At its meeting today, the Payments System Board discussed a number of issues, including:

• The technology outage at the Reserve Bank on 12 October that disrupted the payments system. The
  Board has requested that the Bank commission a wide-ranging and comprehensive external review of the
  incident and the Bank’s operational risk environment with respect to the Reserve Bank
  Information and Transfer System (RITS). The Board also supported the Bank’s plans to publish the
  full incident report that has been provided to the industry and to publish quarterly operational
  reliability statistics for its retail payment settlement services. In addition, as supervisor of
  systemically important payment systems, the Bank’s Payments Policy Department will undertake a
  targeted Assessment of RITS to determine whether further actions are necessary.
• ASX’s decision to pause and reassess all aspects of the CHESS replacement project. Members
  discussed the serious shortcomings of ASX’s management of the project and emphasised the
  importance of ASX developing a safe and reliable clearing and settlement system for Australia’s
  cash equities markets. The Bank is actively engaged in discussions with ASIC about a joint regulatory
  response to the issues highlighted in the independent report. The regulators expect ASX to maintain
  and support current CHESS so that it continues to operate reliably until a new system is put in
  place.
• Cyber resilience at payments and market infrastructures. Members discussed the recent high-profile
  data breaches in the Australian corporate sector, and the various initiatives underway to strengthen
  the cyber resilience of Australia’s financial institutions.
• Payments system regulatory reform. Members discussed the development of a set of common access
  requirements to help facilitate payment service providers’ access to payment systems, while
  promoting the safety of those systems. The common access requirements could form part of the
  licensing framework for payment service providers seeking direct access to payment systems.
• Competition in the debit card market. The Board strongly supports making the debit card market more
  efficient and competitive through the least-cost routing (LCR) of dual-network debit card
  transactions. Following the Bank’s discussions with industry participants, the Board considers
  it to be both feasible and desirable for the industry to deliver LCR functionality for mobile wallet
  transactions by the end of 2024. It is requesting that the mobile wallet providers inform industry of
  the designs of their LCR solutions as soon as possible. The Board also expects that merchant choice
  of debit network would be the default setting in the mobile environment, although it has a strong
  preference for consumers to also have some ability to choose their preferred debit network.
• Card payments regulation. Members reviewed the compliance of card issuers and the designated card
  schemes with the Bank’s interchange standards and access regimes in 2021/22. Overall, there was a high level of compliance with the
  Bank’s regulations.
• The ‘Instalments’ services being proposed by the international card networks. These
  services would enable buy now, pay later transactions to be processed through the card networks. The
  Board expects that from the launch of these services, merchants will be provided with: (1) a choice
  of whether to accept Instalments transactions; (2) clear information about the costs of accepting
  Instalments transactions; and (3) the ability to fully surcharge these transactions if a merchant
  wishes to recover the costs they incur. If these expectations are not met, the Board would consider
  the merit of taking regulatory action including on the issue of ensuring merchants have choice of
  which products to accept. The Bank will continue to monitor closely the implementation of these
  services.
• Enhancing cross-border payments. Members discussed the work that is underway in Australia to make
  cross-border payments faster, cheaper and more transparent. The Board emphasised the importance of
  the industry adopting new functionality and messaging capabilities for cross-border payments over the
  coming years. It expects that NPP participants meet their commitment to deliver the NPP international
  payments business service by December 2023. This will help speed up cross-border payments coming into
  Australia, by enabling the final Australian dollar leg to be processed via the NPP.
• Research on central bank digital currency (CBDC). The Board discussed progress with the research
  project exploring use cases for a CBDC in Australia. The Board welcomed the significant interest from
  industry in participating in the project, with a large number of use case submissions having been
  received. The project is in the process of selecting use cases to take forward to the pilot early
  next year.