The Future of Account-to-Account Payments in Australia with Nium, Azupay, and Gadens

Speaker A: Well we are recording so. Welcome to FinTech Australia's podcast on the future of account account payments in Australia. And I'm here, um, sorry, my name is Sinead Lynch. I'm uh, a technology and data partner at Gaydns Lawyers advising in payments and technology and data and all things related. And I am delighted to be joined today by Tom Rundle who is the Chief Product Officer at Azupay. Um, and Tom will introduce himself shortly and give some little background on Azupay and your role in this environment. And also Michael Manassan who is the Vice President Business Development APAC at Newham. Guys, really great to have you here. Thank you for being here. I'm really excited actually about this particular podcast because I think this is a really great one to wrap up the future of account uh, to account payments in Australia, the role that Fintech providers like you play in this and how we are going to move forward with from a future focused perspective in relation to transitioning off legacy account account payment systems to a more modernized framework. So first of all before we jump into and we've got a list of things that we do want to talk about on this podcast but before we jump into that can I turn to you um, Tom first of all to give a little bit of an introduction on you and on Azupay and uh, your initial kind of role in the future of account account.

Speaker B: Sure, yeah. Great, thanks. Thanks for having me on this podcast. So yeah, so I'm the Chief Product Officer at Azupay. I've been with Azupay about four and a half years. As you pay is focused on commercializing the benefits of real time account to account payments for businesses across Australia. Uh prior to that I've had about 15 years now in scaling up payments related fintechs.

Speaker A: Fantastic. Michael, love to hear from you as well in terms of your um, experience in this marketplace.

Speaker B: Great.

Speaker C: Um, Michael Manassian, I'm a VP for Business Development um, for the APAC region at neom. Um, NEOM is a cross border payments platform that acts as like an infrastructure layer for PSPs, banks, marketplaces, uh, remittance companies to um, access our global network of payouts, pay ins, um and also we're a very large card issuer for both Visa and MasterCard. So we cover a ah, very broad spectrum of payment, um, uh, related activities and I'm really excited about talking about um, the future of account to account payments here in Australia. We bring a very international lens on it but um, you know we're headquartered in Singapore but um, a Little known fact about NEOM M is that despite being a very large global um organization headquartered in Singapore and San Francisco, our first market to go live was actually Australia back in 2015. So it's one of our most mature markets we've operated in and a uh, market where we've learned a lot of lessons and we've seen a lot of growth. So yeah, happy to participate in today's discussion. Um, hopefully with you know um, uh, uh, industry peers such as yourselves I can add some value. But looking forward to a great discussion.

Speaker A: Fantastic and thanks so much for that Michael. It's a great introduction into what we really do want to talk about which is the current state of account to account payments here in Australia. And I think that international lens is really important to give your view as to what you see that current state looking at and when we look at at account account just for our listeners we're talking about where that sits across the NPP in terms of new payments platforms PayID Pay 2 and the um, um real time payment settlement and that transition away from Beccs as the legacy A2A rails but also thinking about open banking and CDR as well as that potential. So when we look at the system, the broader sort of infrastructure system within Australia that system is rapidly evolving. Um, there's a lot of regulatory reform and US lawyers are very much engaged in this space. Um, but it's also increasingly part of critical national infrastructure within Australia. So it's obviously vital and important to the Australian economy. So when you take all of that into account and maybe I'll turn to you Michael first but I'm really keen to get your thoughts Tom as well. Um, how do you think and how would you describe where we are from a progression perspective I guess within Australia at the current time?

Speaker C: Look, I think Australia's status I think is you know the MPP is truly a world class piece of infrastructure and system that's been built. Um, you know and a lot of you know, global payment, um, you know systems uh, and ecosystems really look up to Australia with uh, you know and for a lot of learnings etc. But um, so certainly I think it is a world class system that's been built. Um from our perspective um, whilst it's a world class system I feel that there's a way to go in terms of access. Access um, to it isn't as probably where it needs to be and I can unpack that further. Um, but certainly, I mean um, when we look at, we operate in a variety of different um Jurisdictions, um, we're direct participants in many of those jurisdictions. To answer your question, I think the MPP and what's been built here is certainly um, a cut above most other sort of domestic payment systems.

Speaker A: Tom, what are your thoughts?

Speaker B: Yeah, and mirroring that very much to start with, recognizing that what Australia's got in real time account to account payments is really world class and real world leading. There's a lot of, you know, you mentioned there's a lot of change going on across the industry at the moment and I think a lot of angst throughout the different parties and it's very easy to fall in the trap of just looking at all the problems we're really trying to solve and getting really hung up on right now and taking a moment to reflect and look at what it means to actually operate in a similar way in other countries and can be really hard. And when you compare to other countries it is really a useful exercise to do. When I say I was in scale up before, it's been cross border payments. So I've worked in domestic payments in 18 different countries in uh, the past and we often have this perception that across Southeast Asia there's these amazing real time wallets for payments. But sometimes when you look at it and what we've got in place going on in Australia in terms of just having this incredible vision that was pulled together for NPP and this was the entire country, every single account, every single person can just send money to somebody else's mobile phone number and it's the same experience on those pieces and it happens uh, instantly um, with final settlement. That's a really rare thing to have around the world and it's incredibly valuable. But coming with that, with this vision of how big NPP was going to be, including the vision for Pay2, uh, coinciding at the same time as CDR open banking around the world and ah, different frameworks ended up landing in Australia. We're getting really caught up at the moment around how we manage all those pieces but I think we're doing a great job and we've got some really great artifacts which you've proud of in

Speaker A: this country and it's a great statement you've made and I think when we sort of looked at that interoperability or the sort of cross border interpretability issues that we do and I talk about in a couple of moments but I think when you look at what's happening around the world, you know, if I look at the EU, you might say it's more mature because they've had PST2 for a long time now PST3, um, but it's very regimented and very, you know, prescriptive in terms of their approach to payments regulation more broadly. The US obviously a much more sort of network fragmented, rail specific. Whereas here in Australia we're sort of moving to that in between. Would you agree? Do you think that that's the better access in terms of being able to make it more accessible to industries within Australia? Do you think that's the better regime?

Speaker B: Look, when you say which one's better, you've got to recognize a different situations, the different ecosystems you're in. So particularly, I mean, I've had a lot of my time loving to beat up what's going on in the US and how fragmented it can be. And you've got networks of networks. But remember, California is a bigger economy than Australia, as is New York. So you know, when we start talking about, hey, I want fintechs to get closer to the infrastructure layer and the access layer, keep in mind what the commercials that mean when that would be like a fintech trying to say I want to build up the infrastructure for California and somebody else saying I want to build up the infrastructure for New York. And to some extent some of that's happened and hence you end up with that fragmented arrangements in the US and we're probably more like that model, except we're just the size of California. Uh, when, yes, trying to set the standards like is typical in Europe, that can be really hard. And there's a bit of a movement now in Australia and trying to do that. And then hence the fintech industry, the innovation side of things is saying, oh, this is so frustrating that we've been on this journey for 10 years. We started making some progress, but it's so slow. And now there's revisiting some of the infrastructure questions and some of the policy decisions. That's what comes with trying to say I want to stand it. But the flip side of things is you get the standards, you get the whole network effect, you get the ubiquitous experience. I know it's quite simple for me to operate on, um, because when I send an MPP payment from account to account I can trust it's almost always going to be exactly the experience I expect to have. Some of the surface layers, we're not there yet with that and that's going to mature more and that's where we're getting hung up. But I wouldn't say we're necessarily, you know, doing something different or better than other countries. It's just we're moving along and sort of swinging between different, different paradigms to get more focused on.

Speaker A: Michael, what would, what do you think just in terms of obviously NEOM is global, international. What are your thoughts?

Speaker C: Yeah, look, I think there's some benefit sometimes to having a prescriptive model. Um, you know, sometimes it's, you know it's point you just made before is that you're amazed at how we all came together to bring the MPP to life and so many different industry participants with different goals and outcomes etc. So sometimes it's like herding cats. But having that um, having that prescriptive model can sometimes, I mean that worked in Europe quite well um, to have that. Um, but I also see the flip side of it is, you know, when you're taking more of a fragmented approach and you know organizations that are doing, taking a risk based approach into how they'll, they'll participate, there's also a lot of benefit there. So I mean from our perspective, um, there'd be some benefit to some further prescription. But look, um, you know, I think to the point we made before, the system we have in here is probably a good balance between the two, I'd say.

Speaker A: Yeah, I want to turn to, and I think these are amazing thoughts. I just want to turn quickly to the access arrangements. In terms of the current access arrangements, do you think there are things that can be done to make them? Are they clear? Are they commercially workable for fintechs and payment innovators in this system? Do you think there are things that can be done better? I'm happy for anyone to jump in on that one.

Speaker B: Yeah, sure. Look, I think, look, I sort of seem to have landed in a bit of a pathway of working with findex that have partnered really well with banks. So I've always felt I've suffered or the businesses I've worked with have suffered less from an access issue in that we've recognized how we can bring something to market that also offers some benefits to the banks that we work with. And so the banks are willing to support us. Uh, certainly the position that Azupay is in, we're not looking to become a. Well, we've considered becoming a connected institution on the MPP network but we're not moving into that for many different reasons. Um, but one of them is that we can develop a commercial model that works for us without going to a connected institution status as well as having some operational benefits. So the point is you can build as a fintech, you can build some commercial proposition that says, actually I can get a better commercial outcome for my client base by leveraging the infrastructure that's been built by other infrastructure providers, which often might be the banks. And I've now done that through several fintech journeys. That kind of approach. We do struggle what we're talking about before. If you look at the environment of Australia, it's a relatively small economy and payments, particularly domestic payments, where it's really low margin, it's all about scale. There's a limit to how far we can go. I think there's limited opportunity for supporting many players getting involved in the fixed capital costs of a good infrastructure layer. So it's going to have a limited number of people or players that are really running the infrastructure in Australia. There's no commercial basis for that many players to be running the infrastructure. So there's going to be some dependency there. And the other lens I always think about in Australia is the culture within Australia I think is very interesting around the risk side of things. So you mentioned having a, uh, risk based decision on where you're going to sit on that. Australia's a culture. We certainly got a belief we're a very safe country and I think generally it is a very safe country. But something that I've only really been picking up relatively recently. I've been to that perception that other countries tend to have much higher fraud rates than Australia and I still hear it today, said as a truism amounts to the Australian payments industry that we have a low fraud rate. But actually many other people say no, that's not true. In card payment processing, Australia's got one of the highest fraud rates after the US and that was something that was a bit of an eye opener to me quite recently. So it is a topic, uh, maybe that's come from the data breaches in previous years, maybe it's come from our proximity to nations where it's just a good time zone for people working in those nations to be attacking this area. We're relatively wealthy compared to our neighbors, whatever it is. There are quite high fraud rates. So you can't have a conversation about this right now without talking about that. And that's something the infrastructure players where they are moving huge numbers of payments very quickly now, it's a real concern for them. So anybody that wants to say I want more access to the infrastructure or I want to be an infrastructure participant myself, they have to really come to the table on that space as well on that, on that topic as well.

Speaker A: Yeah, absolutely. And I think the point that you've raised Tom in relation to the fraud figures relative to Australia. When you talk about the market size in Australia they are pretty staggering when you look at some of those stats. So um, it is clearly an issue. It is clearly perhaps where you know, it's a good point in the conversation to talk about legacy beccs and whether that move away is that something that should be retained as point of redundancy to some degree. What do you think on that Michael?

Speaker C: Um, look, if I could just park the Beck's discussion just to chime in on what was just said before if I may.

Speaker A: Um, absolutely.

Speaker C: I think from access perspective and Niam sort of sits there as an end customer of say a pay tech or somebody's giving us access to the npv m not a direct participant ourselves as yet. Um, we have a direct relationship with an adi um for access to the mpp. We have a direct relationship with a paytech provider to give us access to the mpp. We're actually at the moment working uh, on a secondary ADI relationship but we're working a lot to have multiple rails of access to the MPP because the access um pathway is so narrow. There are only really, if you look at it and you guys may disagree on this point, two ADIs that are really supporting the fintech industry with access. Um, most of the other ADIs aren't giving fintechs the ability to access whether it's through a paycheck provider. Now we're establishing multiple connection points to the MPP not because we're dissatisfied with the service providers we have, but as a way of ensuring continuation of our service. There's one single point of failure in that if we've got everything banked up with one ADI and they decide to de risk or make a risk based approach in terms of you know, um, uh, operations we're taking that could be catastrophic to our business model. So we're investing a lot of time and this is from Niam's perspective but I'm sure it's true of many industry participants, uh, we're investing a lot of time in what I would call insurance and having those direct lines of participation as opposed to building product and innovating and there's an opportunity cost that comes with that. So just a little point on there on access and early this year our CEO Prajit Nanu um uh, uh released that we actually have now become, started the process of our own restricted adi um journey with apra. So and that's been not because again because we seek anything but bar becoming A direct participant and with the unit economics and everything that comes, that comes with it, but it's also around taking our destiny in our own hands. Um, and with that. So that's not a decision we take lightly. It's a very, you know, it's, it's a costly decision, but it's a one way of being we need to make because Australia's a priority market for us. So, uh, just wanted to round out that point on.

Speaker B: Yeah, look, and I'd say that they're really good points and the way I'd like to think about it is I'd love to see that there is enforcement of competition at that level. So there was always, in the vision of parts of MPP and particularly of pay, two of mechanisms that will help with competition. And they have been delayed and delayed so far. They're off the roadmap now. So that's certainly a problem that I was kind of starting to move towards. When you talk about it, there is only space for a relatively limited number of true infrastructure players commercially in Australia. Uh, so it's very important there is the ability to have that competition between them really strongly enforced.

Speaker A: And I do hear what you're saying in that space, Tom. Can I just maybe challenge that a little bit? Because if you have a limited number of infrastructure players and we are moving into payments being really critical national infrastructure, so if we move away and we're very much in a real time payment settlement situation where we have very minimal infrastructure players, is there not a risk around continuity and potential continuity? So the issues that Michael just talked about in terms of do we need to diversify a little bit around some of those infrastructures so that we can actually have that level of resilience and continuity moving forward?

Speaker B: Yes, sure. And when I say a limited number, I'm not talking about just two of the big four banks and so on. You know, we are talking maybe 10 players. But you look around, historically there have been regimes set up for PSPs to get more involved, get their own exchange settlement account. The adoption of those have been very, very low.

Speaker A: Ah, is that a cost driven? What do you think is the big issue here? Because that feels cost and legal risk

Speaker B: and liability, cost is a big part of it. I mean part of the success we've done is a very resilient network that does work 24 7, 365. The cost of maintaining your system at that level of resilience, um, with all the indemnities that go to all the other participants in the network, when you're Directly in the network. There's a huge cost of that. There aren't many players that can support that and there's certainly very few Australian homegrown businesses. When we talk about sovereign risk management, there aren't many of them and so that's part of it. So certainly it's cost and certainly it as you pay to give some context, uh, uh, clients, uh, the likes of Optus and big brands like that are our clients. So the resilience of our system and the support levels we give are absolutely mission critical. So if we're talking about building anything at the infrastructure level it's going to be something, has to be something at the same scale as what the major banks are providing already. You're operating cost to that.

Speaker D: Yeah.

Speaker A: And you're operating in that high fraud risk environment because you've got a number of ecosystem players that are in there. So naturally with real time payment settlements, what do you think? Just on that point as well, it's useful maybe to jump in if you're comfortable talking about that in terms of the arrangements around managing real time payment settlements, the proposals around delayed payments and what that could look like to be able to mitigate those risks, those fraudulent, the high fraud environment risks.

Speaker B: Yeah, sure. Certainly comes delayed payments. I mean that, that happened, that happened in a somewhat, I'd say unplanned way maybe about two years ago. Uh, so the unplanned nature of that was, was very damaging actually to the commercial adoption of real time payments for quite a while. That's now settled down. We can see very clearly in our data that there's more precision being given to that. Yeah, it's not a sort of a blanket, hey, we just slow down payments. We can see now amongst the major players that there's obviously specific signals about a particular transaction that is causing their systems to say let's investigate this further. That is much more manageable. However, a key part of the submission we've recently given on the vision of account to account payments is the importance that we find a mechanism to let the information flow in real time. So it's very difficult when a bank says I think there might be an issue here, they can't do tipping off, they can't go and warn somebody. But on the other hand if we can come up with some mechanism that says uh, the payment started, could you go that real time feedback on an MPP payment that's really good to say, look, the payment started, it's not been lost. Because that's particularly where we've got problems now. Consumers are being told the payment's done. The receiver that money says nothing's happened yet. And that caused a lot of anxiety in a real time password. So some kind of messaging at the very least. But at the end of the day certainly across our client base we're talking tiny, tiny fractions of 1% of all transactions get affected like this. Um, I mean statistics. Now we're starting to work more in partnership with some PSPs in card processing world and they're talking about, I hadn't realized how many transactions are authorized but don't settle in the next settlement batch on card processing. I had no idea that even happened. The level that's happening, that is about the level we're seeing transactions getting affected by holes. Um, as I've hinted we've done a lot of work around managing that perception of risk and the partnerships we can with the network.

Speaker A: Fantastic. Michael, did you have any thoughts? Just around um, those aspects as well from Niam's perspective in the local market.

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Speaker C: Yeah, look, certainly I think particularly with consumer payments, you know fraud's always, you know, it's top of mind. Um, and most, most enforcement actions by regulators are typically around those consumer payments. Niam's been focusing more on B2B, the B2B side of things. Although we still do have a lot of clients that are processing P2P payments. But I'd agree with you, I mean um, you know I heard a regulator say recently that they love real time payments but they want things to slow down a little bit.

Speaker B: So um, the world wants to go

Speaker C: real time but let's just bring it

Speaker B: back a little bit.

Speaker C: So um, you know it's, it's an interesting point you make but I think, look, going back to participate participants and not you know, um, I think that's where a lot of value that ah, paycheck providers like as you pay bring to the market is the fact that they have got these sophisticated monitoring um, you know, layers in their tech stack that are able to pick up on certain risk, risky payments um, and so forth. So as an end user we rely upon those, um, we're certainly um, you know a Risk to our licenses, our licenses that we hold globally uh, are paramount to the value that NIAM has. So we are certainly always cognizant of managing our risk in particular around fraud, particularly in a market like Australia. So probably nothing more to add over and above that, but yeah, it's certainly something that's top of mind.

Speaker A: Well look, the other, the other big thing um, that you would have seen coming out of the budget in terms of the consumer data, right, which is obviously sitting alongside MPP in terms of um, the B2C but ATO data is now going to be incorporated and they're doing a pilot test on that which obviously will help with some of those fraud issues in terms of being able to trend and track and trend activities, um, and trends in relation to fraud. So I think as, as we become more mature as a country, as a jurisdiction in terms of both the payments provider side is also in terms of the consumers and their use of um, real time payments. I think hopefully some of those issues will dissipate. Um, I want to turn very quickly to Bex because I know it's um, on our itinerary to work through and just maybe talk a little bit around that in terms of taking account of the opportunities that we see for MPP and clearly Azupay and Niam M in this industry moving forward significantly in terms of being able to build traction around some of those opportunities. Um, what's your view Tom, on Beck's? Do you think it should be retained as a redundancy? Do we think we just need to you know, draw the line and move on?

Speaker B: Look, it's clearly everyone's realized it's not as easy as drawing the line and moving on to uh, us. I think the most important thing is getting moving forward on some decisions and that's uh, everyone trying to work on that and it's taking its time. What I would like to see really really soon is a recognition that is either turn it off and transition and all the pain and cost that goes with that or it's some significant investment to build it up. People I think are not really talking that clearly that if it stays there is quite a lot of investment that must be done. One level there's good code goes moldy is a lovely phrase I learned you have got to keep developing things and no one's been developing Becks in decades so that's a problem. But also the world's moved on. So this is my own observation. I've never heard from anywhere else but I don't know how many People realize that when the travel rule was introduced across Australia, BECS was exempted from that. I've always assumed that exemption was on the basis that the powers that be were told BECS is going to be turned off in 2030. So if it's not being turned off, presumably we've got to add in all that extra data into the BECCS fields pretty soon. I don't think uh, the powers we ever see are going to accept BECS carrying on without that, let alone ISO compatibility and so on. So there's a huge cost to be borne to keep BECCS going and I would like that. Even if we can't decide which of those paths are going down, I would like to see more public acknowledgement of that because what's going to happen, I firmly believe it's either going to be BEC starts becoming more expensive to run and therefore more expensive for users to actually use at the end, um, or it gets shut down. Either way there's massive uh, benefits available to commercial businesses now to switch across to mpp. There's huge benefits for them and the reason they don't is BECS is virtually free. But it's not always going to be like, it cannot always be like that.

Speaker C: So if your pricing should be something that influences behavior, you know, look at what it is.

Speaker B: The people will pricing already is influencing it but people aren't being realistic about what it takes to keep BECKS going.

Speaker C: Yeah, yeah, that's a good point.

Speaker A: It's a really good point and I think, I mean it's like, it's like anything right, because you're moving away from bank to bank and interbank to you know, a larger ecosystem and there's clearly benefits for doing that. Um, but if the intention is to sort of, as you say, you know, to transition away from beccs, what are the conditions that we think need to happen apart from the cost? Right. There has got to be investment. I think that's an acknowledgement in terms of maintaining um, so the technology is not obsolete and other things. But what are the conditions from an infrastructure perspective or from an environment perspective do you think needs to happen in order for us to maintain that for a period and then it runs alongside until NPP and other related payment rails become a little bit more mature in this marketplace and more widely adopted.

Speaker B: Yeah, clearly one of the big topics that people are drilling into is the size of some batch payments on beccs. So you know, within the NPP teams they're looking at potentially batching type settlement arrangements on mpp, um, or it could be that we keep BECCS going for that reason. That's certainly one key piece. Um, my understanding, I'm not too involved in these conversations is the ability for government to change, particularly federal government. That's very challenging. It's a big exercise for them to change which was why a date was set I think because they said hey, some, some organizations have multi year timeframes and that's just dragged on and on so got to have a movement, movement there. The other one that's interesting is resilience. So in my job, small company, even though I'm chief product officer, I do get the notifications when there's any kind of issue on the MPP from any participant coming and, or actually that includes on becs. So you see all the time, like several times a day that some BECS participant is having some issue with some element of aborting. No one ever notices because BECCS isn't instant settlement. Whereas if you're out for even just half an hour on the outages and migration process you really notice it. However, that's not certainly as you pay yourself in that. So our clients have no visibility or no awareness on many of these outages because we can store and forward and manage that for their experiences. Obviously some of the, some really super high velocity use cases they might notice like oh, it seemed to gone slow for a period of time but nothing really drastic. So there does need to be that ability for the different commercial use cases to understand if I'm on npp, what's the implication of a participant being down on one of the services for some short period of time and that's going on with BECCS all the time but you don't notice it because as long as it hits the next two hour window or even the next day, you don't notice any different to your business processes.

Speaker A: Michael?

Speaker C: Yeah, look, we're taking a bit more of an agnostic perspective on it. Um, we use both rails. Um, you know, BECS does a lot of the heavy lifting that the MPP doesn't for certain use cases as you rightly noted. Um, I think the conditions need to be right to sunset it. So I would echo everything that's been said already. Um, so yeah, from our perspective, you know, it's a good point you make around redundancy. Uh, and you know that it's that sort of that safety net that everyone's relying upon at the moment is that BECS will be there in case there's an MPP outage or something around that. So um, what we see though at a practical user level with our customers is that particularly in the B2B spaces that they're forced to use BECCs, that certain banks aren't supporting MPP settlements et cetera for B2B payments. So we'd want to see the conditions right in order to move that away as somebody that'd be overly um, impacted. So that's probably.

Speaker B: Well I think for you particularly you're dealing with a lot of international or players with international flows and a lot of banks haven't connected into the IPS service on mpp.

Speaker C: That's right, that's right. And even just domestically though we've got clients that are willing to settle with us at the moment and B2B flows aren't supported, they're being processed by DE and BECCS.

Speaker A: So that integration with domestic infrastructure in order for you to be able to scale more broadly, not just from a global perspective but also having that integration

Speaker C: domestic, domestic use certain banks that we've won't name them here, um, but that we've got customers that are banking with them seeking to give us some funding. And so I'm sorry we've got a great offshore cross border, um, real time payments, um, uh, service that we're offering them but their settlement to us in Aussie dollars is taking, it's intraday or it's you know they rely on batch payments. So we'd want to see that particularly for B, um two B use cases, um, be more of a level playing field, more access there. Um, and then we can talk about the IPS portion and that interoperability with other payment systems.

Speaker A: I think, I mean that point on interoperability and I guess from niam's perspective looking ahead, you know, how do we look at cross border in terms of where we get to with Australia on a, to A, how do we deal with some of those issues? Because we see some of those issues coming up in Swift, for example, even now in Swift Payments. How do we deal with some of the interoperability issues? Like if we're getting the domestic infrastructure we've got to get that right. But then how do we deal with that from a global perspective?

Speaker C: It's a good point. Um, so I'll talk to it from a near perspective. That's really, that's the value that we offer. We're, we're direct participants in so many of these local clearing systems and payment systems. Um, you know a lot of customers use us because they don't want to rely upon swift. Um, you know, so we're connecting those dots. However we see that there's certainly when looking at it from an interoperability perspective, we've seen what some of these bilateral arrangements will do particularly to consumer payments. We've seen in Singapore the tie up with the UPI paynow and upi. That bilateral arrangement has certainly uh, improved and uh, given greater access to P2P payments for those two corridors. We've seen it with um, the PayNow and um, uh, prompt pay in Thailand for example. But those bilateral type of arrangements are very costly to be done. They need to be driven by governments and central banks, et cetera. Um, so, so we're a ways off seeing that scale in my mind. Um, but certainly there's moves afoot I believe and I need to quote my notes here, but Project Nexus, um, there's a move to get that framework of multilateral kind of um, arrangements between different payment systems and clearing systems um, being done. I know that the Reserve bank made some comments around that last year around just observing it, seeing where we're up to. But we're a ways off being able to sort of, I think Australia being a direct participant in some of those multilateral um, kinds of arrangements and I think that's where NEOM plays is that we've got a global strategy to be those direct participants in local clearing getting access to local payouts and we bridge that. And that's really uh, what a lot of our business model is based on.

Speaker A: Yeah, definitely. Tom, did you want to talk to that in terms of just more broadly I guess in terms of Project Nexus, um, and also the RBA's recent views on some of the interoperability issues for cross border payments. Is that something as you pay. I appreciate you're very much domestic in terms of your um, you know, your infrastructure but in relation to some of your customers and how they engage.

Speaker B: Yeah, look, so yes, as you pay is very much domestically focused. Um, I have had years across border payments, um, experience so I sort of know the problem they're talking about but it isn't something we're coming across. Um, what's interesting is we do partner for example with many of the international banks. So they're good examples of their whole remit uh, on a transactional banking services often is dealing with the large global corporates from their home country and they provide the Australian dollar banking for them in this country. So they're certainly very focused on how do I, um, they're looking for standardization. So it's not necessarily Connecting the domestic payment system of Australia to the domestic systems. They've, they're saying if the experience can be simple for them to support their clients in the same way in every country, that would be great. Australia's got a long history of doing things differently in payments, sometimes very successfully and perhaps trailblazed a bit for the rest of the world, but it can be very hard. So certainly many of these international banks and where more nimble players like Nehem have a great opportunity, it's these international banks say at the end of the day I'm struggling to get my business case across the line to actually build something specifically to the great things that MPP builds because it's different from in Australia than the rest of the world. But if you built something that's great, that is at least similar enough to how great things might run in other countries, then some of these international players can more easily connect directly into our systems here. So it's very much that standardization rather than necessarily the infrastructure or the scheme operators worrying about how to connect to

Speaker A: other scheme operators and standardization is um, difficult in the best of times and challenging whether it's technical standards I don't

Speaker B: think or otherwise cross border payment players are going to go out of business anytime soon. There's plenty of opportunity to solve.

Speaker A: Absolutely, absolutely. Um, what do we think? I mean we've talked a little bit around Becks, we've talked a little bit around um, you know the, the global piece but in terms of domestically and you know the, the concerns I guess or the, some of the challenges around adoption of the new payment platform and different types of Rails. What do we think needs to happen for it to be more compelling in this jurisdiction? And I mean we've talked a little bit around cost for example. Um, are there other conditions that we think need to happen, need to shift, need to change? Is that something where um, we need more buy in from the banks in terms of engagement or do we see, what do we see as some of the conditions?

Speaker B: I think it's getting clear on uh, what's the pathway at a really uh, at a national infrastructure level I think we've lost some direction there and certainly a lot of big players and payroll companies, superannuation companies, large utilities roll back two, three years ago they're all very excited about pay two that didn't quite happen. Roll back a couple of years before that they're very excited about open banking that didn't quite happen. They were all looking oh payday super is going to change everything. But, but now we're very, very close and it's clearly not changing a lot. And so I think there's been now there's so much is sitting on the hands, there's a lot of interest, there's a lot of saying oh I think this will be really good. Uh, but I'm struggling to be clear on landing my business case. What is a really interesting observation. I've actually just had feedback from a uh, women in payments event that's going on at lunchtime today. A lot of feedback on confirmation of payee. So that's just rolled out and we talked about before that you can't get away from talking around the risk and fraud side of things and the business. The payments industry has really picked up on confirmation of payee as being a really great tool. So there's so much talk now and it's so valid and it's going to really accelerate is saying I can now connect things like confirmation of payee. The extra information and insights I can get from the use of a PayID, connect that around with recognizing and all your sort of the network data uh, around how trustworthy a uh, particular transaction can be. I think that's a piece that we're starting to see organically is suddenly really moving. Confirmation to pay has really changed the landscape a lot in Australian domestic account to account payments.

Speaker C: Yeah, I agree, I agree. Yeah, look, just double clicking on something you said earlier. Um, you know we've got great initiatives like you know pay to and pay id. I've not seen a lot of just at a consumer. Whilst consumer adoption is a lot more mature than say B2B adoption of such there's not a lot of consumer education. If we just flip this on a set and look at you know just everyday consumers there's not a lot of um, you know education by the banks, by the large participants on how to use it, how to access it, what the benefits are, you know particularly in for certain use cases in E comm and other things as well. So it's sort of like participants like, like you know as you pay and others that are heralding the advantages of these things as opposed to the banks themselves. And that's just my view, um, not neams you per se but I've always wondered the absence of you know bulk you know consumer education on these kinds of um, things. It's just been, it seems to be I think not as well it's been as it could have been done.

Speaker A: Yeah, no, absolutely. And it's something I mean I do quite a bit around the CDR and it's something we see and hear all the time in terms of, you know, what is the education? Do we need to have the education for consumers more directly? And so but sometimes you look at that and go, should consumers even know what CDR is? I mean ultimately the outcome for them is the payments actually happened and we don't really care realistically how it happened. You know, I just want to click on my app and I want to make sure that I get payments from A to B and that's how it goes. So it's almost like, you know, that all needs to happen in the background without to some degree a level of transparency or um, education. But I hear what you're saying because it is about take up. And I think the big issue that, that you're picking up there is the adoption piece and the take up piece. Do you think the current. And I ask this for both of you just in the context of the regulatory. And as a lawyer I'm going to ask these obvious questions because I think we look at it and we see cost. We see from ah, an industry perspective, we see cost, we see some of the challenges around take up, we see some of the standardization points that you've talked about. Um, do you think regulation, because we are moving into and it is becoming, particularly with new reforms on payment systems, heavily regulated. Are, are you supportive of that level of regulation? Are you concerned about that level of regulation? Do you think it's going down the right path? Tom, you're smiling. I love it.

Speaker B: Uh, well, we certainly have a lot of regulation and I say for the last few years I've been very myopically focused in Australia. But um, I just feel like I've heard a few comments from trying to think, I don't want to name names, maybe policy people at stripe or wise and they, they make jokes about John, just the sheer volume of legislation paper in Australia versus other countries they operate in. Uh, so clearly that's not ideal. Clearly we're not quite heading the right direction for that reason. Um, I couldn't sit here and think how do we stop that? How do we change that? I certainly wouldn't want to embark on some whole of government whole of industry initiative just to reduce legislation. I'd rather we just focus on other things and get moving with some innovation. But perhaps that does talk to a bit of what I was talking before that. But an industry level participants have perhaps lost a bit of their way on thinking around how do we really help the end user, the businesses, the economy overall just get more Productive from better

Speaker A: payments or is it? And I mean this is maybe the question and the point that you were making earlier Michael, in terms of looking at risk and should we look at risk rather than let's regulate everything, do we need to look at risk? Do we need to look at where the high risks are, where the less risk risks are, where there's areas where we can look at a lighter touch in terms of regulation?

Speaker C: M. Yeah, look, um, I would agree, um, you know, if there's a risk based approach that certainly um, you know I think is going to, is probably a good thing. Um, but just on, on the change in regulation, I mean again probably best I don't you know, comment. We do see the sheer number of regulators in Australia, something as a global player. I mean we're regulated by three parties here now. So um, it's ah, there's a lot of fragment, I would agree. Um, but for us, um, in particular the regulatory changes you're talking about, it's the length of time they're taking to implement. So that presents a lot of uncertainty. Um, I can speak to our journey around, you know, do we, do we uh, our own restricted ADI journey we're taking. Did we hold off and wait for the new um, regulation to come out? We don't know what the outcome of that would be. So um, I think the, the time it's taking to embed this is potentially leading to a lack of investment or a lack of delayed investment in certain innovation. And that's something that uh, I think if a decision's made, I'm not going to comment on the pros and cons of the legislation. I'm in sales after all. It's not my job. But um, what I can say though is that the time to take to implement produces a lot of uncertainty and uncertainty. Something you've mentioned before is something this industry doesn't need. We need to know where we're going and how quickly it's going to take us to get there. So.

Speaker B: So yeah, just setting up all this uncertainty about where things are going. It's, it's, you know, it's just entrenching incumbents. It's entrenching the legacy technology. You know you talked about what's been slow on adoption. I mean it is really interesting. Consumer adoption of real time account to account payments is very high in Australia. It just got turned on for them. Do they have to be educated? Maybe not. But I've got the old cliche uh, of you know, kids going to that stage where they're becoming financially independent and they're all kind of like shocked. It's like, what do you mean the payment didn't land immediately?

Speaker A: Oh, absolutely. I, I have the same frustration if I, if I am sending payments and it doesn't happen, I get very frustrated about that. In fact, eight years ago when I came to Australia first, the whole interoperability with banking and not being able to change banks was an issue, a massive issue for me. So I do get it, I completely get it. And I agree with you. I think consumers, as in the more educated consumers, want real time payments. They want it to happen automatically. So is it incumbent on the industry? And when I say industry, I mean all players in the industry, including banks and the government and infrastructure providers and payments providers to facilitate that and to drive that so there's less customer friction around how payments are actually made and how they're actually done. Is that really where the future, when we think about this podcast and the future of account to account payments, where do we see that? Is that where we think we need to focus from an infrastructure perspective? So rather than less on the, the consumer and the education piece, but actually more on how do we get this done?

Speaker B: Look, I totally agree with that and it's particularly getting the businesses to be able to really effectively and quickly adopt it and use it. So it's not necessarily sort of the infrastructure level, it's that level above it, it's the platforms. So it's only a lot of E commerce platforms. The card schemes have done a fantastic job of getting themselves really entrenched and it's becoming hard to switch the behaviors at that level. So you have plenty of enterprises right now, especially with potentially them not being able to send out, definitely not being able to send out the pricing signals pretty soon around how they steer their customers to a lower cost payment method. They're very interested to say, well how do I start encouraging my users to use account to account payments in an E commerce context when I can't surcharge my card payment? Um, and lots of conversations on that. It's quite a big piece of work for many of them to then say well I've got my commerce plan, I've got my global fintech that's running my payment processing. How do I work with them to help steer things? Those platform players sitting there saying well actually I've got a pretty good embedded payments margin line here that the whole industry been really promoting for many years. Um, that's very entrenched. Ah, so it's actually probably. And that talks about competition layer, how do we make sure it's not just talking about the big banks, how do we get them to open up to more competitive playing field, but also the platform layer above them that actually really gets those businesses going. Another little anecdote is a lot of big enterprises very interested in the capabilities around PayID and we've got some great clients doing some really great stuff with that. A lot of them are struggling to get up and going because putting the ability to use a Pay ID in their SAP instance is incredibly hard. Um, so it's actually the ERPs getting the ERPs up to speed with this stuff. So the businesses want it. The banking infrastructure's actually got some really good stuff we can run with with. It's getting those platforms moving. And so a bit of focus on industry level around how do we help make it more attractive for businesses to do that? That's how you get the kind of adoption you're talking about there, which is where as a consumer, when I'm interacting with my business or my government, I want to use these better payment methods. That's a challenge there.

Speaker A: Lots of work for FinTech Australia then I can see in this industry forum. So plenty of opportunity there. Michael, did you have any final thoughts in that aspect?

Speaker C: Um, no, I think it's been articulated well. Um, I think too often we think about ourselves as, as the participants or as a player in the value chain of these payments. But there's probably not a lot of thought from a lot of players on the end customer and what's best for them. And with my commercial hat on, I'm always thinking about what's best for the customer and that driving adoption and demand, et cetera. Um, but it's exciting times ahead.

Speaker A: No doubt it's exciting times. I mean, if I was to leave um, our podcast because I think we're almost at time and I really want to thank both of you for your contributions. They're fantastic and it's great to hear from, um, really knowledgeable, um, industry experts in this space. Um, but if I can leave you with maybe one, or if you can leave our listeners rather with one last thought around Account to account and the future of Account to account in Australia. Tom, any final thoughts? Where do you think we're going to be if we look at, you know, what are we now? 2026? Give us 10 years, 2036. Any predictions as to where we think we might be in this space?

Speaker B: Yeah, look, I think Account to account payments in Australia, it is going to get adopted for a lot More use cases. So the infrastructure and the vision has done a great job of building something that's really powerful but in terms of making it work for individual use cases, all the detail wasn't worked through and that's a bit of a journey. But that is going to land and we're going to see a lot more usage of it, a lot more use cases. People aren't even thinking about it right, right now.

Speaker A: Fantastic. So really we need to have it landing all these kind of amazing benefits from NPP that we do see. Real time payments, lower cost, better data. We got to land them across use cases. Real time use cases. Michael.

Speaker C: Yeah, look I, I just like to see you know, um, the MPPs, you know, functionality being used to its fullest. Um, um, it should be absolutely um, be used by all use cases in Australia I would hope in ten years. Um, but we had that BEX conversation earlier. Um, I think that that really brings to the power of, of what's capable um, within this, this environment. And so yeah, and from our perspective it just complements what we're doing. We're real time players. We want real time payments in uh, into Australia and we're now doing that um, uh, real time payments out and you know, potentially seeing some interoperability with other, other payment systems. But yeah, uh, I think it's a, it's, it's a bright future ahead.

Speaker A: Brilliant and pushing towards more cross border interoperable from Liam's perspective. Well look, I want to say I think we're out of time but thank you both very very much. Really appreciate, love the conversation. Great to talk to you both. Um, and I think we'll leave it here. Thank you for spending some time with us.

Speaker B: Thank you,

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