An ode to PayPass (from the future)

Remember the EFTPOS minimum? Hahahaha!

What a time that was!

Back when Eftpossing was seen as a  privilege. Back when it was a hassle!

My goodness. How barbaric we were.

I recall carrying around these heavy metal discs.

Coins, they were.

God, what a pain! But under the old system, you couldn’t just pay the amount you wanted. you had to pay with whatever combination of money you had on your person.

Preposterous!

It’s funny the things we didn’t expect would improve our lives. The future is here. And there’s still no flying cars.

It turns out even something as simple as improved payment systems is incredibly hard to achieve. Nobody owns the payment system, so it’s hard to get people to invest in it.

Even Apple has had little luck making their new payment system widespread enough to please people. It’s in 220,000 outlets, but that is apparently just a fraction of all the shops people go into. And payments are about habits. You need to have your payment option available everywhere someone wants to pay.

RBA Governor Glenn Stevens spoke about the payments system last week. As well as interest rates, the RBA is responsible for managing payments.

He said this

“Overall, the record in Australia in instances where innovation requires cooperation between established players, especially where one or more of them feels the need to protect an existing line of business, is mixed… This isn’t just a problem for the industry. It’s a problem for the users of the system as well. Innovation in the ‘cooperative space’ – where no single entity has control – is critical because it is this space that determines the limits on the services that the rest of the payments system can provide.

Australia now has an Australian Payments Council to try to smooth the path to the future. The measure of their success will be forcing this yellow line down below zero.

Screen Shot 2014-10-31 at 11.32.45 am

 

A huge push for new payments to become a reality will come via the New Payments Platform. That’s a new payments architecture being funded by 17 major banks.

It’s very promising – so long as it isn’t crippled by vested interests along the way.

Here’s what the Governor had to say about the process of keeping those 17 banks cooperating :

“This approach, however, is not without its challenges. It requires that industry leadership and collaborative spirit be maintained over a sustained period. At various key moments the project faces the risk of that spirit breaking down….

 

This is where the broader governance arrangements now in place need to take into account the interests of users and the need for the system to be open to competition, not just the interests of the existing players. We – the industry and the Reserve Bank itself – are building a piece of national infrastructure. We should take every opportunity to increase its potential value to the nation, rather than limiting it for fear of where it might take us.”

I for one look forward to a time when I can take a jar of coins into the bank for the last time, burn my wallet, and leave the house without patting my hip pocket a dozen times, just to make sure.

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thomasthethinkengine

Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

One thought on “An ode to PayPass (from the future)”

  1. I found that to be an interesting insight into something very useful but also something you never really think about. Like shipping containers.

    Like

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