There have been some interesting developments in the Australian payments market in recent times.
One of the biggest headlines was the dispute between three of the country’s biggest banks and tech giant Apple. This related to access to the near-field communication controller in the iPhone, which would have enabled the banks to offer their own digital wallet services, in competition with Apple Pay. In March 2017, the Australian Competition and Consumer Commission sided with Apple, denying banks permission to collectively bargain with the US firm and boycott Apple Pay.
Now, three of the banks involved in that legal tussle – Commonwealth Bank of Australia (CBA), National Australia Bank and Westpac – have teamed up to launch Beem, a brand new platform for peer-to-peer (P2P) payments.
This new service will not – to begin with at least – be a rival for Apple Pay, but it does provide a sign of the innovation and competition growth taking place in Australia.
What is Beem?
Beem is a free app for Android and iOS devices that will enable customers of all banks to complete instant P2P mobile payments.
The banks are expected to market the new service on its ability to maximize speed and convenience for consumers, by allowing them to split restaurant bills or pay tradespeople, for example.
It will not be a direct competitor to Apple Pay, which is currently only used for contactless point-of-sale (POS) transactions in Australia, but it’s possible that Beem could expand into the POS space in future.
It’s also highly probable that the new service is a response by the country’s big banks to ongoing fintech innovation and competition growth in Australia, a trend that appears to be picking up pace.
Australia has been one of the markets at the forefront of the ongoing global drive towards open banking and greater competition and diversity, not only in payments, but across the whole financial services spectrum.
The burgeoning fintech market is indicative of the broader industry expansion occurring in the country. According to the 2017 Fintech Australia Census by professional services firm EY, companies in the sector have experienced a 200 percent median increase in annual revenue, with many firms devising plans to expand overseas.
Simon Cant, chair of FinTech Australia, said: “The fact that the industry has experienced a tripling in median revenue is a strong sign that fintech firms are acquiring customers and making strong inroads into the traditional financial services sector.”
Similarly, a recent report from CBA noted that there has been a more than twofold increase in the number of Australian firms that have become ‘disruptors’ in the past year.
Adam Bennett, group executive for business and private banking at CBA, said there has been a “surge of innovation” among the country’s businesses, driving the economy’s move away from mining and towards services.
As far as payments are concerned, it’s encouraging that one of the defining characteristics of the sector in Australia is diversity. The 2016 Consumer Payments Survey from the Reserve Bank of Australia showed that, despite the growth of debit and credit card transactions and the emergence of new payment instruments, cash was still used for more than a third of all consumer transactions last year.
These are positive trends that point to an exciting, healthy future for the payments market in Australia.
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