transfers, pay wages and salaries, or issue tax refunds. GoCardless facilitates direct debit payments using this payments system, allowing businesses to pull payments directly from customer bank accounts for fast, easy settlement.

EFTPOS: Another payment system in Australia is EFTPOS, or electronic fund transfer point of sale. These take place over the EFT network and are regulated by AusPayNet. EFTPOS transactions take place at retail locations. This system also covers ATM withdrawals.

BPAY: Regulated by Australia’s four major banks, the BPAY payments system is accessible through most of the country’s banks, credit unions, and other institutions. Consumers and businesses can use BPAY to pay for things like phone and utility bills.

New Payments Platform (NPP): One of the most recent additions to Australia’s payment systems is the New Payments Platform. The NPP was developed to speed up the payment process significantly, offering real-time settlement of funds. Compared to direct debit or other electronic transfers, this is a faster, more convenient option as it functions 24/7. In 2022, the NPP will release its new PayTo service allowing merchants to initiate customer payments directly from their bank accounts in real-time, a faster alternative to BECS payments.

Understanding Australia’s payments systems and the role of the RBA ensures you can provide a more convenient, efficient, and cost-effective payment service for your customers.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.