PODCAST: How to navigate Australia’s evolving payments landscape

Australia's payments system is set to undergo significant change over the next five years to make it fit for the digital age and Westpac is urging businesses to act early to prepare themselves. 

Treasurer Jim Chalmers has announced that cheques will no longer be accepted after September 2029, while also revealing plans to ensure that businesses continue to accept cash payments. 

Meanwhile, it’s expected that the bulk electronic clearing system, or BECS, which businesses have used to process payments since 1989 will be phased out by early in the next decade.

“This signals the next phase of payments modernisation,” Kathryn Carpenter, Managing Director of Domestic Payments and Liquidity at Westpac, tells Wire in a podcast interview. 

“It presents material opportunities for Australian businesses, but it’s important to recognise that it also means disruption,” she notes, adding that it will impact on how businesses collect revenue, how they pay suppliers, and how they manage their payroll. 
 

The transition away from cheques is generally well understood by businesses, Carpenter says.  They are less well prepared for the decommissioning of BECS, or direct entry as it’s also known. 

While usage of the open-access digital New Payments Platform has been steadily increasing since its introduction in 2018, direct entry still accounts for between $15-$18 trillion worth of payments annually, Carpenter notes.

As such, the transition away from BECS represents a big change on a relatively short runway.

“Our number one recommendation to clients is to act now,” Carpenter says. “That’s about understanding the opportunities and barriers to change and targeting early adoption to smooth the cost and risk of change, and access the benefits earlier.”  

On a practical level, Carpenter encourages companies to prioritise transition solutions early in their investment cycle, while working with their customers and suppliers to drive adoption of alternative payments platforms.

Moving off batch or paper payments to digital presents numerous benefits. Firstly, it creates operational efficiencies in terms of minimising manual errors and reducing time spent on relatively simple admin.

Real-time processing enabled by digital payments allows businesses to access cash a lot quicker as well as speeding up reconciliation, and at the same time reduces fraud risk. 
 

Carpenter says Westpac is ready to help its business customers navigate the transition.

“No matter what the client’s level of real-time readiness we can absolutely support them, from readiness planning all the way to realising advantage through the change, with practical support, alternative solutions and proven real-time leadership and change expertise.”

The bank offers a range of channels to cater for a wide range of business clients, including PaymentsPlus, QuickStream, and PayWay. It also offers PayTo for billers functionality – a  secure digital alternative to Direct Debit which allows service providers and their customers to set up digital payment agreements. 

PayTo includes an option to migrate existing Direct Debit mandates off direct entry and onto PayTo to enable a simple and smooth transition.

Find out more: Westpac opens up PayTo capability to billers

Further capabilities will be rolled out in the near future, including PayID receivables – a fast, secure receivables solution which allows users to receive payments with a unique identifier, allowing the biller to automatically update their accounts receivable file. 

“There’s a lot that we can do to support, all the way from readiness through to advantage, underscored by our fraud and scam solutions, which means we can provide customers with peace of mind as they make this transition from traditional to digital in real time.”