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Transformations and Trends Reshaping Payments in the Pacific

Over the past year, the long-term trend away from cash — and toward digital payments — has really ramped up in Australia and New Zealand. Similar to other global markets with well-established infrastructures, there was a rapid pivot by merchants and consumers to online shopping. In Australia, they quickly adopted “Tap & Go” payments at the urging of the government. The consequences of the COVID-19 pandemic and its impact on payment behaviors and modernization roadmaps are sure to be far reaching, though each country is at very different stages of development in terms of real-time payments.

New Zealand’s real-time payment explorations have been stop-start for several years now, but when the pandemic hit, these efforts were in fact ramping up to keep pace with global developments. 2020 revealed the convenience and economic security advantages of real-time payments, which added further impetus to this work.

The relatively small size of the market means that regulators and market players have had to be creative with their infrastructure strategy. They’ve sensibly taken the opportunity to consider the challenge in a decentralized way and are looking to construct a point-to-point network between banks, using open banking-like APIs.

Across the ditch in Australia, the shift to real-time payments has been well under way for some years now, and a maturing market combined with a tech-friendly population drove more than a two-fold increase in real-time payments’ share of all electronic payments between 2019 and 2020.

Given the speed with which cash is declining and businesses are moving online, it seems clear that future developments in the Australian market are going to focus on expanding real-time to high-value payments and additional corporate use cases. Regulators expect the future to lie in real-time payments and are making moves to guarantee reliability and performance.

The recipe for real-time success

Ultimately, these conditions are translating into a range of payments modernization imperatives for the primary Pacific markets covered in ACI’s Prime Time for Real-Time report. For example, acquiring and issuing is fast becoming a highly competitive space. Here, differentiation depends on taking the usual mix of reliability and speed, then combining it with support for as many payment and initiation methods as possible — all wrapped up in extremely simple and intuitive user experiences.

These are in fact the consistent ingredients for real-time success with which all financial institutions must contend. Whether a bank or a processor, a fintech or an issuer, if technology and infrastructure roadmaps don’t feature solutions for delivering performance and value at scale, then they can’t be considered fit for purpose based on the market’s current direction. And that’s before we even mention that financial institutions must continue to manage and maintain existing infrastructure and solutions for traditional payment methods, which will endure for years to come.

For this reason, cloud deployments continue to move up the agenda, and we expect organizations both large and small to accelerate their plans after what has been — for some, at least — an overextended period of due diligence. For larger banks, the cloud’s appeal lies in moving to a more modern and agile infrastructure base that is also more attractive to technical talent. Smaller players are keen to remain lean and cost-efficient by switching their infrastructure expenses to an operational expenditure model rather than a capital expenditure one.

This reflects another fact of life in the Pacific payments landscape, also seen in other markets around the world: major payment transformations are no longer decades in the making. In a real-time world, infrastructure and services are in a near-constant state of change. This in turn means that the region’s financial institutions need to prepare themselves to evolve more quickly — and more often — than they have ever needed to in the past.

To learn more about the growing global footprint of real-time payment schemes and country-level trends in 48 countries, including Australia and New Zealand, download the 2021 Prime Time for Real-Time report.

Director - Solution Consulting, APAC

Geoff is an industry authority who leads strategic solutions consulting for ACI Worldwide. He brings two decades of payments experience in the Asia-Pacific region to his role, which includes the development and delivery of customer-centric solutions that meet the business and process needs of some of the world’s largest financial institutions. Prior to joining ACI, Geoff held senior at organizations including CSC, Accenture, Westpac, National Australia Bank and ANZ.