Submission - Joint submission to the 2007 Review of the Electronic Funds Transfer (EFT) Code of Conduct to ASIC (May 2007)

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Q1 – What do you see as the emerging trends or developments in the consumer payments marketplace in Australia over the next few years?

Three emerging trends in the marketplace are of interest in relation to the EFT Code review:

• 1. Growth in use of third party direct electronic transfers
  Internet banking appears to have entered a new phase where it is common for customers to arrange direct transfer of funds to a third party using their BSB and Account Number. This service is now offered for all accounts – whereas at the time of the last review of the EFT Code this service was only available for a small number of account holders. Some financial institutions require additional security or authentication for direct transfers (e.g. there may be an extra security question before the transfer is confirmed).
• 2. Emergence of new Internet only payment services
  A small number of new, Internet based payment systems are operating. Two of these services – PayPal and Checkout – have become quite prevalent and are widely used in Australia. They are not traditional payment systems or financial institutions but they do share many characteristics with credit cards and Internet banking. This type of service was not in widespread use at the time of the last EFT Code review.
• 3. Convergence / confusion of consumer banking and business banking
  Although this development was also considered during the previous review of the EFT Code, there appears to now be even greater convergence of consumer banking and business banking. This is due to the growth in the home business and micro business sectors, and the need for micro-businesses (e.g. eBay sellers) to offer electronic payment systems to consumers. It is unlikely that all home businesses and micro businesses operate a strict division between their personal banking and their business banking, so determining which accounts are personal accounts may be difficult.

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