Submission on Financial System Inquiry Final Report – Purchased Payment Facilities
Australia’s purchased payment facility (PPF) market is relatively underdeveloped. Ironically the PPF regulatory regime was introduced following the previous financial system inquiry (the Wallis Inquiry) to encourage growth and innovation in new payment methods, yet today a major impediment to the growth of PPFs in Australia is the PPF regulatory regime.
PPFs are growing and innovating rapidly in other developed countries. In Hong Kong, the Octopus stored-value card was introduced in 1997 as a transport ticketing system and led to the implementation of the Oyster card in London some six years later. Octopus now has a penetration rate of 99% in Hong Kong, with over 6,000 service providers, and 15,000 retail outlets. Octopus is one of the world’s most universally accepted smart-card payment systems. There is no reason Australia cannot replicate a success story like Hong Kong’s Octopus system. This would benefit all Australians by making daily transacting quicker and easier, and should be of great interest to the Government as it moves the economy away from cash and the potential it offers to evade taxation. However, for such important policy goals to be achieved, the existing PPF regulatory regime needs extensive revision.
We support reform of the current PPF regime, however, would recommend a different path to that proposed in the FSI Recommendations.
Originally Published:
01/03/2015