Annual Review - Australian Payments Clearing Association

Australian 

Payments 

Clearing 

Association 

Views/ReViews 

the payments industry in perspective 

2007 

Annual 

Review

Contents 

Overview // 01 

Views // 02 

CEO’s view 02 

Evolution of payments systems 03 

The secret to successful self-regulation 06 

Is Australia ready for chip? 09 

The international standards revolution 11 

The four layers of fraud prevention 13 

Reviews // 17 

Chairman’s review 17 

Highlights 19 

Industry and community 20 

APCA’S clearing systems // 23 

APCS 24 

BECS 25 

CECS 27 

HVCS 29 

ACDES 31 

Corporate direction 33 

Board of Directors 36 

Corporate governance 39 

Management 41 

Membership 43 

Payment statistics 48 

Glossary // 50

01 

Overview 

Overview 

For 15 years, the Australian Payments Clearing 

Association (APCA) has been the coordinating vehicle 

for financial institutions administering Australian 

payment systems. Our history is encapsulated in 

previous (printed) Annual Reviews, which summarise 

the wide range of activities undertaken by, and on 

behalf of, the Australian payments industry. 

The 2007 Review brings with it some significant 

changes. Everybody makes payments, so the Review is 

now online to make it easily accessible to industry 

participants and the broader public. 

Also, APCA is developing a stronger policy perspective. 

This year’s online Annual Review includes “Views”, a 

series of articles on topical issues, as well as “Reviews”, 

the annual report of APCA’s activities. 

About APCA 

APCA is the Australian payments industry’s principal 

self-regulatory body. It is the primary vehicle for 

payments industry collaboration with a mandate to 

improve the safety, reliability, equity, convenience 

and efficiency of the Australian payments system. 

APCA’s role is to manage and develop regulations, 

procedures, policies and standards governing 

payments clearing and settlement within Australia. 

Currently, APCA has 78 members including banks, 

building societies, credit unions, the Reserve Bank 

and other payment organisations participating in its 

five payments clearing systems. These systems 

cover the main payment methods – such as 

cheques, direct entry, debit cards – used by 

consumers and businesses. More than 98% of 

Australia’s non-cash retail payment values are 

cleared through APCA’s clearing systems. 

APCA promotes a co-operative environment to drive 

policy development, self-regulation and change 

management in the payments industry. It provides 

the venue for consensus building among its 

members so as to deliver efficient, mature and 

highly reliable payment systems to support 

Australia’s economic growth. 

This year we have broken 

our commentary into 

two sections: ‘Views’ is a 

presentation of topical 

industry issues; and 

‘Reviews’ is a report of 

APCA’s activities during 

the year

02 

Views // CEO’s view 

CEO’s view 

APCA has undergone a significant reorientation in the 

course of the year. The “Chairman’s review” refers to 

the new core principles for APCA, enshrining the 

primacy of payments system enhancement and 

member benefit in our strategic thinking. The core 

principles also identify industry policy and advocacy 

as core functions of the “new” APCA. This is very 

satisfying to me, since it represents part delivery 

against the mandate for strategic review the board 

gave me on appointment a little over 18 months ago. 

This revitalised policy orientation is already running at 

full steam: APCA is making policy contributions to the 

Reserve Bank’s review of payments system reforms, to 

an industry solution on ATM network access reform, to 

governance and innovation in the EFTPOS network, and 

much more in the pipeline. I am delighted that we have 

the opportunity to add value to the industry so quickly, 

and on such important topics. 

As a self-regulatory and policy body for the industry, 

part of our function is to promote new ideas and 

stimulate debate. To that end, this year’s Annual Review 

takes on a new format (apart from being online for the 

first time!). The “Chairman’s review” leads the “Reviews” 

section, summarising APCA’s activities and key industry 

developments. The “Views” section that follows tries to 

address topical industry issues, not so much for 

reporting purposes but to contribute to, or generate, 

industry debate on these important matters. The 

following five articles should not be viewed as the 

concluded views of APCA or its members. Rather, 

they are policy debate: designed to stimulate 

thinking. I hope you find them interesting. 

There has been a fair bit of change over the last 18 

months, and I am very grateful to APCA’s staff, who 

have weathered unsettling times with a positive 

attitude and a willingness to try something new. 

The team has settled into new organisational roles 

without missing a beat. 

Thanks also to the member representatives, without 

whom APCA’s business would never get done. The 

directors have engaged in sometimes challenging 

strategy discussions with openness and 

commitment. I appreciate their support. 

Finally, on behalf of the board and APCA, I would like 

to acknowledge the strong contribution of Bob 

Challis who will retire as chairman in the coming 

months. As APCA’s longest serving chairman, Bob 

Challis was instrumental in driving the Board’s 

agenda and has provided unstinting support and 

sage advice – of immeasurable value to a new CEO. 

Chris Hamilton 

Chief Executive Officer 

Views

03 

Views // Evolution of payments 

systems 

Evolution of 

payments systems 

This is one of those “futurist” articles – the kind that 

predicts the end of payment services/banking/life as we 

know it within 10 years. The problem with most such 

articles is they assume that because something 

becomes technologically possible, it will probably 

happen. You might say it is a very human trait to be 

distracted from what is important by what is novel. 

Instead of exploring the “wow” factor of new 

technology, this article attempts to preview the 

(somewhat less glamorous) business drivers of future 

payment services. 

Technology is an enabler, but not a driver. 

Over 10 years ago, I secured a “hardship posting” to 

Paris for 6 months. I applied for a French bank account, 

and was given a chip card for use in the ATMs on every 

street corner. I could also use it, with PIN, in any 

restaurant (when in Paris,…). At the end of the meal, 

Monsieur would arrive at the table with a cordless chip 

terminal. The card never left my sight, and I could enter 

the PIN without getting up. “What clever people!” I 

remember thinking. 

The above describes a level of payment technology 

not yet generally available in Australia or, for that 

matter, in the home of payment cards, the United 

States. Clearly, technological capability is not a 

particularly good predictor of future evolution. 

In the Parisian example, the French payments 

system had three distinctive features that led to its 

adoption of chip technology significantly earlier than 

many others: relatively high fraud losses, relatively 

high telecommunications costs (leading to electronic 

card payment solutions that did not rely on online 

verification) and a relatively centralised, growthoriented, 

national card infrastructure. None of this 

had much to do with technological capability. 

Necessity is the mother of invention, not the other 

way around. 

So, having leapt 10 years back in time, let us now 

leap 10 years forward. What will the Australian 

payments landscape look like? Chip cards are a safe 

bet, even though we still enjoy an enviably low level 

of fraud losses. But what other industry changes 

might we see? 

Competition, 

globalisation, 

convergence... what 

will the Australian 

payments landscape 

look like in 10 years?

04 


systems (continued) 

One thing to watch is global competition amongst 

commercialised payment schemes. There is a tendency 

to think of Visa and MasterCard as big, comfortable, 

bank-controlled utilities, because of their mutual history. 

But the schemes are increasingly aggressive 

commercial entities in a rapidly changing global market; 

the “bank utility” view is already outdated. 

Over the coming decade, the schemes will face new 

competition from a number of directions. For example, 

China UnionPay is already the world’s second-largest 

issuer of branded cards. Granted, it is an intensely 

domestic brand today, but already showing signs of 

expansion and centered in the world economy’s growth 

engine for the next decade. There are others with the 

potential to develop as global competitors: American 

Express is changing its business model to broaden its 

appeal, and the European national debit card schemes 

may yet produce a transnational alternative to Visa 

and MasterCard. 

Let us assume, then, a more intense, complex and 

commercial global market for payment scheme 

services. Australian financial institutions will want to 

keep their scheme options open, even as 

commercialised card schemes try to build customer 

loyalty ahead of emerging competition. 

This competition will only intensify with payment 

type convergence. Today, we treat cards as a 

separate market from other electronic payments 

– although there are already areas of direct 

competition between card payments and other 

electronic payment methods, such as retail bill 

payment. A card is just an identifying/authenticating 

device: in the future the form factor could be your 

PDA or phone, even parts of your anatomy. What 

keeps card business conceptually separate from 

other electronic payments is not technology, but 

real-time payment assurance: card schemes are 

built around providing a merchant with a high 

degree of certainty that payment will be received 

from a consumer he has no knowledge of. Giving 

merchants such assurance provides the basis for 

ubiquity and convenience and the card schemes 

have done a fine job of delivering both global ubiquity 

and great convenience in the last 10 years or so. 

At one time, no other retail payment methodology 

(apart from cash) could match the real-time payment 

assurance of card payments. But that time is, of 

course, already past. Internet-based account and 

stored-value systems – PayPal and its competitors 

– are already as familiar to Generation Y as bank 

accounts and a great deal more familiar than 

cheques. Equally importantly, these new payment 

providers are as brand-savvy as the card schemes. 

To cater to this young demographic, the next 

generation of electronic low value payment 

mechanisms will all feature near real-time payment 

assurance. An industry-wide example is the Faster 

payments system being developed in the UK, but 

there are other context-specific offerings. 

So the implication is: watch out for convergence of 

card business with electronic payments business. 

As markets converge, so will products, networks 

and back office systems. 

There are some very interesting implications of this 

converging, global competition in the areas of 

operating standards and regulation.

05 


systems (continued) 

Historically, card schemes and national payment 

systems have tended to set their own standards. But in 

a globally competitive market, something has to give: 

competition on price and service is one thing, but 

competing operating standards impose large costs on 

industry participants; and as the number of competitors 

increases, the costs become prohibitive. So, there will 

be a strong push towards integrated, global standards 

as the basis for payment system competition. We are 

already seeing this in the UNIFI standards 1 and in the 

card scheme efforts to develop cross-scheme 

standards (PCI). The implication for a mature domestic 

system like Australia is that we need to stay in touch 

with global standards development: it could have major 

business implications. Participants need to be able not 

only to anticipate global standards and their impact 

on back office systems, but also to contribute to 

standards evolution. 

In the same vein, card schemes and national payment 

systems have historically acted as self-regulatory 

bodies – setting policy, making rules, enforcing 

compliance. If there is direct, intense competition 

amongst commercial payment service providers, can 

they continue to do this? Regulators have in recent 

years recognised the economic importance of 

payment systems of all kinds, and taken a 

correspondingly greater interest in their regulatory 

frameworks. As schemes commercialise and 

compete, regulators will scrutinise their behaviour 

for adherence to good industry policy. When 

something similar happened to the world’s stock 

exchanges, the general trend was to reduce the 

self-regulatory powers of commercialised 

exchanges. The obvious risk is an accumulation 

of new, intrusive public regulation. 

The implication seems to be that industry selfregulatory 

structures need attention. Australian 

payments organisations need to devote some 

attention to self-regulation if they want to continue 

to enjoy the commercial freedom they have enjoyed 

in the past, while at the same time ensuring 

regulatory certainty and system stability to the 

satisfaction of the public regulators. 

The rest of this “Views” section explores these 

ideas, and some others, in a little more detail. 



1. For a discussion of standards, see article “The international 

standards revolution”. 

The ideas and opinions expressed in this article are those of the author 

and not necessarily those of APCA or any APCA member. This article has 

been included in APCA’s 2007 Annual Review for the purpose of 

promoting industry discussion on topical issues.

06 

Views // The secret to 

successful self-regulation 

The secret to 

successful 

self-regulation 

In rapidly evolving, complex industries (particularly those 

with network characteristics, like payments), successful 

self-regulation is better than good public regulation. 

Successful self-regulation, compared with direct 

government regulation, offers a means of addressing 

public policy objectives, that: 

a. is a better balance between public policy concerns 

and industry interests; 

b. is more flexible, responsive to changing participant 

needs and innovation; 

c. creates lower compliance costs; and 

d. is more certain because participants control its 

evolution. 

How then can public policy self-regulation be organised 

to maximise its chances of success? This article 

examines the roles of, and levels of engagement 

between, the two parties most interested in selfregulatory 

solutions to public policy objectives: the 

government regulator (for the Australian payments 

system, the Reserve Bank of Australia) and the industry. 

Successful public policy self-regulation 

Successful self-regulation addresses public policy 

objectives to the satisfaction of the government 

regulator and the industry. This means that: 

1. The regulator must be satisfied that its public 

policy objectives are being met (otherwise direct 

regulation will result); and 

2. The industry needs to be satisfied that, 

notwithstanding the need to meet public policy 

objectives, a self-regulatory solution is better than 

direct regulation because it delivers benefits such 

as those described above. 

The critical question is, then, what allocation of 

responsibilities between the regulator and industry 

and what level of engagement between these two 

parties maximises the chances of achieving the 

above dual objectives of successful self-regulation. 

For example, in order to maximise the chances of a 

successful self-regulatory regime to effect ATM 

reform, what issues should be the responsibility of 

the Reserve Bank (RBA), the payments industry, and 

both the RBA and the payments industry, and what 

How do we organise 

government/industry 

co-regulation so as to 

promote payment 

system efficiency 

and innovation in 

the long term?

07 

Views // The secret to successful 

self-regulation (continued) 

levels of engagement between the RBA and the payments 

industry are required on these different issues. 

Overview 

The role of the regulator and the industry, and the level 

of engagement required to achieve successful selfregulation, 

varies depending upon the type of issue 

under consideration. Figure 1 (right) shows that: 

1. Any self-regulatory issue (in respect of public policy 

objectives) is somewhere between: 

a. what are the public policy objectives that the 

regime is trying to achieve; and 

b. how the requirements of those objectives are 

implemented; 

This ‘continuum’ is represented by the blue lines. 

2. The regulator has the greatest responsibility for the 

what and least for the how and that the industry has 

the greatest responsibility for the how and least for 

the what; and 

3. The level of engagement between the regulator and 

the industry should increase for the issues for which 

both the regulator and industry are responsible. 

This article argues that Figure 1 represents the 

allocation of responsibilities and level of engagement 

that is most likely to deliver successful self-regulatory 

solutions to public policy objectives. 

What are 

the policy 

objectives? 

Regulator 

responsibility 

Industry/regulator engagement 

Success 

criteria 

Shared 


How are they 

implemented? 

Industry 


Figure 1 – Regulator/industry responsibilities and engagement 

What are the public policy objectives? 

Fundamental to any regulatory regime are the public 

policy objectives that it is seeking to further or 

achieve. This is where the regulator (and/or 

government) must have primacy. 

Industry participants will generally act to advance 

their commercial interest (indeed most participants 

are legally obliged to act in the best interests of their 

shareholders). As such, the industry can only have 

minimal responsibility for the development of public 

policy objectives. Moreover there is little need for 

regulator / industry engagement in this area. (Note 

the difference between public policy objectives and 

success criteria – see next page.) 

This does not mean that the industry cannot, or 

should not, make representations to the regulator as 

to public policy objectives. Indeed in many cases it 

is likely to be good practice for the regulator to seek 

views on its public policy objectives. The point is 

that it is the regulator that must have the 

responsibility for setting these objectives. 

Thus the highest level public policy objectives will 

often, and should, be set outside of a self-regulatory 

regime. For example, the definition of the public 

interest by the Payments System Regulation Act as 

the desirability of payment systems: 

a. being: 

i. financially safe for use by participants; and 

ii. efficient; and 

iii. competitive; and 

b. not materially causing or contributing to increased 

risk to the financial system. 

Of course, self-regulatory regimes may also have 

industry objectives, to the extent that they do not 

impinge upon the public policy objectives. However, 

inconsistency or confusion around public policy and 

industry objectives is likely to retard successful 

self-regulation.

08 

Views // The secret to successful 

self-regulation (continued) 

Success criteria 

Clear and objective success criteria are fundamental to 

a successful self-regulatory regime. 

Success criteria are what we use to determine whether 

public policy objectives, such as safety, efficiency and 

competition, are being met. In a self-regulatory regime 

they let the industry know whether they are meeting the 

first of the dual objectives of successful self-regulation: 

the regulator being satisfied that its public policy 

objectives are being met. 

Figure 1 puts the development of success criteria at the 

mid-point between the what and how. This means that 

the regulator and the industry have equal responsibility 

for their development (and review) and that there should 

be maximum engagement between the regulator and 

industry. This is because: 

1. the regulator needs to ensure that the success 

criteria are an accurate measure of the relevant public 

policy objective(s); 

2. the industry best understands the fundamentals of 

what is actually happening in the relevant markets, 

what is likely to happen in the future and therefore 

what changes will signify achievement or movement 

towards the relevant public policy objectives; and 

3. dual responsibility and maximum engagement 

increase confidence of the industry and other 

stakeholders in the self-regulatory regime and is 

more likely to foster the right levels of regulator/ 

industry co-operation. 

For example, for the Australian payments system 

both the RBA and the payments industry should be 

responsible for developing the success criteria in 

respect of the public policy objectives in the 

Payments System Regulation Act. These success 

criteria, which could differ across payment systems, 

should (ideally) provide an objective and clear basis 

to determine whether payment systems are 

financially safe for use by participants, efficient and 

competitive and do not materially cause or 

contribute to increased risk to the financial system. 

How are they implemented? 

Implementation of rules to create the conditions that 

meet the success criteria is where the industry must 

have primacy. 

If self-regulation is to be successful it must also 

meet a second objective: delivery of a solution that 

is better than direct regulation because it delivers 

benefits such as greater flexibility, lower compliance 

costs and a better balance between industry 

interest and public policy. 

Only the industry itself can develop these solutions 

because it is only the industry that knows and is 

able to assess (in detail) how different rules will 

affect its flexibility, compliance costs (etc) and, for 

example, result in other unintended consequences. 

Further, if clear and objective success criteria have 

been developed by the regulator and industry, then 

the regulator can be confident that a clear means of 

assessing whether the implemented rules are 

achieving the public policy objectives exists. It can 

thus leave the industry to develop and enforce rules 

to achieve the success criteria. 

Temogen Hield 

Head of Self-Regulation 





09 

Views // Is Australia ready for 

chip? 

Is Australia ready 

for chip? 

The use of chip payment cards is already widespread 

overseas, its rollout being primarily driven by the need 

to combat card counterfeit fraud. We understand that 

chip cards are prevalent in 45 countries across the 

world, with the United Kingdom alone having over 100 

million chip cards on issue. 

Australia’s record on combating card fraud is excellent 1 , 

but the jury is out on whether major fraud will head our 

way or not. Despite this, for many reasons the 

implementation of chip in Australia seems inevitable. 

One day magnetic stripe cards will become obsolete. In 

Europe, magnetic stripe cards are already seen as 

‘old-fashioned’: chip is the way things are done 

domestically, with the magnetic stripe being accepted 

only on foreign-issued cards. 

In Australia, some banks have rolled-out, or are in 

the process of rolling-out, chip credit cards to their 

customers and have updated their EFTPOS 

terminals to standard EMV. Financial incentives 

provided by the credit card schemes have driven 

this work. 

It is now common that overseas issued chip cards 

are presented for payment at merchants’ EFTPOS 

terminals in Australia and in some cases they are 

processed fully EMV. These instances are set to 

increase substantially as more and more markets 

overseas implement chip. Unfortunately, this does 

bring the potential for a migration of counterfeit 

fraud to Australia as those markets overseas 

implement the protection that only allowing chip 

based transactions domestically brings. This type 

of fraud is occurring in Australia although, currently, 

at very low levels. 

Chip is a major technology shift that is providing an 

infrastructure platform for business to introduce 

innovative products to their customers. Just as the 

internet has changed how people work (and play), 

chip infrastructure will change how we make 

payments. In some countries customers are reaping 

the benefits of chip plastic cards that provide the 

convenience of both contact and contactless 2 

The world’s heading 

for chip and so 

is Australia – how 

can we learn from 

overseas experience?

10 

Views // Is Australia ready for 

chip? (continued) 

payments at merchants (the hybrid card), along with the 

benefits of e-purse, loyalty programmes and public 

transport ticketing that the advent of multiple 

application capability on the chip provides. 

While recognising the continuing hard work of schemes, 

issuers and acquirers on rolling out chip programmes in 

Australia, the question now is whether there is need for 

an overlay of industry-wide coordination to ensure a 

trouble-free chip implementation. Overseas experience 

suggests this may be the case. 

The issue is “interoperability”. Chip cards can be 

manufactured and configured in different ways, as can 

chip reader terminals. Each financial institution will of 

course ensure that its cards work in its terminals. But 

who makes sure that all cards work in all terminals? 

The schemes have an interest in doing so, but of 

course there are multiple schemes as well. 

APCA held a one-day Forum in May 2007, attended 

by Australian issuers, acquirers and merchants, to 

explore the need for industry-wide coordination of 

chip/EMV payment card implementation in Australia. 

Guest speakers at the Forum shared their overseas 

experiences of industry coordinated approaches and 

their “war stories” on where things went wrong and 

interoperability was not achieved. The Forum 

concluded with strong support for an industry 

coordinated programme. 

Australia’s chip infrastructure upgrade will be 

lengthy and costly, whether there is an industry 

coordination programme or not. No one wants the 

cost to be increased if implementations are 

uncoordinated, causing re-work due to 

interoperability problems. 

Other countries needed to press the pace on chip 

conversion to stem a rising tide of fraud. With our 

low fraud environment, Australia can take a more 

measured approach and learn from overseas 

experiences. This means that each financial 

institution will choose when and how to upgrade, 

based on their own business drivers. However, as 

confirmed at the Forum, a coordinated approach 

is a necessary component of a successful 

implementation in Australia. 

The Australian industry has recognised this, 

establishing a chip for Australia implementation 

steering committee chaired by APCA. Major issuers, 

acquirers merchants and the card schemes are 

all participating. 

In the past, Australian financial institutions have 

successfully collaborated to deliver lasting value to 

Australian consumers. The EFTPOS system itself is 

one of many examples. We need to do so again to 

ensure Australia is not left behind the rest of the 

world and does not suffer the unwanted 

consequences of painful interoperability problems. 

Once we get this right, we can move on as an 

industry to adding new functionality and extra value 

to delight consumers. 

Michael Forey 

Head of Industry Change Management 

1. At 24 cents in every $1000, Australia’s plastic card (debit, credit and 

charge card) rate of fraud is less than a third of that in the UK which 

remains the equivalent of about 90 cents for every $1000. 

2. An antenna imbedded within the plastic card can communicate wireless 

to the payment terminal potentially proving for a faster payment 

experience. 





11 

Views // The international 

standards revolution 

The international 

standards revolution 

In payments systems messaging, the holy grail of the 

standards revolution is the single international standard: 

one standard to replace the myriad of proprietary and 

open standards currently in place in the financial 

industry. For many institutions and their corporate 

customers, which have to maintain multiple linkages 

and multiple message formats running on multiple 

legacy systems, the cost and effort involved in 

standardisation often obscures the benefits. As a result, 

reaching industry consensus and developing 

momentum towards any new standard is a very 

challenging and protracted process. 

The reality is that any program of standardisation must 

focus on delivering value to business and not just blue 

sky or intellectual stimulation for technologists. 

The challenge for the standards knights (jousting with 

profit-focused business managers) is how to articulate 

the business benefits in such a way that a sustained 

industry effort can be established to reach the ultimate 

goal of a single standard. 

Perhaps the best business motivation will be the 

realisation that by not quickly addressing the issue of 

standardisation, it will open the door for a new market 

or competitor to develop a more efficient and nimble 

product, allowing it to directly impact the profitability of 

many large institutions. 

A related example from Heidi Miller 1 was the inability 

to develop a secure and easy to use on-line 

payments solution for what became the very 

successful company e-Bay. e-Bay turned to another 

e-business start up in the late 90’s to solve their 

needs after several banks could not deliver a 

suitable solution. e-Bay eventually bought the 

company for over $1billion USD. The company was 

not a bank; it was PayPal. Of course, the irony is 

that PayPal transactions leverage the same systems 

the banks spent billions of dollars building. Miller 

notes that “however when we as an industry are 

properly motivated, it’s impressive what we can 

achieve together. Look at what has been done with 

Equilend, CLS, the Euro, Target, and SEPA.” 

Motivation will again be the key to taking advantage 

of the current revolution occurring in messaging 

standards. Perhaps the most prominent example of 

the standards revolution is the UNIFI initiative from 

the International Organisation for Standardisation 

(ISO). Rather than only describing message formats 

in detail, UNIversal Financial Industry message 

scheme (UNIFI) provides a business-based 

approach to developing message standards. 

If the Australian 

payments industry 

doesn’t engage in 

global standards 

processes,will we be 

left behind?

12 

Views // The international 

standards revolution (continued) 

UNIFI was designed to address the problem caused by 

the creation of several new standardisation initiatives 

that had evolved over the last decade using internet 

based messaging. These initiatives are a real alphabet 

soup; SWIFT, TWIST, FIX, MDDL, XBRL, IFX and 

several others. 

Over the past decade, the rapid expansion of the 

internet led to a proliferation of standards initiatives 

based on using eXtensible Markup Language (XML) 

as a language. However each initiative developed their 

messages in their own XML dialect. 

XML’s genesis came through innovations designed to 

solve the difficulties in large scale electronic publishing 

in the 1970’s. One of the key people involved and the 

person who coined the term “markup language”, 

Charles Goldfarb, has referred to XML as the holy grail 

of computing, solving the problem of universal data 

interchange between dissimilar systems. XML was 

developed in the late 1990’s based on the markup 

principles as a framework to achieve this nirvana. XML’s 

power comes from its simplicity and ability to describe 

data within the message. This flexibility however has 

assisted in the creation of many “standards” in 

isolation, resulting in overlaps and confusion in usage. 

UNIFI’s approach is to provide an umbrella mechanism 

whereby the ‘alphabet soup’ and other standards can 

successfully co-exist in the short term and converge 

over time to a single standard. The approach requires 

business level modelling to be undertaken as a 

pre-requisite to the formation of the messages. The 

result of the business modelling is a non-technology 

dependant, non-language dependent set of models 

and data descriptions that are stored in dictionaries 

allowing anyone access to look-up the information. 

The UNIFI (or ISO20022) approach is also being 

taken up in the development of new standards for 

initiatives such as SEPA (Single Euro Payments Area). 

The approach promises reduced implementation 

costs and time, but also incorporating flexibility in 

individual business processes. 

Although the UNIFI approach provides a means for 

the financial industry to move towards a single 

standard, the momentum needed to attain the 

objective is yet to be achieved. Standards 

organisations such as SWIFT and TWIST are very 

active in promoting the approach and encouraging 

their members to commence convergence programs. 

The success or failure of UNIFI will depend on a 

clear understanding and articulation of the business 

benefits and the ability of the industry to see beyond 

their short term issues and get involved in 

collaboration and planning for the future. The 

question for Australia is what part do we want to 

play in this revolution? 

There is little doubt that regulatory and market 

forces driven primarily by the Europeans and the 

United States will push our local financial institutions 

to adapt to new global standards. Evidence of these 

forces already exists with various initiatives such as 

anti-money laundering, Sarbanes-Oxley, IBAN, IBEI 

etc requiring changes to infrastructure and 

operational processing. 

Motivation and engagement at a payments industry 

level is the key to Australia influencing the strategy 

and implementation of international standards. The 

benefits gained in reducing costs in infrastructure 

maintenance and development alone would justify a 

unified Australian voice to influence the direction of 

the UNIFI standard. 

Bob Masina 

Head of Technology & Operations 

1. Based on a speech by Heidi Miller, Treasury & Security Services 

Executive, JP Morgan Chase & Co – SIBOS 2004 





13 

Views // The four layers of 

fraud prevention 

The four layers of 

fraud prevention 

Fraudsters will always seek out the path of least 

resistance. They target vulnerabilities in individuals, 

property or financial institutions. The possibilities for 

fraudulent endeavour in payments systems are many 

and varied; fraudulent activities can be undertaken with 

little personal risk involved, at physical remove from the 

target, and with significant sums of money available as 

a reward. 

Historically, Australian financial institutions have been 

very good at preventing payments fraud, especially 

when compared to other jurisdictions. As an example, 

at 24 cents in every $1000, Australia’s plastic card 

(debit, credit and charge card) rate of fraud is less than 

a third of that in the United Kingdom which remains the 

equivalent of about 90 cents for every $1000. 

This does not mean Australia can be complacent. 

As other jurisdictions improve their defences there will 

be an inevitable shift by criminals as they go forum 

shopping for weaker defence payment systems. 

Fraudsters are never restricted geographically in this 

age of the internet. 

According to the Australian Institute of Criminology, 

fraud comprises 16% of the total annual cost of 

crime in Australia. This is a cost that cannot be 

ignored, irrespective of the fact that percentagewise, 

it may be higher elsewhere. 

Payments fraud prevention activities can be seen 

to operate at four different levels. The first level 

focuses on actions to be taken by the end user – 

either the customer or the merchant. Cardholders 

can ensure they protect cards and PIN information; 

merchants can ensure staff follow work practices 

that will discourage fraud attempts. The second 

level is at the financial institution: implementing 

measures to protect the institution’s customers. 

At this level, Australian institutions have invested 

significantly in fraud detection and risk management 

systems. The remaining two levels focus more 

widely. The third operates at the scheme level 

(for example specific measures developed and 

implemented separately by Visa and MasterCard 

to reduce online fraud). The fourth operates at 

an industry wide-level, encompassing financial 

institutions, government and law enforcement 

agencies, merchants, technology providers 

and customers. 

Fraud (prevention) is 

big business. Is the 


doing enough?

14 


fraud prevention (continued) 

To date, payments fraud prevention initiatives in 

Australia have largely taken place at the first three 

levels. There have been fourth level type industry 

forums such as the Australian Bankers’ Association’s 

(ABA) Financial Crimes Steering Group and APCA’s 

Fraud Committee, but these have not attracted much 

attention in recent times. This article seeks to examine 

the desirability of enhanced industry effort as a 

complementary measure alongside existing (and so 

far successful) effort on the other three levels. 

Examples of fourth level type fraud prevention activities 

include: 

• an education campaign run as a joint initiative 

between the ABA and the Australian High Tech 

Crimes Centre; 

• the Joint Banking Financial Services Team, which is a 

centralised body set up to provide a point of contact 

for law enforcement agencies to obtain information on 

online banking fraud; and 

• publication by APCA of industry-wide data on cheque 

and card fraud, in line with current practice in the 

United Kingdom. 

Layer 4 

Layer 3 

Layer 2 

Layer 1 

Government 

Law enforcement agencies, 

regulators 

APCA’s clearing 

systems 

Banks 

Card 

schemes 

Non-bank 

financial 

institutions 

Industry 

peak bodies 

APCA, ABA, ABACUS, 

Australian Cards Risk 

Council etc 

Other payment 

systems 

Technology 

providers 

Consumers Merchants Corporates 

Govt/ 

Industry 

System 

Institution 

User 

In addition, some of Australia’s major financial 

institutions are working together to create the Trust 

Centre: a central service set up to facilitate user 

identification and hence cut the level of identity 

fraud currently associated with false applications for 

bank accounts.

15 



However, the question is whether more should be done 

to enhance fraud prevention and detection in Australia 

through a more coordinated, industry-wide approach? 

If the answer is yes, then how should this be done? 

An important element of this would be to improve 

interaction between the different players in the industry, 

including financial institutions, government and law 

enforcement agencies, merchants, technology 

providers and customers, as occurs in many overseas 

jurisdictions. 

There are two main obstacles to fourth level effort. First, 

the business case for investment in fraud prevention 

initiatives is much easier to establish when that initiative 

is specific to a single institution where the costs and 

projected savings are clear. By contrast, translating 

overall industry costs and benefits of collective industry 

efforts into predicted net benefit for a critical mass of 

individual institutions, each of which has different fraud 

profiles and systems, can be very difficult. 

Second, there is the problem of comparative 

advantage. Any successful industry effort reduces 

total fraud costs, but will not by definition, confer 

any significant competitive advantage on any one 

institution or class of institutions. Given an 

investment choice between an industry effort and 

one that will confer competitive advantage on a 

single institution, it will be difficult to persuade 

business managers to opt for the former. 

Despite this, overseas experience suggests that as 

a complement to other efforts, industry cooperative 

effort is valuable in long-term fraud prevention. 

An example of effective cross industry coordination 

in preventing payments fraud can be found in 

France, where the Observatory for Payment Card 

Security (OPCS) was established in 2001 to promote 

dialogue and exchange of information between all 

parties that have an interest in the security and 

smooth functioning of the French card payment 

systems. The typical work undertaken by the OPCS 

relates to the identification and analysis of card 

fraud activity, facilitating ongoing evaluation of the 

potential impact of such fraudulent activity on card 

and device security standards and timely 

dissemination of information on the latest modus 

operandi being utilised by criminals. 

In the United Kingdom, there has been a wholesale 

shift in attitude to payments fraud prevention, 

spurred by the substantial level of payments fraud 

encountered. The best example of this is the 

cooperative approach taken by industry bodies and 

law enforcement agencies to establish the Payments 

Industry & Police Joint Intelligence Unit, an industryfunded 

agency staffed by both industry experts and 

law enforcement officers. This effectively combines 

expertise in payment systems and financial crimes 

with the objective of preventing and detecting 

payments fraud within the one office. In such 

circumstances, by having an industry wide 

independent body closely cooperating with law 

enforcement agencies, sensitivities relating to 

competition and commercial confidence between 

financial institutions are unlikely to arise, and 

protection of the entire industry is undertaken in a 

coordinated manner by a central body. 

In both France and the United Kingdom, a 

combination of information sharing and technological 

innovation are being used to combat payments fraud.

16 



Of course, there are significant differences between the 

Australian payments system and those of France and 

the United Kingdom, therefore these types of measures 

may not be appropriate within the Australian 

environment, or would at the very least need to be 

suitably tailored. Irrespective of environmental 

differences, however, lessons can be learned from the 

cooperative nature of these initiatives where financial 

institutions and law enforcement officers combine their 

expertise to successfully combat fraud, complementing 

fraud prevention strategies pursued by customer 

education, financial institutions’ internal preventative 

measures and scheme measures. 

From such cooperation, industry-wide trends in criminal 

activity can be detected and addressed, experiences in 

one sector can be learned from, and a proactive 

technology driven program of fraud prevention can be 

resourced and utilised for the benefit of the whole 

payments industry and the wider community. 

The first step to achieving such cohesion in Australia 

has recently been taken with the establishment of 

the joint ABA/APCA Fraud Direction Working Group. 

This Group will explore the potential for greater 

cooperation across the payments industry with the 

long term objective of developing a cooperative 

network, not just within the payments industry, but 

with government, law enforcement agencies and 

other payments system stakeholders. This will help 

ensure Australia’s enviable record in payments fraud 

prevention is maintained. 

Stephen Halliday 

Head of Industry Policy 

Arun Kendall 

Research/Policy Analysis 

Caroline Pearce 

Risk & Compliance 

The ideas and opinions expressed in this article are those of the authors 




17 

Reviews // Chairman’s review 

Chairman’s review 

I am pleased to present the “Reviews” section of APCA’s 

2007 Annual Review, reporting on APCA’s activities and 

key developments this year. 

2007 was a year of renewal and reform – one of internal 

restructure and external responsiveness to new public 

policy demands and market evolution. 

As foreshadowed in last year’s report, with the industry 

facing significant opportunities and challenges, our 

strategic focus has been on ensuring APCA is wellplaced 

to continue to deliver member value in a 

changing environment. 

Following completion of the board’s strategic review 

during the year, APCA adopted new core principles 

recognising the company’s enlarged mandate: to 

improve the Australian payments system through 

industry policy, self-regulation and change 

management. I am confident that this expanded 

industry role positions APCA to help the industry meet 

the challenges ahead, while meeting our commitment to 

members to enhance the long-term value of their 

payment activities. 

From these core principles came a set of corporate 

goals providing guidance for APCA’s priorities over 

the next three years. To best fulfil APCA’s purpose, 

the organisation was restructured into four teams 

based around the core activities. Close consultation 

between the Reserve Bank and other members led 

to a significant change in relationship with the public 

regulator: the Reserve Bank stepped down from the 

board and committees in favour of a structured 

cooperative dialogue with APCA. Some new staff 

have added key competencies and the company 

moved to new, open plan premises to provide 

additional space for enhanced member services. 

It seems particularly fitting that these activities took 

place during the15th anniversary of APCA’s 

establishment. 

APCA has already commenced work to address a 

range of developmental and policy issues identified 

by members and the regulator. Together with the 

Australian Bankers’ Association, we are developing 

options for a commercial governance structure to 

promote and develop the EFTPOS system. This 

work follows some joint exploratory work about 

the best way to ensure an efficient, competitive 

payment card industry over the long term. APCA will 

also make a detailed submission in response to the 

ReViews

18 

Reviews // Chairman’s review 

(continued) 

Reserve Bank’s review of its various payment system 

reforms. We intend to highlight why co-regulation – 

effective self-regulation supported by public policy 

oversight – is the best regulatory model for the 

Australian payments system. These and other industry 

activities are discussed in the body of this report. 

I would also like to mention some of the projects 

managed by APCA to improve the effectiveness and 

efficiency of the payments clearing systems. As part of 

the industry’s commitment to combat fraud and help 

protect consumers and businesses in Australia, new 

industry-wide data on payments fraud was collected for 

the first time and made available on APCA’s website. 

Further enhancements were made to the CECS device 

approval process, which ensures ATMs and EFTPOS 

terminals deployed in the ATM/EFTPOS systems meet 

the required standards, to clarify the requirements for 

members and suppliers alike. Good progress has also 

been made on developing the technical specifications 

and standards for domestic PIN based transactions 

processed using chip card technologies. 

APCA’s expanded industry role is reflected in this 

year’s Annual Review, which is produced in two 

sections. In addition to the following “Review”, a 

separate “Views” section raises topical issues on 

the payments industry’s agenda. We trust that the 

online format of this year’s Annual Review will 

ensure payments information is accessible to 

everyone with an interest in the payments system. 

Having completed eight years as chairman, when 

my current term expires in October 2007, I have 

decided to retire from my position. I would like to 

thank the current board and past directors, CEO 

Chris Hamilton and members of APCA’s staff for 

their support and dedication. I leave APCA wellpositioned 

to meet all currently identified payments 

related projects and future challenges that will arise 

in a continuing evolving marketplace. 

Robert N Challis 

Chairman

19 

Reviews // Highlights 

Highlights 

100 

60 60 

Cheques Cheques 9.8% 9.8% 

Direct entry Direct 32.1% entry 40 32.1% 40 

EFTPOS EFTPOS and and 

EFTPOS and EFTPOS and 

20 20 

credit cards credit cards 

credit cards credit 58.0% cards 58.0% 

Direct entry Direct entry 

High value High 0.1% value 0.1% 

0 0 

Cheques Cheques 

‘03 ‘04 ‘03 ‘05 ‘04‘06 ‘05‘07 

‘06 ‘07 

Proportion Proportion of payments of payments 

by number by number (as at May (as 2007) at May 2007) 

Trends in Trends type of in payment type of payment 

by number by number (as at May) (as at May) 

• Completed a strategy review programme including an 

update of the mission and objectives into core principles. 

• Developed three-year corporate goals to ensure a 

focus on delivery against member agreed priorities. 

• Established new formal liaison arrangements with the 

public policy maker, the Reserve Bank. 

• Further developed informal consultation networks, 

both with payments industry associations overseas 

and with relevant stakeholder bodies in Australia. 

• Made public new industry-wide data on payments 

fraud to help protect consumers and businesses. 

• Opened up membership of the High Value Clearing 

System to all payments organisations regardless of 

institutional form. 

80 

100 

80 

• Developed a programme to support implementation 

of chip cards in Australia, commencing with a “Chip 

for Australia Implementation” industry forum. 

• Undertook a joint research programme on system 

governance and innovation with the Australian 

Bankers’ Association, including an industry forum on 

“Payments System Evolution”. 

• Removed the BECS membership criteria requiring 

new entrants to establish bilateral agreements with 

all existing members. 

• Made preparations for the Government’s introduction 

of Medicare e-claiming at doctors’ surgeries through 

the EFTPOS system. 

• Implemented an organisation restructure and moved 

to new premises designed to promote collaboration. 

Over the last 15 years, 

our members have 

delivered efficient 

and highly reliable 

payment instruments 

to support Australia’s 

economic growth

20 

Reviews // Industry and 

community 

Industry and 

community 

The new core principles recognise that part of APCA’s 

role is to facilitate the development of industry positions 

and views on the evolution and regulation of payment 

systems, and to communicate those views to 

government, regulators and other stakeholders as 

needed. Fulfilling this role in the year of review required 

a wide range of activities aimed at raising awareness 

and promoting discussion of payments industry issues. 

This section summarises those activities. 

ABA/APCA Joint Research Project 

During the year, APCA and the Australian Bankers’ 

Association (ABA) conducted joint research on a 

number of issues related to payments system 

architecture, governance and innovation. While in part 

driven by recent regulatory interest in the functioning 

of the payments system, the research programme is 

intended to promote informed industry debate about 

the future direction of the Australian payments system. 

Reserve Bank (RBA) Forum 

As one of the first steps in the programme of joint 

research, APCA and the ABA invited the RBA to 

present to a half-day industry forum, attended by 

more than 80 industry professionals in Sydney on 

27 September 2006. Dr Philip Lowe, Assistant 

Governor, Financial System, provided a broad 

overview of the RBA’s thinking on matters such as 

the role that technology can play in the evolution 

of payment systems. 

ICPACE 

The third annual meeting of the International Council 

of Payment Association Chief Executives (ICPACE) 

was held in South Africa in August 2006. The two 

and half day event was attended by payment 

association representatives from Australia, Canada, 

Ireland, South Africa and the United Kingdom. 

ICPACE provides an effective forum for members to 

exchange information and keep abreast of payment 

system developments from an international 

perspective. 

APCA has an expanded 

role focused on policy 

development and 

advocacy for the 


as a whole

21 


community (continued) 

Chip Forum 

APCA held a Chip for Australia Implementation Forum 

on 22 May 2007 for the major stakeholders that will be 

direct participants in chip implementation. The Forum 

explored the industry-wide challenges of migrating 

Australia’s highly successful ATM, EFTPOS and credit 

card systems from magnetic stripe to best practice chip 

card technology. With a common goal of achieving a 

trouble-free migration for consumers, the Forum’s 

attendees agreed that a coordinated industry approach 

was needed to ensure interoperability between chip 

applications and devices. APCA is identifying other 

areas where industry collaboration could ensure chip 

adoption is a relatively seamless experience for 

providers and consumers alike. 

Preventing fraud 

APCA made public new industry-wide data on 

payments fraud as part of the industry’s commitment to 

improve disclosure and help protect consumers and 

businesses in Australia. The data, which is for cheque, 

debit card, credit card and charge card fraud across all 

financial institutions, was collected for the first time over 

the previous financial year and released in November 

2006. Subsequent collections are released every six 

months and published on APCA’s website to help raise 

awareness of payments fraud risks. Financial institutions 

use the fraud data to target their prevention efforts and 

warn their customers about emerging trends. 

APCA participates in industry-wide efforts to 

counter payments fraud including through 

membership of the Australian Bankers’ Association 

Fraud Taskforce and close association with the 

Australasian Cards Risk Council. 

Supporting Government initiatives 

The industry is ready for the Government’s 

introduction of Medicare e-claiming at doctors’ 

surgeries through the EFTPOS system. Rule 

changes have been made so that financial 

institutions can use the existing EFTPOS “refund” 

function for paying medicare claims to accounts 

linked to plastic debit cards, on a transitional basis. 

Use of the “refund” function is due to cease when a 

new transaction for making deposits at EFTPOS 

terminals is introduced in 2008. Changes have also 

been made to ensure medicare benefits are 

appropriately identified on customers’ statements. 

Payments clearing resilience 

APCA works closely with others participants in the 

financial community to ensure the payments system 

remains resilient in the event of a wide-scale 

disruption. It has representation on the banking and 

finance group operating in the “Government’s 

Trusted Information Sharing Network for Critical 

Infrastructure Protection” and participates in the 

financial industry’s AllFinance forum. Amongst other 

things, during the year these groups engaged in 

exercises to determine potential weaknesses in 

the sector’s business continuity planning and 

established a new forum to focus on cyber and 

IT security. 

Business continuity 

As part of its business continuity arrangements, 

APCA has a crisis communications plan in place 

to minimise adverse impacts if there is a major 

disruption to any of the five payments clearing 

systems. The plan, which is tested on a regular 

basis, provides a framework for facilitating 24x7 

communications between affected members so 

as to expedite industry-level actions for recovery. 

Representing the industry 

APCA participates on a number of working groups 

and committees developing technical and security 

standards for financial transactions. 

• Standards Australia Committee IT/5, developing 

standards for financial transactions systems. 

• Standards Australia Committee IT/5/3, developing 

standards for message formats. 

• Standards Australia working Group IT/5/4, 

developing standards for authentication and 

security.

22 


community (continued) 

• ISO/TC68/SC2/Working Group 11, developing 

international standards for banking and related 

financial services in particular triple data encryption 

algorithms. 

• ISO/TC68/SC2/Working Group 13, developing 

standards for security in retail banking. 

• SWIFT Australia: National Member Group; User 

Group; and National Member Group Standards 

Subcommittee. 

Engaging the community 

APCA’s public communications strategy was reviewed 

during the year to assist the company in advancing the 

new core principles and meeting its three-year 

corporate goals. Initiatives to broaden the community’s 

understanding of the payment industry’s activities will 

be implemented progressively in the coming year. 

These will include new information sheets and a revamp 

of the website to make it easier for stakeholders and 

members of the public to find general and specific 

payments information. 

Publications 

In addition to its website, APCA keeps the 

community informed of payments industry 

developments through its annual reviews and 

quarterly publication Payments Monitor. Following a 

reassessment of APCA’s publications during the 

year, the focus for the content has shifted from 

updates on specific APCA activities to providing a 

more encompassing industry perspective. This 

year’s Annual Review has been produced in an 

interactive, on-line format to make it easily 

accessible to the broader community.

23 

Reviews // APCA’s clearing 

systems 

APCA’s clearing 

systems 

A clearing system provides an integrated body of rules 

and decision-making structures for the efficient clearing 

and settling of payments between APCA members. 

APCA currently coordinates and manages five 

payments clearing systems through management 

committees comprising representatives of clearing 

system members. 

APCA’s five clearing systems are: 

• Australian Paper Clearing System (APCS) 

for cheques and other paper-based payment 

instruments. 

• Bulk Electronic Clearing System (BECS) 

for direct entry (credit and debit payments). 

• Consumer Electronic Clearing System (CECS) 

for EFTPOS and ATM transactions. 

• High Value Clearing System (HVCS) 

for settlement of high value, real-time payments 

between financial institutions. 

• Australian Cash Distribution and Exchange 

System (ACDES) 

for the trading and distribution of bulk notes and 

coin between banks. 

The rules established for each clearing system are 

a combination of membership requirements, 

processing regulations and procedures and 

minimum standards for processing and technology. 

They are designed as a framework for maximising 

efficiency, while protecting each payments clearing 

system against risks to integrity arising from 

processing errors or failures or unauthorised access 

to system data. 

APCA’s five clearing 

systems cover the 

main payment 

methods used 

by consumers and 

businesses in 

Australia today

24 


systems // APCS 

Australian Paper Clearing System (APCS) 

for cheques and other paper-based payment instruments 

60 

50 

40 

30 

20 

10 

0 

‘03 

60 

50 

40 

30 

20 

10 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

200 

150 

100 

0 

‘04 ‘05 ‘06 ‘07 

Number of cheque Number transactions of cheque transactions Value of cheque transactions 

Value of cheque transactions 

in May (in millions) in May (in millions) in May (in $ billions) in May (in $ billions) 

In keeping with a global trend, cheque usage in Australia 

has been declining consistently over the past decade. 

The number of cheque transactions has plummeted by 

more than 50% since the peak year of 1996 when there 

were some 3.9 million cheques exchanged each business 

day. Nonetheless, cheques remain an important part of 

Australia’s payments system. Businesses continue to 

value cheques as a convenient, easily reconciled 

payment method for commercial transactions. In 

contrast, individuals are moving away from cheques for 

personal use in favour of electronic payments, which is 

accounting for the overall decline in cheque usage. 

50 

‘03 

200 

150 

100 

50 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

‘04 ‘05 ‘06 ‘07 

Developments 

• Following a detailed risk assessment of the 

electronic data they exchange, APCS members 

have undertaken to upgrade to tripleDES line 

encryption by June 2008 to further strengthen data 

security within the system. 

• The Exchange Summary Data File Transfer Facility 

introduced by the Reserve Bank in 2005 became 

the mandatory method for members to exchange 

settlement data with the National Collator effective 

July 2007. 

Personal cheque transactions 

have plummeted in the 

last ten years although 

business continues to 

value them as a 

convenient form 

of payment

25 


systems // BECS 

Bulk Electronic Clearing System (BECS) 

for direct entry (credit and debit payments) 

100 

80 

100 

80 

500 

400 

500 

400 

60 

60 

300 

300 

40 

40 

200 

200 

20 

20 

100 

100 

0 

‘03 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

0 

‘04 ‘05 ‘06 ‘07 ‘03 ‘04 ‘05 ‘06 ‘07 

Number of direct Number entry of direct entry Value of direct entry Value of direct entry 

transactions in May transactions (in millions) in May (in transactions millions) in May transactions (in $ billions) in May (in $ billions) 

Direct credit Direct Direct debits credit Direct debits Direct credit Direct Direct debits credit Direct debits 

Direct entry payments 

have continued the 

strong growth seen in 

recent years 

Direct entry is a cost-effective and convenient 

mechanism for handling high volumes of usually low 

value electronic payments. Direct debit is used for bulk, 

routine payments like superannuation contributions and 

insurance premiums as well as by individuals for paying 

regular bills. Bulk direct credit payments are used for 

salary and government payments as well as large 

corporate payments such as share dividends; however, 

with the introduction of internet and telephone banking 

“pay-anyone” functionality, direct credit has also 

become a primary means for making person-toperson 

payments. Direct entry payments have 

shown consistently strong growth. As at 30 June 

2007, more than 14,000 billing companies (direct 

debits) and 200,000 paying companies (direct 

credits) had facilities in place to receive and make 

direct entry payments.

26 


systems // BECS (continued) 

Developments 

• Changes were made to BECS membership criteria to 

remove some of the practical and commercial 

difficulties associated with BECS’s bilateral 

architecture. As a result, effective 30 June 2007, new 

entrants are no longer required to establish bilateral 

agreements with each existing member in order to 

qualify for membership. Other criteria, such as 

disclosing their intended activities, now apply. 

• At the request of the Federal Treasurer and the 

Australian Bankers’ Association, APCA is reviewing 

the processes for switching direct entry arrangements 

from one financial institution account to another with a 

focus on ensuring that processes for customers are 

easy and straightforward. 

• The Anti-Money Laundering & Counter-Terrorism 

Financing Act’s new “tracing” information 

requirements for electronic funds transfer instructions 

came into effect on 12 December 2006. 

• Following a detailed risk assessment of the 

electronic data exchanged in BECS, members 

have undertaken to upgrade to tripleDES line 

encryption by June 2008 to further strengthen 

data security within the system. 


introduced by the Reserve Bank in 2005 became 

the mandatory method for members to exchange 


July 2007. 

• Work commenced on developing industry 

guidelines for dealing with mistaken payments. 

These typically occur when customers make an 

error providing payment instructions using 

internet-based facilities, such as “pay anyone”.

27 


systems // CECS 

Consumer Electronic Clearing System (CECS) 

for EFTPOS and ATM transactions 

150 

120 

90 

60 

30 

0 

‘03 

150 

120 

90 

60 

30 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

15 

12 

6 

3 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

9 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

Number of debit card Number of debit card Value of debit card Value of debit card 

transactions in May transactions (in millions) in May transactions (in millions) in May transactions (in $ billions) in May (in $ billions) 

ATM EFTPOS ATM EFTPOS ATM EFTPOS ATM EFTPOS 

Source: Reserve Bank of Australia: Source: Reserve BulletinBank of Australia: Source: Bulletin Reserve Bank of Australia: Source: Reserve BulletinBank of Australia: Bulletin 

15 

12 

9 

6 

3 

‘04 ‘05 ‘06 ‘07 

CECS is the regulatory 

and standards framework 

for Australia’s highly 

successful ATM and 

EFTPOS networks 

Financial institutions issue PIN-based debit cards (or 

add PIN-based debit functionality to their credit cards) 

for use in more than 25,000 ATMs and some 600,000 

in-store terminals. The volume of transactions 

processed in CECS is higher than in any of APCA’s 

other payments clearing systems. Australia has one of 

the most extensive, widely-used EFTPOS systems 

amongst developed economies. 

Developments 

• Following an extensive consultation process with 

members, vendors and other stakeholders, a 

number of enhancements were made to APCA’s 

device evaluation approvals to clarify the 

requirements and speed-up the approval process.

28 


systems // CECS (continued) 

• A detailed gap analysis between the Payment Card 

Industry (PCI) device security requirements and the 

AS2805 standards used for APCA device evaluations 

was completed during the year. The results will be 

used to inform an assessment of the risks, benefits 

and feasibility of closer aligning these security 

standards. 


introduced by the Reserve Bank in 2005 became the 

mandatory method for CECS members to exchange 


July 2007. 

• Preparations are underway for the implementation in 

2008 of a new credit transaction type at EFTPOS 

terminals so that organisations, such as health funds, 

can make one-off payments to debit accounts. Work 

will include specifying the types of credit payments 

the new transactions might apply to and developing 

associated business rules. 

• Work has commenced on developing an 

architecture providing full EMV capabilities to 

support CECS members’ initiatives when rollingout 

chip debit cards. This work will culminate in a 

set of debit specifications and standards for a 

CECS Integrated Circuit Card debit payment 

system in the coming year. 

• In a move to ensure end-to-end protection for 

cardholder data, CECS members have undertaken 

to implement additional measures, such as 

tripleDES message encryption, to protect data in 

transit between the terminal and the acquirer and 

while in-storage within the acquirer’s host system. 

• APCA’s “open-call” facility was operational over 

Christmas, Easter and Father’s Day to ensure the 

ATM and EFTPOS networks continued to operate 

efficiently over these peak periods. The facility 

allows members to exchange information on 

network capacity.

29 


systems // HVCS 

High Value Clearing System (HVCS) 

for settlement of high value, real-time payments between 

financial institutions 

7 

6 

5 

4 

3 

2 

1 

7 

6 

5 

4 

3 

2 

1 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

0 

0 

0 

0 

‘03 ‘04 ‘05 ‘06 ‘07 ‘03 ‘04 ‘05 ‘06 ‘07 ‘03 ‘04 ‘05 ‘06 ‘07 ‘03 ‘04 ‘05 ‘06 ‘07 

Number of HVCS Number transactions of HVCS transactions Value of HVCS transactions 

Value of HVCS transactions 

year ending 30 June year (in ending millions) 30 June (in millions) year ending 30 June year (in ending $ billions) 30 June (in $ billions) 

Source: Reserve Bank of Australia: Source: Reserve Bulletin Bank of Australia: Bulletin Source: Reserve Bank of Australia: Source: Reserve Bulletin Bank of Australia: Bulletin 

With the opening 

of HVCS membership, 

all five clearing systems 

have open, objective 

admission criteria 

Around $100 billion passes through HVCS each day, 

representing about 90% of Australia’s payments value. 

Financial institutions use the system to make immediate 

and irrevocable payments. Payment details are sent 

and verified through the SWIFT payment delivery 

system and each payment is settled individually using 

the Reserve Bank Information and Transfer System. 

As the funds are settled at the same time as the 

payment detail is transferred, the arrangements 

promote a more secure payments system and 

reduce settlement risk. With each payment 

averaging around $4.7 million, this is critical.

30 


systems // HVCS (continued) 

Developments 

• Membership of the HVCS was opened up to all 

payments organisations involved in real-time high 

value payments (eg insurance companies and 

superannuation funds) that meet objective operational 

and prudential membership criteria, regardless of 

their institutional form. 

• Changes were made to the HVCS Procedures to 

highlight the Anti-Money Laundering & Counter- 

Terrorism Financing Act’s new “tracing” information 

requirements for electronic funds transfer instructions, 

which came into effect on 12 December 2006. 

• The Standards Release 2006 changes to SWIFT 

Standards messages came into effect on 

18 November 2006. 

• Two additional field options, not previously 

supported in the Australian PDS, became available 

as part of the SWIFT Standards Release 2006, to 

facilitate straight-through-processing for payment 

messages with those field options. 

• APCA is working with the Reserve Bank and 

SWIFT to ensure a coordinated approach to 

Australia’s migration to SWIFTNet FIN Phase 2. 

Installation and testing schedules are being 

developed to provide guidance to HVCS members. 

The first stage of migration is due for completion in 

October 2007.

31 


systems // ACDES 

Australian Cash Distribution and 

Exchange System (ACDES) 

for the trading and distribution of bulk notes and coin between banks 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

‘03 

‘04 ‘05 ‘06 ‘07 

Number of cash trades 

per 4-week period 

3 

2 

1 

0 

‘03 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

‘04 ‘05 ‘06 ‘07 ‘03 

‘04 ‘05 ‘06 ‘07 

Value of cash trades Number of cash trades 

per 4-week period per (in $ 4-week billions) period 

3 

2 

1 

0 

‘03 

ACDES banks provide 

most of the notes 

and coins used for cash 

payments in Australia 

‘04 ‘05 ‘06 ‘07 

Value of cash trades 

per 4-week period (in $ billions) 

The system covers the storage, handling, buying and 

selling of bulk cash holdings amongst the six ACDES 

banks. Together they provide most of the notes and 

coins needed for everyday payments in Australia. 

Developments 

• APCA wrote to the Commonwealth Treasurer 

proposing a review of Australia’s coinage to 

increase consumer convenience and reduce 

system costs, in line with comparable 

developments overseas. The Treasurer has since 

asked the Royal Australian Mint to undertake 

the review.

32 


systems // ACDES (continued) 

• A number of initiatives, including new processes for 

sharing information on excess coin holdings, were 

introduced to increase efficiencies in the way ACDES 

members manage and trade excess coin. This has 

reduced the demand for new minted coin from the 

Royal Australian Mint, thereby reducing overall 

system costs. 

• ACDES members have adopted a common set of 

procedures for processing and settling any cash 

discrepancies resulting from clearing surplus cash 

with each other. 

• Reflecting the procedures adopted by ACDES 

members, Guidelines for Processing and Settling 

Cash Discrepancies has been published on APCA’s 

website to assist financial institutions, cash carriers 

and other parties involved in moving cash, to resolve 

such matters.

33 

Reviews // Corporate direction 

Corporate direction 

New core principles 

As part of a strategy review programme endorsed by 

the board in April 2006, an externally commissioned 

environmental scan and a stakeholder survey, to which 

members, users and vendors responded, were 

completed during the year. A consultation draft of the 

core principles was developed by APCA’s board for 

testing with members in December 2006. After 

extensive member consultation and board debate, the 

final core principles were approved in February 2007. 

The core principles clarify APCA’s purpose as improving 

the Australian payments system through industry policy, 

self-regulation and industry change management. Every 

aspect of APCA’s activities is carried on by reference 

to the core principles. More detail can be found on 

APCA’s website. 

New corporate goals 

With the core principles in place, the board adopted 

a set of three-year corporate goals in March 2007, 

with the intention that they be reviewed and 

extended annually. These goals derive from the core 

principles and provide the framework against which 

individual proposals for project and development 

work in APCA’s five payments clearing systems will 

be assessed for resourcing and priority. For the next 

three financial years, APCA will focus on: 

• Developing consensus on payments industry 

direction; 

• Promoting self-regulatory policy for the 

Australian payments system; 

• Providing effective clearing system 

administration; 

• Promoting payments industry standards; 

• Developing cooperative system improvements 

for the payments system; 

• Promoting community understanding and 

confidence in the payments system; and 

• Enhancing APCA’s own organisational capacity. 

This year saw a strong 

focus on renewing APCA’s 

culture and business 

processes

34 


(continued) 

APCA’s core principles 

APCA exists to improve the safety, 

reliability, equity, convenience and efficiency 

of the Australian payments system. 

We deliver system improvements through: 

 

advocacy; 

 

and standards; and 

 

APCA aspires to be the 

leading authority on the 

Australian payments system 

and internationally recognised 

for payments system 

 

APCA benefits members 

 

value of their payments activities. 

For member’s payments activities, 

 

 

 

 

 

 

Strengthening relationships 

APCA and the Reserve Bank jointly signed new 

liaison arrangements in May 2007 to promote 

better payments industry self-regulation. The new 

arrangements delineate the roles and relationship 

of the Reserve Bank and APCA in pursuit of their 

common goal of ensuring an efficient, stable and 

competitive payments system. 

Under the new arrangements, senior staff from the 

Reserve Bank and APCA consult on a regular basis 

on issues of industry policy. To facilitate selfregulatory 

processes, the Reserve Bank made a 

decision to step away from its previous automatic 

rights to appoint representatives to APCA’s board 

and management committees and remain eligible 

for representation on the same basis as other 

APCA members. 

APCA values: 

 

 

 

 

 

decision making. 

APCA uniquely combines: 

 

 

 

During the year, we further developed our informal 

consultation networks, both with our counterparts 

overseas such as APACS in the United Kingdom and 

the Canadian Payments Association as well as with 

relevant stakeholder bodies in Australia including 

the Australian Bankers’ Association and Abacus 

(the association of mutual financial institutions).

35 


(continued) 

Advisory councils 

Advisory councils were established in APCS, BECS 

and CECS to broaden consultation by taking into 

account the views of non-member organisations 

with a significant role in these payments clearing 

systems. Advisory councils meet regularly and 

provide input and advice to the management 

committees responsible for administering each 

clearing system. 

APCA’s decision-making process has been 

enhanced through the different perspectives and 

expertise that councils bring from outside APCA’s 

participating membership. Council members 

provided valuable input to a number of project 

developments highlighted in this report. 

As reported in last year’s Annual Review, APCA has 

been reassessing the structure and role of advisory 

councils to ensure the best possible engagement of 

the broader stakeholder community. This process 

has been delayed by the overall strategic 

realignment of APCA, and subsequent 

organisational restructure. However, we have 

gathered many perspectives on the needs of 

non-member stakeholders and will finalise the 

reassessment in the coming year. 

Process review 

Following completion of the strategy review 

programme, the operational planning and budgeting 

process was reviewed. The new core principles and 

three-year corporate goals have provided the 

foundations for a stronger strategic approach and a 

more structured process to prioritising work projects 

and allocating resources. This has been reflected in 

developing the 2007–2008 Operational Plan. 

Revised funding arrangements were implemented 

during the year with a view to moving towards a 

member-benefit focussed funding model that meets 

APCA’s longer term strategic cash flow requirements 

and provides greater certainty to members. The 

revised arrangements institute a volume-based 

operating fee quarterly in advance for participants in 

each clearing system based on the system’s budget 

approved at the beginning of the financial year. 

Previously APCA’s funding arrangements were 

based on recovering the actual operating costs from 

each system’s members on an “as incurred” basis.

36 

Reviews // Board of Directors 

Board of Directors 

There were a number of changes to the board of directors during the year. Mr David Ingham resigned from the 

board in August 2006 and was replaced by Mr Alan McGeachy. Mr David Heine replaced Mr McGeachy in 

January 2007. Ms Michelle Bullock resigned in May 2007 following the Reserve Bank’s decision to introduce 

new liaison arrangements with APCA (see page 34) . Ms Louise Clarke resigned in June 2007 and was replaced 

by Mr Paul Apolony. 

The names of the directors in office as at 30 June 2007 are set out below, together with particulars of their 

qualifications, experience and special responsibilities. 

Mr R N Challis Dip Bank, Faib, Abinz 

Chairman 

(Non-executive director) 

Over forty years’ banking experience with the Australia 

and New Zealand Banking Group Limited. Retired in 

1997, having occupied a number of general manager 

positions and directorships on several ANZ subsidiary 

companies. Chairman of Austraclear Limited 1990–1994. 

Appointed as a director and chairman of the company in 

October 1999. Chairman of the Remuneration Committee. 

Mr P J Apolony F Fin, PNA 


Associate Director, Head of Macquarie Payment 

Services, Macquarie Bank Limited. Over 25 years’ 

experience in the banking industry including roles in 

Operations, Product Development and Strategy, 

specialising in Payments. Appointed by the OB Owner 

Member Electoral Group as a director in June 2007.

37 


(continued) 

Mr G L Bebbington B Eng(Hons) 

Deputy Chairman 


Head of Payments Policy & Support, Financial 

Services Australia, National Australia Bank Limited. 

Over 25 years’ experience in financial services in 

business and technology related roles as both a senior 

executive and internal/external consultant. Director 

and Chairman of BPAY Pty Ltd and a director of 

Cardlink Services Limited and EFTPOS Access 

Australia Limited. Appointed by National Australia 

Bank as a director in May 2002. Chairman, 

Management Committee of the Bulk Electronic 

Clearing System. 

Mr C G Campbell BEc, MBus(Finance) 


Head of Payments Policy and Implementation, 

Westpac Banking Corporation. Over 15 years’ 

experience in banking and economics, including 

payments policy, finance, product management and 

related areas. Director of EFTPOS Access Australia 

Limited and member of the Visa Executive Committee. 

Appointed by Westpac Banking Corporation as a 

director in April 2003. Chairman, Management 

Committee of the Australian Cash Distribution and 

Exchange System. Chairman of the Finance and 

Audit Committee and member of the Remuneration 

Committee. 

Mr G P Devlin 


Chief Manager Card and Business Delivery Services, 

Bendigo Bank Limited. Thirty years’ experience in 

cards based payments systems in Australia and the 

Asia/Pacific region, including roles in operations, 

business development, strategic marketing and 

general management. Appointed by the RB Owner 

Member Electoral Group as a director in October 2005. 

Mr C J Hamilton BA, LLM 


(Executive director) 

Fourteen years’ experience in financial services, 

particularly financial markets infrastructure, and six 

years’ experience in securities law. Appointed Chief 

Executive Officer and executive director in January 

2006. Member of the Finance and Audit Committee 

and the Remuneration Committee. 

Mr D Heine B Econ, M ApFin, MAICD 


General Manager, Product and Operations, Cuscal 

Limited. Over 15 years’ experience in the financial 

services industry including management and 

production of commercial products and services and 

risk management. Director of Credit Union Financial 

Support System (CUFSS) since 2004. Appointed by 

the Credit Unions Owner Member Electoral Group as a 

director in January 2007. Member of the Finance and 

Audit Committee and the Remuneration Committee.

38 


(continued) 

Mr P A Inglis BEc(Hons) 


Head, Payments Risk & Industry, Australia and New 

Zealand Banking Group Limited. Over twenty years’ 

experience in the banking industry in payments and 

economics; five years in government service, 

including Federal Treasury. Director and Chairman of 

EFTPOS Access Australia Limited and a director of 

CLS Services Limited. Member of the global 

Payments Market Practice Group. Appointed by the 

Australia and New Zealand Banking Group Limited as 

a director in July 1998. Chairman, Management 

Committee of the Consumer Electronic Clearing 

System. Member of the Management Committee of 

the Bulk Electronic Clearing System. 

Mr J N Toms BComm 


Chief Executive Officer, Australian Settlements 

Limited. Over nineteen years’ experience in areas of 

industry policy, particularly payments systems. 

Appointed by the Building Societies Owner Member 

Electoral Group as a director in December 1992. 

Chairman of the Fraud Committee. Member of the 

Finance and Audit Committee and the Remuneration 

Committee. 

Mr I R Warner F Fin, MICM, PNA 


Head of Servicing Operations, St. George Bank 

Limited. Over twenty-six years’ experience in 

financial services including operations, retail branch 

network, project management, business technology 

and group processes and procedures. Appointed 

by St.George Bank Limited as a director in 

February 2006. 

Mr S A Woodward BA(Hons), F Fin 


General Manager, Industry and Alliance 

Management, Banking Products, Premium Business 

Services, Commonwealth Bank of Australia. Over 

twenty-nine years’ experience within the 

Commonwealth Bank Group, including retail and 

corporate banking, payment systems and merchant 

acquiring. Director and Chairman of Cardlink 

Services Ltd. Director of Charge Card Services Ltd 

and EFTPOS Access Australia Ltd and an alternate 

director of BPAY Pty Ltd. Member of the Visa 

Executive Committee (Australia). Appointed by the 

Commonwealth Bank of Australia as a director in 

February 2005. Chairman, Management Committee 

of the Australian Paper Clearing System.

39 

Reviews // Corporate 

governance 

Corporate governance 

Board of directors 

The board, comprising an independent chairman, the 

chief executive officer and non-executive directors 

appointed by the company’s owner members, is 

responsible for setting the company’s strategic 

direction and corporate governance. 

Owner members that participate in three of the 

company’s clearing systems and have, on average, 

at least 5% of the transaction volumes in at least three 

of the company’s clearing systems are entitled to 

appoint a nominee director. The building societies 

and credit unions are also each entitled to appoint 

a nominee director. 

Chairman of the board 

The chairman is a non-voting director and holds office 

for two years from the date of appointment. The term 

of the current chairman, Mr R N Challis, expires on 

21 October 2007. Mr Challis has indicated his intention 

not to seek a further term, and accordingly in May 2007 

the board appointed a Selection Committee to seek a 

replacement in accordance with the terms of the 

Constitution. 

Chief executive officer (CEO) 

The CEO is a board-appointed, non-voting, 

executive director. The CEO manages the 

company’s affairs under the broad guidance of the 

board. The CEO’s performance against agreed 

goals is assessed on an annual basis by the board. 

Reserve Bank of Australia (RBA) liaison 

arrangements 

On 17 May 2007, APCA and the RBA agreed to new 

liaison arrangements. Under the new arrangements, 

senior staff of the RBA and APCA consult on a 

regular basis on issues of industry policy. In 

addition, to facilitate self-regulatory processes, the 

RBA has stepped away from its automatic rights to 

appoint representatives to APCA’s board of 

directors and management committees. As a 

substantial user of payment systems, it remains 

eligible for representation on the same basis as 

other APCA members. 

Management committees 

In accordance with the company’s constitution, 

the board has established a management 

committee for each of the company’s five clearing 

systems. Acting under delegated authority from the 

board, management committees are responsible 

for the efficient operation and management of each 

clearing system. Members of a management

40 

Reviews // Corporate 

governance (continued) 

committee are appointed for a two-year term by 

participating members of the clearing system 

concerned. Directors may also appoint up to two 

members of a management committee to represent 

the collective interests of clearing system members 

that are not otherwise represented. 

Other board committees 

The board is empowered to establish other 

committees as it sees fit to assist in managing the 

company’s affairs. The board has established three 

such committees, the Finance and Audit Committee 

and the Remuneration Committee for good 

corporate governance and the Fraud Committee. 

Finance and Audit Committee 

The Finance and Audit Committee (F&A Committee) 

comprises a number of non-executive directors and 

the CEO. Its primary functions are to review the 

company’s internal financial practices and audit 

results, monitor the effectiveness of the company’s 

financial controls and administrative policies, 

monitor various risk exposures and statutory 

compliance matters, and review the company’s 

budget and monitor expenditure against it. 

Remuneration Committee 

The Remuneration Committee comprises the 

chairman and the members of the F&A Committee. 

Its responsibilities are to establish remuneration 

policies and practices for the company generally 

and to recommend remuneration levels and 

contractual arrangements for the CEO. 

Financial controls 

The company’s annual budget is approved by the 

board each year. Expenditure that would lead to any 

material increase in the required budget is also 

brought to the board for approval. The company has 

an annual external extended audit to test adherence 

to accounting policies in addition to the annual 

financial audit. 

The company’s financial statements are published 

separately from its Annual Review. 

Legal risk 

Two in-house lawyers monitor legal risks on a 

day-to-day basis. Business practices are regularly 

reviewed to ensure they are in keeping with the 

company’s legal responsibilities and with company 

policies. External legal advice is also obtained 

when appropriate. 

Adequate and appropriate insurance cover is in 

place. This is assessed annually in consultation with 

the company’s brokers. 

Risk management 

A process for managing internal risks which is in 

line with the Australian and New Zealand Standards 

AS/NZS 4360:2004. It covers aspects such as 

reputation, the workplace environment (including IT), 

information security, legal and regulatory 

compliance, finance and human resources 

management. APCA’s risk and compliance manager 

regularly meets with the Internal Management Team 

to review and update the risk register. 

Occupational workplace risk 

The company has policies in place to ensure that it 

complies with workplace-related laws. They include 

an equal employment opportunity and 

discrimination policy, a harassment policy, grievance 

handling procedures and an occupational health 

and safety policy. The company’s employees are 

periodically reminded about the importance of 

compliance with these policies. Directors and all 

committee members are also reminded of the terms 

of the harassment policy annually. 

Codes of conduct 

All directors, management committee members and 

senior executive staff must comply with a Directors’ 

and Officers’ Code of Conduct. The Code was 

developed using a model from the Australian 

Institute of Company Directors. Directors and 

management committee members review 

adherence to the Code annually. The currency of 

the Code is also reviewed annually by the 

company’s legal department. 

Additionally, all company employees are required to 

comply with a code of conduct, which covers such 

matters as confidentiality, conflict of interest, and 

standards of behaviour in business dealings.

41 

Reviews // Management 

Management 

Organisation structure 

Technology & 

Operations 

Bob Masina 

Information 

Management 

Trish McGinness 

Operations 

Lynda Gajic 

Angelina Maurice 

Alice Trevan* 

Technology 

Gavin Bollard 

Industry Change 

Management 

Michael Forey 

Projects 

Rob Magee 

Shirley Young 

(Contractor) 

Radek Zmuda 

(contractor) 

TBA 

(contractor) 

BOARD 

EXECUTIVE OFFICE 

CEO 


Accounts 

Charini Carro 

Communications 

Ida Turner 

Finance 

Oksana Dlougatch 

Office 

Management 

Clare 

Russell-Williams* 

Lesley Terry 

Industry Policy 

Stephen Halliday 

Research/ 

Policy Analysis 

Arun Kendall 

Research 

Support 

Rhonda Hunter 

Self-Regulation 

Temogen Hield 

Administration 

Lani Lam 

Legal 

Philippa 

Tate-Gilder* 

Membership & 

Governance 

Rob Cirotto 

Catherine McIntosh 

Kellie Oastler 

Risk & 

Compliance 

Caroline Pearce 

Our new flatter, more 

flexible management 

structure reflects our 

unique industry role 

and purpose 

* Commenced at APCA between 30 June 2007 and 30 September 2007

42 

Reviews // Management 

(continued) 

Organisation restructure 

A new management structure designed to deliver 

against APCA’s new core principles was 

implemented in March 2007. In the flatter and more 

flexible structure, staff are organised into five 

business units that reflect APCA’s unique industry 

role and purpose as the payments industry 

association. The new units are: 

Executive Office: 

provides financial, communications and 

administrative support to the CEO and the operating 

units of the company. 

Industry Change Management: 

oversees payments industry projects that introduce 

change and evolve Australia’s payments 

environment. The purpose of the unit is to lead the 

implementation of this change to deliver benefit to 

APCA’s members through innovation, safety, equity, 

reliability, convenience and efficiency. 

Industry Policy: 

leads industry policy development and advocacy 

activities to improve the Australian payments system 

and to enhance the value of member’s payments 

related activities. Industry policy provides a means 

of achieving consensus on what industry action to 

take, balancing public policy and participant 

interests, and achieving government and community 

support for industry positions. 

Self-Regulation: 

is responsible for development and operation of 

payments system self-regulation and APCA’s broad 

constituency. It administers existing self-regulatory 

regimes (such as APCA’s five clearing systems and 

the EFTPOS Access Code) and develops new 

self-regulatory regimes (for example an ATM Access 

Code). It also administers APCA’s extensive 

framework for industry collaboration, for example 

management committees and working groups. 

Technology and Operations: 

provides critical support for clearing system and 

industry-wide activities including operation and 

maintenance of databases, statistics collections and 

website developments. The team also provides 

internal support to staff through its research, 

information management, training and IT activities. 

Key activities during the year included establishing 

new databases to support the device approval 

process and the crisis communications plan; 

establishing an off-site disaster recovery facility to 

support the existing IT infrastructure; managing the 

office relocation; and setting-up improved audio 

visual and technical facilities for members and staff. 

Internal management team (IMT) 

The IMT is the management decision-making group 

for APCA. It comprises the CEO and four 

department heads (see diagram on page 41) with 

other staff members attending in their areas of 

expertise. The IMT has a shared sense of 

commitment and responsibility and works as a 

group on strategic issues and direction. It meets 

fortnightly and all management matters affecting 

more than one area are addressed in this forum. A 

separate Policy Forum will be set-up in the coming 

year to specifically deal with policy-related projects. 

New premises 

APCA moved to new premises on 18 June 2007. 

Designed to promote staff and member 

collaboration and interaction, the new offices have 

highly flexible facilities to accommodate the 

company’s growing business and staffing needs.

43 

Reviews // Membership 

Membership 

Corporate structure 

Associate Members 

BOARD 

Owner Members (a) 

Other Committees 

Fraud, Finance & Audit, 

Remuneration, System Review WG 

5 Management 

Committees (b) 

CEO & Management 

3 Advisory Councils (c) 

78 Participating 

Members (d) 

7 Sub-groups (e) 

(a) See list of Owner Members (page 45). 

(b) APCS, BECS, CECS, HVCS & ACDES management committees. 

(c) See Advisory Councils (page 44). 

(d) See list of Clearing System Members (page 46). 

(e) APCS Printing Standards Sub-Committee; CECS Capacity Planning 

Sub-Committee; CECS Evaluation Review Sub-Committee; CECS 

Program Management Steering Committee; CECS Standard 

Sub-Committee; CECS Technical Message Formats Working Group; 

and CECS Technical Security Working Group.

44 


(continued) 

APCA has four categories of members: owner, 

clearing system, advisory council and associate 

members. 

Owner members 

Owner members must be constitutional 

corporations within the meaning of the Payment 

Systems and Netting Act 1998 and must be either a 

participant in at least one of APCA’s clearing 

systems or an industry association representing 

participating members. 

Clearing system members 

Clearing system members are institutions that 

participate on a day-to-day operational basis in one 

or more of APCA’s clearing systems. Members are 

represented on the management committees of 

each of the clearing systems in which they 

participate. Members need not be owner members, 

but are encouraged to join in that capacity. 

Separate membership exists for each clearing 

system, so that membership is divided into five 

classes based on APCA’s five clearing systems. 

Within each of these five classes there may be 

different categories of membership, with different 

rights and obligations, depending on whether a 

member clears and settles directly or indirectly. 

Each clearing system has rules in place setting out 

members’ rights and obligations, and detailing the 

operating procedures required in the system. 

Advisory Councils 

APCS 

BECS 

CECS 

- Australian Taxation Office 

- Carreker Corporation 

- Certegy Australia 

- Ensis-Papro 

- Fiserv Solutions 

- Forensic Document Services 

- Fuji Xerox 

- Lithographic Institute* 

- Prismac Systems 

- Rockson Agencies 

- Scientific Document 

Services 

- Security Printers' Association 

- Telecheck Payments 

Systems 

- UPSL 

- Xplor 

* Chair 

Robert Chesney 

- Association of 

Superannuation Funds of 

Australia 

- Australian Taxation Office* 

- ADP Employer Services 

- Cardlink Services 

- Cashcard Australia 

- Centrelink 

- Certegy Australia 

- CITEC 

- Investment and Financial 

Services Association 

- MYOB 

- Paycorp 

- Prismac Systems 

- UPSL 

* Chair 

Mark Slater 

- American Express 

- ACI Worldwide (Pacific) 

- ATM Industry Association 

- Australia Post 

- Banktech 

- Caltex 

- Cardlink Services 

- Cybertrust 

- Diebold 

- Giesecke & Devrient 

- Hypercom 

- IBM 

- Keycorp* 

- MasterCard 

- NCR (Australia) 

- Optus 

- Pulse 

- SafeNet Strategic Payment 

Services 

- Telstra 

- Travelex 

- Verifone 

- VISA 

- Woolworths 

* Chair 

Tem Elliott (until 8 June ‘07)

45 


(continued) 

Advisory council members 

Advisory councils comprise organisations 

(appointed by the board for a two year term) that 

participate in the business of payments but are not 

payments clearers and therefore are not entitled to 

join APCA as participating members. The number of 

members of each advisory council is limited and the 

appointment of members is subject to a formal 

process. Each year APCA identifies a range of 

organisations eligible for membership and invites 

them to nominate for the advisory council’s 

upcoming term. 

Each management committee of a clearing system 

where an advisory council has been established is 

required to liaise with the advisory council for that 

system and must have regard to the opinions or 

decisions of the council in performing its duties. 

Associate members 

Associate members are individuals or organisations 

interested in payments system matters that wish to 

be kept informed of developments within APCA (and 

the Australian payments system more generally). An 

associate member may not be an owner member or 

a participating member. Associate membership must 

be renewed annually via payment of a nominal fee. 

Owner members and clearing system members 

Owner Members 

(as at 30 June 2007) 

Clearing System Participation 

APCS BECS CECS HVCS ACDES 

ABN AMRO Bank N.V. • • • • 

Adelaide Bank Limited • • • • • 

AMP Bank Limited • • • • • 

Arab Bank Australia Limited • • • • • 

Australia and New Zealand Banking Group Limited • • • • • 

Australian Settlements Limited (ASL) • • • • • 

Bank of America, National Association • • • • • 

Bank of China • • • • • 

Bank of Queensland Limited • • • • • 

Bank of Tokyo-Mitsubishi UFJ, Limited • • • • • 

Bank of Western Australia Limited • • • • • 

Barclays Bank plc • • • • • 

Bendigo Bank Limited • • • • • 

Citigroup Pty Limited • • • • • 

Commonwealth Bank of Australia • • • • • 

Cuscal Limited • • • • • 

Deutsche Bank AG • • • • • 

Hong Kong and Shanghai Banking Corporation • • • 

Limited (Australia Branch) 

HSBC Bank Australia Limited • • • • • 

HSBC Bank plc • • • • •

46 


(continued) 

Owner members and clearing system members (continued) 

Owner Members 

(as at 30 June 2007) 



Clearing System Members 

(as at 30 June 2007) 



Indue Ltd • • • • • 

ING Bank (Australia) Limited • • • • • 

JPMorgan Chase Bank, • • • • • 

National Association 

Macquarie Bank Limited • • • • • 

Mizuho Corporate Bank, Ltd • • • • • 

National Australia Bank Limited • • • • • 

Oversea-Chinese Banking Corporation Limited • • • • • 

Reserve Bank of Australia • • • • • 

Royal Bank of Canada • • • • • 

St.George Bank Limited • • • • • 

Standard Chartered Bank • • • • • 

State Street Bank and Trust Company • • • • • 

Suncorp-Metway Limited • • • • • 

United Overseas Bank Limited • • • • • 

Westpac Banking Corporation • • • • • 

ABS Building Society Ltd • • • • • 

B & E Ltd • • • • • 

Bananacoast Community Credit Union Ltd • • • • • 

Bank of China (Australia) Limited • • • • • 

Bank of Cyprus Australia Pty Limited • • • • • 

BNP Paribas • • • • • 

CLS Bank International • • • • • 

Cashcard Australia Limited • • • • • 

Coles Group Ltd • • • • • 

Credit Union Australia Limited • • • • • 

Greater Building Society Ltd • • • • • 

HBOS Treasury Services plc, Sydney Branch • • • • • 

Heritage Building Society Limited • • • • • 

Home Building Society Ltd • • • • • 

Hume Building Society Ltd • • • • • 

Hunter United Employees’ Credit Union Limited • • • • • 

IMB Ltd • • • • • 

ING Bank NV (Sydney Branch) • • • • • 

Investec Bank (Australia) Limited • • • 

Laiki Bank (Australia) Limited • • • • • 

Lifeplan Australia Building Society Limited • • • • • 

Mackay Permanent Building Society Limited • • • • •

47 


(continued) 

Owner members and clearing system members (continued) 

Clearing System Members 

(as at 30 June 2007) 



Maitland Mutual Building Society Limited • • • • • 

Mega International Commercial Bank Co., Ltd • • • • • • 

Members Equity Bank Pty Limited • • • • • 

MoneySwitch Limited • • • • • 

Newcastle Permanent Building Society Ltd • • • • • 

Pioneer Permanent Building Society Limited • • • • • 

The Police Association Credit Co-Operative Limited • • • • • 

The Police Department Employees’ Credit 

Union Limited • • • • • 

Queensland Police Credit Union Limited • • • • • 

Queensland Professional Credit Union Limited • • • • • 

Queenslanders Credit Union Limited • • • • • 

Rabobank Australia Limited • • • • • 

Rabobank, Australian Branch (Co-Operative • • • • • 

Centrale Raiffeisen- Boerenleenbank B.A.) 

Societe Generale Australia Branch • • • • • 

State Bank of India • • • • • 

Taiwan Business Bank, Sydney Branch • • • • • 

The Rock Building Society Limited • • • • • 

The Toronto-Dominion Bank • • • • • 

UBS AG (Australia Branch) • • • • • 

Victoria Teachers Credit Union Limited • • • • • 

Wide Bay Australia Ltd • • • • • 

• Member of the clearing system’s management committee. 

• The Reserve Bank has an important operational role in HVCS and 

ACDES and as such is a member of these management committees.

48 

Reviews // Payments statistics 

Payments statistics 

APCA collects fraud statistics every six months and 

other payments statistics on an annual basis to 

measure trends. These collections are available in their 

entirety from APCA’s website. 

APCA’s 2007 statistics collections were used for the 

following estimation of Australian payments activity on 

an average day. 

On an average day in May 2007: 

Cheques 

• Some 1.8 million cheques were cashed or deposited 

into financial institution accounts – about 500,000 

less than on an average business day in May 2003. 

The average value of each cheque was about $3,900*. 

Of the 1.8 million cheques processed, about 10 

cheques were found to be fraudulent. 

Direct entry 

• About 203,500 credit users (paying organisations) 

had facilities in place to make direct credit payments 

into the financial institution accounts of consumers 

and businesses. 

Credit users made some 4 million direct credit 

payments into financial institution accounts – about 

1.1 million more than on an average day in May 2003. 

The average value of each direct credit transaction 

was $4,975*. 

• About 14,400 debit users (billing organisations) had 

facilities in place to direct debit their customers’ 

financial institution accounts for payment of goods 

and services. 

Debit users initiated some 1.8 million direct debit 

transactions from financial institution accounts – 

about 500,000 more than on an average day in 

May 2003. 

The average value of each direct debit transaction 

was about $8,700*. 

Now averaging at 

16 million each day, 

retail electronic 

transactions have grown 

by 35% since 2003

49 

Reviews // Payments statistics 

(continued) 

ATM & EFTPOS 

• There were more than 43 million plastic (debit and 

credit) payment cards on issue – that is about 

2.5 cards for every Australian over 18 years of age. 

Cardholders were able to: 

make withdrawals at more than 25,600 ATMs. 

About 7,500 of these were located in stores, 

airports, hotels and other convenience locations. 

pay for purchases at more than 597,000 EFTPOS 

terminals. 

• Some 2.3 million withdrawals were made at ATMs 

using debit cards – about 400,000 more than on 

an average day in May 2003. 

The average value of each ATM withdrawal made 

using a debit card was about $170. 

• Some 3.9 million purchases were paid for by debit 

cards at EFTPOS terminals – about 1.3 million 

more than on an average day in May 2003. 

The average value of each EFTPOS transaction 

made using a debit card was about $65. 

• Of the 6.2 million transactions made using debit 

cards, about 120 were found to be fraudulent. 

• There were some 3.8 million payment (ATM, 

EFTPOS, internet etc) transactions made using 

credit cards – about 1 million more than on an 

average day in May 2003. 

The average value of each credit card transaction 

was about $145. 

• Of the 3.8 million credit card transactions, about 

560 were found to be fravudulent. 

* The high average transaction values reflect the large number of 

business-to-business payments. 

Statistics Source: www.apca.com.au; www.rba.gov.au; www.abs.gov.au

50 

Reviews // Glossary 

Glossary 

Glossary of terms 

Acquirer is an organisation which owns, operates or 

controls ATMS and/or EFTPOS devices. 

Anti-Money Laundering & Counter-Terrorism 

Financing Act fulfils Australia’s international obligations 

to combat money laundering and the financing of 

terrorism in accordance with the recommendations 

made by the Financial Action Task Force, of which 

Australia is a founding member. 

APCA Device Evaluation Approval Process is for 

the protection of the ATM and EFTPOS systems and 

customers’ PINs. Devices are evaluated against 

security standards which are aligned with current and 

international standards by test laboratories that have 

been accredited by APCA as “Approved Evaluation 

Facilities”. 

Chip cards are pocket-sized cards with embedded 

integrated circuits which can process payments 

information. 

EFTPOS Electronic Funds Transfer at Point of Sale 

EMV (from Europay, MasterCard and Visa) is a 

specification for interaction between chip cards 

and terminals. 

Issuer is an organisation which issues cards that 

are accepted for use in ATMs and/or EFTPOS 

terminals. 

Payment Card Industry (PCI) Device Security 

Requirements Regulated by MasterCard and VISA, 

the PCI’s minimum acceptable criteria for device 

characteristics and device management. 

National Collator The Reserve Bank of Australia 

operates the function of collator of low-value 

clearing stream obligations on behalf of APCA. 

SWIFT Society for Worldwide Interbank Financial 

Telecommunications 

SWIFTNet is SWIFT’s IP-based messaging protocol 

for the communication of financial information and 

transaction data. 

Glossary

51 

Reviews // Glossary 

(continued) 

Corporate information 

Australian Payments Clearing Association 

Limited ABN 12 055 136 519 

Registered office 

Level 6 

14 Martin Place 

Sydney NSW 2000 

Tel +61 2 9221 8944 

Fax +61 2 9221 8057 

www.apca.com.au 

Solicitors 

Mallesons Stephen Jaques, Sydney 

Auditors 

PricewaterhouseCoopers, Sydney 

Company meetings 

The Annual General Meeting will be held on 

Thursday, 18 October 2007. 

The Annual Meeting of APCS will be held on 

Wednesday, 7 November 2007. 

The Annual Meeting of BECS will be held on 

Tuesday, 13 November 2007. 

The Annual Meeting of CECS will be held on 

Thursday, 15 November 2007. 

The Annual Meeting of HVCS will be held on 

Thursday, 29 November 2007. 

The Annual Meeting of ACDES will be held on 

Wednesday, 21 November 2007. 

APCA publications 

BSB Numbers in Australia 

Issued quarterly and available in either book form or 

on CD. Can be purchased directly from: 

Bluestar Print Australia Pty Ltd 

3 Nursery Avenue 

Clayton Business Park 

Clayton Vic 3168 

Tel +61 3 8514 6000 

Available from APCA’s website: 

• CECS Approved Devices List 

• Cheque Fraud Prevention Brochure 

• Design Specifications for Cheques and Deposit 

Forms (Publication 11.5.2) 

• Guidelines for Establishing DDRs Electronically or 

by Telephone 

• Guidelines for MICR Encoding Cheques 

• Guidelines for Paper Used for Cheques and Other 

MICR Encoded Documents 

• Guidelines for the Purchase and Use of Specially 

Printed Cheques 

• Guidelines for Processing and Settling Cash 

Discrepancies 

• MICR Magnetic Ink Character Recognition 

(Publication 3.3) 

• Payments Monitor – a quarterly publication for 

members and interested parties (also published in 

hard copy form) that provides an update on 

payments clearing developments. 

Also available: 

• APCA Position & Layout Gauge (hand held device 

for verifying positioning of MICR encoding) 

Registers 

APCA maintains registers relating to cheque printing 

standards to help printers, APCS members and their 

customers comply with the standards in 

publications 11.5.2 & 3.3. 

• Printer Registration Database 

This database contains organisations that print, 

design and MICR-encode cheques and deposit 

forms. 

• Register of Paper for MICR Encoded Documents 

Manufacturers or suppliers of paper may submit 

results of tests of their paper against the ‘APCA 

paper standard’ for review by APCA. Where review 

of test results shows compliance with the 

standard, the paper is included on the register. 

• Register of MICR Printing Systems 

APCA evaluates MICR encoding equipment to 

determine whether it produces encoding of an 

acceptable standard. This standard and the 

processes for evaluation are set out in the MICR 

Magnetic Ink Character Recognition publication.

Australian 

Payments 

Clearing 

Association 

2007 

Annual 

Review 

Produced by Ross Barr & Associates

Annual Review - Australian Payments Clearing Association

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