Source: Airservices Australia
Introduction
Let me begin by acknowledging the tragic events in Bondi over the weekend. Our thoughts and condolences go out to anyone who has been affected.
Thank you to AusPayNet for the opportunity to join you all here at the annual Summit. Though this forum has been running for less than a decade, it has emerged as a centrepiece on the calendar for both industry and regulators. I suspect that at least some part of the reason we have a world-class payments system in Australia is because we have opportunities like this where a range of big ideas for the future of the system can be thoroughly debated. Long may this spirit of engagement continue.
It is difficult to think of another time where developments in the payments and digital money ecosystems – in Australia and abroad – were more fascinating than now. There are big structural forces reshaping the operating environment, technological change and geopolitical disruption among them. This change is amplifying both risks and opportunities. As Governor Michele Bullock observed in her Bradfield Oration, our collective challenge is to manage both in a way that improves the lives of all Australians.
The key question I will address in my remarks today is this – in a period of profound structural change, how can we build an ecosystem for payments and market infrastructure that is both highly resilient and highly innovative? One that is not just able to weather storms, but as I discussed recently, ‘anti-fragile’, in the sense that it stands to benefit from change and disruption.
It is no accident that the twin themes of resilience and innovation underpin the RBA’s refreshed payments policy strategy out to 2027. This strategy has recently been endorsed and published by the Payments System Board (PSB) to assist industry in their prioritisation efforts. Conscious that industry already has plenty on its plate, the RBA’s contribution to the implementation plan of the Council of Financial Regulators (CFR) ‘Better Regulation Roadmap’ will also shortly be published to provide industry with additional visibility over the sequencing of our wider priority set. The bottom line today is that I am optimistic our system is up to this twin challenge, but it will require everyone involved – industry and regulators – to prioritise somewhat differently to recent decades.
Why resilience, why now?
If we step back for a moment and consider the properties of resilience that could apply to any technical system – not just payments – and one whose operating environment is changing in material ways, quite a few possibilities spring to mind: interoperability, diversity, redundancy and adaptability. Each of these brings pros and cons on their own of course, and how they interact is critical – as a case in point, if diversity simply translates to duplicating systems with limited interoperability, there may be more costs than benefits to the wider system. But in the years ahead, I suspect that concepts like these will feature more prominently in the design of our payments system and associated infrastructure.
To move from the conceptual to the concrete, a safe and resilient payments system underpins economic activity in Australia. Every day, the average daily value of payments settled at the RBA through our real-time gross settlement system is equivalent to more than 10 per cent of Australia’s annual GDP. The size and interconnectivity of our payments system means that major disruptions could have systemic consequences – for financial stability, economic activity and, in extreme cases, social cohesion. This is a sobering reality. Three themes stand out here, all structural rather than cyclical in nature.
The first relates to our deteriorating strategic circumstances. As the Director-General of the Office of National Intelligence recently reminded us: the pace and gravity of strategic change is accelerating, our region is now the epicentre of global systemic rivalry and our operating environment is one where coercion below the threshold of conflict is becoming normalised. This makes for a less forgiving and less predictable world. The potential for external shocks to threaten the provision of critical financial services is rising, and the risk of coordination failure is larger for adverse geopolitical scenarios compared with more traditional financial risks. This realisation has been informing a program of work overseen by the CFR for some time now.
The second source of structural change relates to technological transformation. Increasing digitalisation is yielding substantial efficiencies for the financial system and making new functionality possible. At the same time, it is expanding the attack surface for cyber intrusions and making the potential consequences of operational disruptions more severe. Applications of artificial intelligence (AI) reflect both sides of this coin. The financial system is contending with accelerating waves of distributed denial of service attacks, and the commercialisation of cybercrime on the dark web is becoming big business. A concentrated group of key third-party technology providers are increasingly performing critical functions, such that a major disruption in one could have ripple effects across the entire system. Last year’s Crowdstrike episode, and the Amazon Web Services outage a couple of months ago, are just a couple of recent reminders.
A third and related challenge is that interdependencies between the payments system and other critical national infrastructure are coming into sharper focus. It can be taken for granted that the functioning of our financial system, and the payments system within it, is dependent on the smooth functioning of the electrical grid and telecommunications network. But these core services are increasingly experiencing their own resilience challenges, which can have downstream impacts on the broader economy. A recent example was the April 2025 blackout of the Iberian Peninsula that affected 50 million households and saw daily economic activity and electronic retail payments in Spain decline by approximately half. This disruption could easily have been worse, had the geographical span of the outage been different and cash not been readily available as a means of payment.
Recognising it is insufficient to just admire these problems from a distance, let me turn now to several related priorities in the RBA’s forward work program. A common theme here is the importance of payments infrastructures investing in their governance, risk management capabilities and operational resilience to meet not just regulator expectations but also those of the wider community.
System-wide interdependencies
One element is a stepped-up focus on system-wide interdependency and concentration risk. We are conscious that individual entities may have limited visibility over the extent to which their vulnerability to third-party providers or single points of failure is mirrored elsewhere and could amplify disruptions if a large shock were to occur. As a result, the RBA has embarked on a program of analysis and outreach with industry and other arms of government. The scope of this work ranges from high-value payments through to retail point-of-sale and account-to-account (A2A) transfers. We are actively engaging with CFR agencies, the Department of Home Affairs, national security agencies, overseas central banks, other non-financial regulators and industry, in order to develop a more holistic system-wide mapping of vulnerabilities.
A notable example where our collaboration with industry is spurring both increased resilience and innovation is through the Industry Resilience Initiative. Here, the RBA and the Australian Prudential Regulation Authority (APRA) are working with banks, Australian Payments Plus and AusPayNet to enhance existing contingency capabilities so that payment services can continue to operate, even if in a reduced form, in the event of a significant shock like a major institution ‘going dark’ for some time.
Another area where we see the concepts of system-wide resilience and innovation coming together is in quantum computing. The brute-force computing power enabled by quantum computing offers intriguing possibilities – it will unleash capabilities in the financial system that are not currently possible, especially when coupled with AI. At the same time, these advances could pose first-order data security risks and so compromise the integrity of the financial system. We know that threat actors are already capturing data with the expectation of breaking current encryption down the track – a strategy known as ‘harvest now, decrypt later’.
As a result, the PSB strongly supports industry efforts to migrate card payments to the Advanced Encryption Standard (AES). AES is viewed as a quantum-safe solution, should advances in quantum computing undermine the secure exchange of payment details. Some European countries are already there. The PSB expects industry to progress migration with sufficient urgency to enable the readiness of AES for use by 2030 and has agreed to consult around the middle of next year on using the RBA’s standard-setting powers under the Payment Systems (Regulation) Act 1998 (PSRA) to support the migration.
Cash distribution
Another element of our work on payments system resilience relates to cash access. Not only does cash remain an essential part of the payments system – 1.5 million Australians still rely on it to make everyday payments – cash also provides a backup for localised disruptions (e.g. floods and fires) when digital payments are unavailable. In this sense, physical cash is an ‘all hazards’ digital hedge. In discussions with my international counterparts, I am increasingly struck by how uniform the view has become about the critical contingency role cash can play in the economy. Sweden is one example, where authorities are now requiring cash distribution entities to maintain a heightened level of crisis preparedness and a public campaign has been launched to advise the community to maintain personal cash holdings in preparation for crises.
The RBA fully supports the Government’s commitment to ensuring that Australians retain adequate access to cash for as long as they wish to use it. Accordingly, the RBA, CFR and the Australian Competition and Consumer Commission (ACCC) have consulted on regulatory arrangements for the cash distribution system that are designed to ensure the system remains on a strong footing far into the future. In seeking to promote system-wide resilience, the framework embeds crisis readiness and resolution powers as key features.
Promoting an innovative and resilient payments system
Ensuring our payments system can withstand extreme-but-plausible disruptions should not mean innovation grinds to a halt. Quite the contrary. Australia has always been up around the front of the pack regarding innovation in the payments system. In the context of our national productivity challenge, it is important that this remains so. And as I have stressed before, there are big opportunities ahead of us if we can harness innovation in ways that not only enhance efficiency but also resilience – there need not be a trade-off.
To help play our part in fostering an innovative payment system, we have several initiatives underway.
Project Acacia and the Future of Money
One is Project Acacia, the centrepiece of our Future of Money program this year. Working alongside industry, regulators and our research partners at the Digital Finance Cooperative Research Centre, we are exploring how new forms of digital money and financial infrastructure could support the development of tokenised asset markets in Australia. This is also a growing area of interest for central banks and industry globally. We’ve taken the step of issuing pilot central bank digital currency onto external digital ledger platforms to better understand how new forms of money and tokenised assets could more seamlessly interact on the same ledger. This includes where trading and settlement are synchronised into a single function – obviating the need for clearing or tying up of collateral for days. The project has also explored the role that private digital money, in the form of tokenised bank deposits and stablecoins, could play in tokenised asset markets.
It has been pleasing to see Acacia draw strong interest from a wide cross-section of industry, from large banks to smaller fintechs to technology companies. Across more than 20 use cases, a range of real-world assets have been tokenised: government bonds, money market securities, mining royalties and repurchase agreements among them. We’ve deliberately not been prescriptive about these use cases, as we have wanted to hear from those on the front line of industry innovation where they think the largest potential benefits could be for the Australian financial system.
The experiments will be wrapping up shortly. I will have more to say about Acacia and our related strategic priorities on the Future of Money at the end of March, and shortly thereafter the Acacia project report will be published. But for now, I’d like to thank all our project partners for their contribution to the project – it has been a leading example of how the public and private sectors can collaborate on important policy issues arising from the application of frontier technologies.
Future of account-to-account payments
Let me now turn to a topic I addressed at last year’s Summit that also sits at the intersection of innovation and resilience – the future of Australia’s A2A payments system. At that time, and as our risk assessment of the decommissioning of the Bulk Electronic Clearing System (BECS) later set out in detail, the feedback we received from a range of stakeholders suggested that a foundational element was missing in the migration to modern payment rails – a shared vision among industry on the desired features of the future system. We shared industry concerns that loading more risk onto modern rails that had higher outage rates than the legacy bulk system was going to be problematic if contingency arrangements were not also significantly uplifted.
To support strategic planning by industry, RBA staff published a Public Interest Framework in July. The framework outlines technology-agnostic principles that prioritise the reliability of the payments system through robust contingency arrangements, alongside new functionality spurred by competition and innovation. As an example, we view interoperability – the ability for different payment systems to connect to each other – as integral to promoting resilience, competition and efficiency. In good times, end users will have greater choice over their providers; when systems go down, contingency options will be available.
Fast forward to today, and I am pleased to say that industry has made important progress, including in establishing a new coordination forum and completing an end user consultation to inform the future vision for A2A payments. At the same time, there is still a big lift ahead: key outstanding issues include the processing of large volumes, the account reach of the New Payments Platform (NPP) and contingency arrangements.
We want to thank industry for engaging in the A2A reset over the past year. We recognise it has not been easy. As we have said all along, if it takes industry a little longer than originally envisaged to come to a shared understanding of the system’s central features, then it should be time well spent. For our part, RBA staff will continue to engage with industry via the A2A Roundtable and in March 2026 we will publish an update on the risks associated with the migration.
We are all striving for the same objective – that Australians can benefit from the features that modern payment systems such as the NPP can provide. These include 24/7 real-time payments, richer data, confirmation of payee and real-time verification of payment. To achieve this, we need everyone in the ecosystem to continue engaging – payments service providers (PSPs), and corporate and government end users.
Modernising the RBA’s settlement system to support innovation
Ensuring that Australia’s financial infrastructure is fit for the future is a key focus of ours. This can be seen not only in our involvement in initiatives like Project Acacia and the modernisation of Australia’s A2A system, but also in the RBA’s forthcoming strategic modernisation of Australia’s high-value real-time settlement system – the Reserve Bank Information and Transfer System (RITS). The last major innovation in RITS occurred in 2018, with the public launch of the Fast Settlement Service. This system enables real-time, 24/7 settlement of NPP transactions and currently processes about four million transactions per day – most in under a second. The RITS modernisation project will explore a range of options to ensure our critical settlement infrastructure can support the evolving needs of the financial system well into the future.
Enhancing cross-border payments
Under the G20 roadmap, Australia is committed to supporting the international effort to address challenges in cross-border payments. A priority for the RBA in recent years has been engaging with industry over the adoption of richer data and new capabilities in Australia’s cross-border payments infrastructure. Next year, we will be examining ways to enhance wholesale cross-border payments, including as it relates to our RITS modernisation project and research on the role of digital money. We are also collaborating with central bank partners on a second phase of the BIS Innovation Hub’s Project Mandala. This project explores protocols to automate regulatory compliance processes in cross-border payments using new technologies like digital ledgers. The aim here is to make cross-border payments more transparent, faster and safer.
Supporting national reform priorities
In light of the Government’s efforts to modernise Australia’s payments regulatory framework, the RBA also has a number of initiatives in train.
First, following the recent amendments to the PSRA, the RBA will publicly consult on the PSB’s regulatory priorities in mid-2026, taking into account these amendments and technology modernisation in the payments industry. The focus will extend to regulatory issues beyond those addressed in the Review of Merchant Card Payment Costs and Surcharging. The consultation will include efficiency, competitiveness and safety issues with mobile wallets, three-party schemes, buy-now-pay-later providers and e-commerce platforms. We look forward to your input.
Second, the RBA will be reviewing its policies for accessing Exchange Settlement Accounts to support competition and innovation in payments. We expect to commence this review in the second half of 2026, once the first tranche of the Government’s PSP licensing reforms has passed Parliament and work on the second tranche has begun. This second phase includes the proposed common access requirements. This framework would involve APRA setting proportionate regulatory and supervisory arrangements for non-bank PSPs seeking to directly access Australian payment systems. In the meantime, we are engaging with our peer central banks to better understand how they see the competition and financial stability implications from stablecoin issuers holding funds in central bank deposits. We note the regulatory framework for the licensing and prudential supervision of issuers of Australian dollar-denominated stablecoins is an important pillar of the Government’s approach to developing responsible innovation in the Australian digital asset industry.
Third, to support responsible innovation in the wider financial system, the RBA will be providing input into the review of Australia’s Enhanced Regulatory Sandbox (ERS). Similarly, as a result of its learnings from Project Acacia, we are examining whether and how a dedicated digital securities sandbox could further support the development of tokenised markets and complement the general purpose ERS. We are looking closely at the experience in places like the United Kingdom, euro area, Switzerland and others to guide us here.
Update on the Review of Retail Payments Regulation
Before I close, it would be remiss not to provide a brief update on the current Review of Merchant Card Payment Costs and Surcharging, which includes a package of proposed reforms:
- reductions in ‘downstream’ consumer payment costs via changes to the surcharging regime for eftpos, Mastercard and Visa networks
- reductions in ‘upstream’ payment costs incurred by Australian merchants, via their service provider, in the form of lower interchange rates on card transactions
- increased disclosure of fees charged by acquirers, and collection and publication of wholesale fees charged by card networks, to help ensure savings from lower interchange are passed through to Australian merchants.
We received more than 170 submissions from a broad cross-section of stakeholders, including merchants, issuers, acquirers, PSPs and the card networks. It is fair to say that each of these stakeholders come at the issues from different perspectives, so we are carefully weighing the balance of the various arguments as they relate to our mandate. Given the reforms will inevitably result in some redistribution of costs and benefits across the system, we recognise it won’t be possible to please all stakeholders. But when the PSB publishes its conclusions and an implementation timeline for any regulatory action by March 2026, I can assure you that a huge volume of information, consultation meetings, requests for further information, and so on, will have been channelled towards landing on a package that we believe most promotes the public interest. The PSB is also aiming to ensure that decisions on issues like the scope of surcharging and the extent of interchange cuts will not be affected by the recent amendments to the PSRA.
Conclusion
Let me conclude. We should all aspire for a payments system that is safe and resilient – one that Australians can rely on – and one that is a hotbed of innovation and competitive efficiency. I’ve set out today a number of the opportunities we see here. They are reflected in our priorities that span regulatory reform, the Future of Money and tokenisation, A2A payments, the Industry Resilience Initiative, cross-border payments, quantum-safe encryption standards, physical cash and the modernisation of RITS. As we realise that the sequencing of priorities is always a challenge, my colleagues at the RBA and on the PSB are more committed than ever to working constructively with AusPayNet and the wider industry. There is much to celebrate in the Australian payments system, and we all want to ensure this remains the case far into the future.
Thank you, and I look forward to taking your questions.