Speech
Building Bridges in the Digital Economy: Modernising Australia’s Payments System
Michele Bullock
*
Governor
The Daily Telegraph’s Future Sydney: Bradfield Oration, Sydney Opera House
Sydney
–
24 October 2025
Audio
38MB
Q&A Transcript
Watch video: Speech delivered by Michele Bullock, Governor at The Daily Telegraph’s Future Sydney: Bradfield Oration, Sydney Opera House, Sydney
Introduction
I’d like to begin by acknowledging the Traditional Custodians of the land on which we meet and pay my
respects to Elders past and present.
It is an honour to be here with you today at this year’s Bradfield Oration.
Dr John Bradfield’s name is etched into Australia’s history as a visionary of transformative
infrastructure. As the chief engineer behind the Sydney Harbour Bridge, Bradfield didn’t merely
build a crossing, he built a connection – one that shaped how Sydney functioned, moved and grew.
His legacy reminds us that infrastructure doesn’t just support a nation – it expands its
possibilities.
While physical infrastructure like transport networks continue to shape our cities and economy today,
it’s increasingly digital infrastructure and growth in the digital economy that underpin how people
live, work and transact. Innovations such as mobile phone apps and cloud software are now woven into the
fabric of everyday life for most Australians.
Among the most frequently and widely used pieces of digital infrastructure in the country is our payments
system. Whether you’re buying a coffee, paying the salaries of your employees or receiving a
government payment, the payments system is part of the daily experience. It matters not just to central
bankers, economists or technologists, but to every Australian.
Given its importance to our lives, it is vital that the payments system provides its users –
households, businesses and governments – with a range of valued and trusted payments services.
The RBA, through its Payments System Board, is the primary regulator of the payments system in Australia.
The Board and the RBA work with participants in the payments system so that it meets the needs and
expectations of the Australian public.
The RBA also performs other crucial roles in the payments system. For example, we operate the
infrastructure that transfers money between financial institutions when individuals, businesses and
governments make payments. We also issue Australia’s banknotes, which are still a very important
part of the way people pay in Australia.
Our role in the payments system complements our other responsibilities in the economy and financial system
– setting monetary policy, safeguarding financial stability and providing banking services to the
Australian government.
In the spirit of Bradfield, my speech today will focus on the importance of continuing to build a modern,
innovative and robust payments system in Australia, and the roles that industry and the RBA can play in
this process. In doing so I’ll cover three aspects of our payments system: digital payments; the
RBA’s infrastructure underpinning the digital payments system; and cash.
Australia’s digital payments system and the role of innovation
Australians rely on digital payment services such as cards and bank account transfers to support their
day-to-day economic activities. These services have become more important over time: today, Australians
make, on average, about 700 digital payments per year, up from around 100 per year at the turn
of the century (Graph 1).
Graph 1
As users of the digital payments system, we expect the services for sending and receiving payments to have
certain attributes (Figure 1).
Figure 1: Desirable Attributes of Payments Services
Typically, we want these services to be:
Safe – we want to feel confident that our money and information won’t be lost or stolen.
Reliable – we want to know that these services will work when we need them to, with payments
successfully going through to the intended recipients.
Low-cost – we want prices for these services to be fair and affordable.
Easy to use – we want our payments services to be simple and convenient, so we don’t have
to spend a lot of time and effort using them.
In my view, Australia’s digital payments system already does well in delivering these attributes and
meeting users’ expectations. Indeed, I often hear from people that come to Australia that they are
impressed with the quality of our payments system.
Of course, this does not mean there is no scope for improvement. Later in this speech, I will outline
several areas where we think there could be further progress in the digital payments system.
The RBA helps to achieve these key attributes through the Payments System Board’s mandate to promote
a safe, efficient and competitive payment system in the public interest. Sometimes that means working
with industry to balance these attributes against each other to reach the best outcome for the Australian
people overall. The RBA’s current Review of Merchant Card Payment Costs and Surcharging is a good
example of attempting to balance not only the desired attributes of the payments system but also the
multiple views of providers and users. We are currently consulting on our preliminary views on potential
regulatory changes that could be in the public interest, so I won’t discuss these issues further in
this speech except to say we are going to take the time to get these changes right.
There are a range of factors that can help deliver the desirable attributes of Australia’s digital
payments system. Today I want to focus on the key role of innovation.
Ongoing innovation by providers of digital payments services – banks, fintechs and payments
infrastructure operators – is needed to keep the digital payments system fit for purpose. Because
the external environment and people’s needs and expectations evolve over time, the payments system
must adapt to remain safe, reliable, low-cost and easy to use.
This is no different to other forms of infrastructure, which also require periodic investment. For
example, transport infrastructure like buses and trains need upgrading from time to time to integrate new
technologies, and make them safer and easier to use.
A key focus of innovation by the payments industry over the past decade has been the introduction of
easier ways for Australians to make and receive payments. The development and adoption of new payment
options in Australia has been, in some respects, world leading.
A good illustration of this is the widespread adoption of contactless card payments – often referred
to as ‘tap-and-go’. This happened much earlier in Australia than in many other countries
(Graph 2).
Graph 2
The introduction of contactless card payments was made possible because of innovation and investment
across card issuers, terminal providers and businesses. This didn’t happen overnight though –
we needed a critical mass of cards issued with chips and terminals accepting tap-and-go for it to get
momentum. I recall Commonwealth Bank running a small-scale trial in the Sutherland Shire, but it
didn’t really seem to take off. Only once the supermarkets picked it up did it gain the momentum
needed to effect a broad change in payment behaviour. This demonstrates that the benefits of innovation
sometimes only become evident when it reaches a minimum scale.
Another example of innovation by the payments industry was the introduction of Australia’s fast
payments system – the New Payments Platform (NPP) – in 2018. It allows people to transfer
money to another person’s bank account in a matter of seconds, 24 hours a day, every day of the
year. The use of PayIDs, which allow NPP payments to be addressed to someone’s phone number or an
email address, has made initiating payments between accounts easier and safer.
For payments innovations like tap-and-go and the NPP to be a success they require widespread adoption.
This is commonly referred to by economists as a ‘network effect’, whereby the value of a
service increases the more people use it.
We see network effects play out in other forms of infrastructure too – take electric vehicles (EVs)
for example. For EVs to be a viable choice for most people, there needs to be a widespread and reliable
network of charging stations. But it’s not just about quantity, it’s about standardisation.
When charging points use common connectors, an EV can charge anywhere. As more charging stations are
built, EVs become more attractive to consumers. And as more people adopt EVs, the incentive to invest in
charging infrastructure grows. It’s a virtuous cycle, and each new connection strengthens the
network and increases its value for everyone.
It can sometimes be challenging to achieve a network effect in private card or account-based payments
systems without wide payment industry and public sector support to facilitate a level of coordination.
While banks and other payment firms have strong commercial incentives to innovate in their own branded
payments services, they’re often less motivated to enhance the shared infrastructure those services
rely on. At times, this has led to coordination and standardisation challenges that prevent progress on
innovations that would benefit the broader public. It is in these situations that the RBA can step in and
encourage the industry to collaborate to upgrade infrastructure or develop industry standards.
A clear example of this was the Strategic Review of Innovation in the Payments System that we undertook
more than a decade ago, which identified key gaps in the system that needed to be addressed through
cooperation. These included the lack of real-time payments, 24/7 availability, the ability to carry
more information with a payment and simple addressing. This laid the groundwork for the development of
the NPP that I noted earlier.
To be clear, developing the NPP wasn’t a top-down directive – it came from identifying the
problem, presenting the evidence and working with industry to find a solution. In my view, this was an
example where the industry ‘took the bit between its teeth and ran with it’. That spirit of
collaboration – building consensus, rather than imposing regulation – is the way we’ve
achieved many of the major enhancements in Australia’s payments system.
Of course, progress hasn’t always been smooth. After the successful launch of the NPP, adoption was
slower than expected because of delays in the rolling out of key services by some providers. In response,
the RBA wrote to the relevant major banks requesting that they deliver key NPP services by a certain
date. We then monitored their progress in doing so. Use of the NPP has since picked up and it now
processes an average of about 5 million transactions every day.
The RBA’s involvement in the development of the NPP illustrates how we can be a catalyst for industry
innovation in Australia’s payments system. I’m confident that, without our actions, the fast
payment capabilities that Australians now benefit from would have been much harder to achieve.
Focus areas for further progress in the digital payments system
Despite the progress made to date, there are aspects of the digital payments system where further
innovation is required, whether to build the capabilities needed to unlock future opportunities or
strengthen the system against emerging threats. As Brad Jones, the RBA’s Financial System Assistant
Governor, noted in his recent speech, innovation and resilience are not opposing forces – they can,
and should, reinforce one another. 1
In each of these areas the RBA and other regulators are cooperating with industry and the Government to
achieve outcomes that benefit the broader public.
Modernising the account-to-account payment system
The first area of focus is modernising the account-to-account (A2A) payment system.
An important conversation is currently underway about the future of Australia’s Bulk Electronic
Clearing System (BECS) – the infrastructure that processes batches of individual payments like
payroll and government support payments. While BECS continues to provide reliable and low-cost bulk
payments, it is ageing and lacks features that are expected in a modern payments system and that support
innovation. These include real-time, 24/7 processing and the ability to include detailed payments
data, both of which are available via the NPP.
In late 2023, the payments industry decided to work towards winding down BECS by the end of this decade.
The RBA’s review of this decision concluded that there are a number of challenges that industry must
address to ensure an effective and orderly transition of payments from BECS to alternative payment
systems. 2
The most fundamental of these is the need to develop a vision for the future of the A2A payments system
that benefits the Australian public. In essence, this means considering how to achieve safe, reliable,
low-cost and easy to use payments between bank accounts into the future.
In response, the relevant industry bodies recently launched a public consultation on the future of A2A
payments. Industry has also established an A2A Payments Roundtable involving the RBA and Treasury.
The Roundtable is using the feedback from the consultation to develop a shared vision by the end of this
year, and a plan for achieving that vision by mid-2026. This work will involve considering potential
trade-offs, such as those between payment cost and reliability, between innovative and legacy systems,
and between customer needs and payment provider priorities. As with all payments systems, the interests
of the various parties are not necessarily aligned.
Nonetheless, I would encourage all industry participants and the public sector to take this opportunity to
work collaboratively to develop a system that delivers the attributes the public expect, and that
supports innovation and resilience in our economy, well beyond 2030. Achieving this is in all of our
interests.
Enhancing cross-border payments
The second area where progress is required is enhancing cross-border payments.
Innovation matters not just for domestic payments, but also cross-border payments. Cross-border
transactions, such as when people send money overseas, can be relatively costly and slow. In an
increasingly interconnected world, it is crucial that cross-border payments benefit from the types of
modern technologies that are underpinning improvements in domestic payments. This is a central theme of
the international policy agenda to enhance cross-border payments.
Australian regulators and financial institutions are playing their part in this international effort. A
priority for the RBA has been engaging with industry over the adoption of richer data and new
capabilities in Australia’s cross-border payments infrastructure. A good example of this is the
recent introduction of the International Payments Service (IPS) on the NPP. The IPS allows incoming
cross-border payments to be processed on a real-time, 24/7 basis, so that Australians can receive
funds in their accounts faster. It is pleasing to see substantial growth in the number of IPS payments
processed over the past year, including outside standard business hours.
A major challenge in cross-border payments is managing financial crime risk. Compliance processes at
financial institutions are extensive and complex, which slows transactions down and increases their cost.
To help address this challenge, the RBA has collaborated with central bank partners and the Bank for
International Settlements Innovation Hub on Project Mandala. This project explored the use of digital
technologies to automate compliance processes, reducing risk and the potential for failed transactions.
The adoption of this kind of solution could ultimately make cross-border payments faster and cheaper for
customers.
Combatting fraud and scams
The third focus area is combatting fraud and scams in payments.
As anyone who has experienced a fraud or scam event would know, they can have a serious and lasting impact
on people and organisations. Implementing effective measures to combat fraud and scams is therefore vital
for ensuring our payments system is safe – protecting users and supporting confidence in digital
payments. This is imperative for the government, regulators and the payments industry.
Innovation by payments providers can play a crucial role here. For instance, the new ‘Confirmation of
Payee’ service that is being rolled out on the NPP represents an important industry collaboration to
help to reduce certain types of scams. It enables people transferring funds to someone else to verify
whether the account details, including the name, exactly or closely match what they expect before
proceeding with the payment. This complements similar functionality already available through the PayID
service. Individual banks are also implementing their own innovative measures, such as using artificial
intelligence (AI) to detect high-risk transactions.
The fight against fraud and scams will no doubt require further innovation, adaptation and cooperation by
the payments industry – we can be certain that fraudsters won’t stand still in their efforts
to steal people’s data and money. One important example is the need to protect card users against
advances in quantum computing, which is expected to result in current encryption standards being broken
sometime in the future. This requires migrating card payments to the Advanced Encryption Standard (AES),
a quantum-safe solution. 3
Strengthening operational resilience
The final area of focus is strengthening operational resilience in the payments system.
This objective is about ensuring our payments system is secure and reliable and will remain so in the
future. Payments infrastructure is often compared with plumbing – people tend not to notice it
until something goes wrong. And when it does, it must be fixed quickly.
Today’s operating environment is increasingly complex, with many risks:
Cybersecurity threats are more frequent and sophisticated, complicated by growing geopolitical
tensions.
Technology systems are growing in complexity, with some operators still reliant on legacy systems.
Third-party technology providers are increasingly performing critical functions – a failure in
one could have ripple effects across the system.
To manage these risks, financial institutions, their technology providers and operators of critical
payments infrastructure must strengthen their resilience across three fronts:
Prevention – strong cybersecurity, backup systems (like multiple data centres), and staff and
user awareness to avoid things like clicking on malicious links or inadvertently sharing information.
Detection – having tools in place to monitor, identify and scan for threats and
vulnerabilities.
Mitigation – having the capability to respond quickly when issues arise, minimise disruption
and restore services promptly.
The RBA has a key role to play here as it oversees the governance and operation of payments and settlement
systems. A key priority is ensuring these systems have a strong operational risk management culture and
capabilities to manage risks effectively, including those faced when maintaining critical legacy systems
or upgrading systems.
Beyond these oversight activities, the RBA is also researching system-wide risks as well as approaches
that would help boost the overall resilience of the payments system. A current area of focus is
understanding how interconnections between systems can amplify the impact of outages. This work aims to
help industry better prepare for potential operational problems across various parts of the system.
Australia’s infrastructure for settling payments
Alongside its policy role through the Payments System Board, the RBA operates Australia’s interbank
settlement system – the Reserve Bank Information and Transfer System (RITS). RITS enables banks and
other approved institutions to settle interbank obligations using their accounts at the RBA. When you
make a digital payment in Australia, the movement of those funds between financial institutions takes
place using RITS.
RITS is critical to Australia’s financial stability, ensuring payments are settled safely and
efficiently without the build-up of payment obligations and settlement risk between financial
institutions. RITS currently settles around $300 billion a day – which is equivalent to
turning over Australia’s annual GDP about every nine days.
When a critical system like RITS experiences a disruption, the impact can be widespread. Unfortunately,
this was evident during a major outage to our systems in October 2022. Following that incident, the RBA
commissioned an external review and has since launched initiatives to strengthen RITS’s operating
model, IT controls and governance. These initiatives are intended to ensure that RITS operates at the
extremely high standard of availability and resilience required for such an important national system.
Over its 30-year history, RITS has evolved in line with payment innovations and the needs of the public.
One of the most important milestones was the launch of real-time gross settlement in 1998. This change
allowed banks to settle high-value payments in real-time, payment by payment, alleviating the risk
involved with waiting until the following business day to settle these obligations.
Another notable change occurred in 2018, with the public launch of the Fast Settlement Service (FSS). The
FSS enables real-time, 24/7 settlement of payments made via the NPP. While the FSS handles much
smaller values than RITS (around $5 billion daily), it processes high volumes – about
4 million transactions per day – most in under a second. 4
While RITS continues to work well and remains secure and efficient, we recognise that because it is the
critical central settlement infrastructure for Australia, it needs to remain fit-for-purpose not just now
but into the future. In 2026, we’ll begin exploring options to modernise RITS, including assessing
whether:
using modern data exchange methods can improve user experience
operating hours could be extended or made more flexible
settlement using central bank money could be made available for a wider range of transactions.
In parallel, we’ve been researching how new forms of digital money, such as central bank digital
currencies and privately issued tokens, may be used to support wholesale payments and settlements. 5
This is
providing valuable insights into how the RBA’s settlement infrastructure may need to evolve in the
future.
With payments and financial market transactions innovating rapidly, modernising RITS is essential to
ensure Australia’s payments infrastructure remains fit for purpose, supporting innovation,
resilience and economic growth well into the future.
The RBA’s role in Australia’s cash system
While most payments are now made using digital means, cash remains an essential part of our payments
system.
Cash contributes to the resilience of the payments system because it is an important back-up payment
method when digital payments are not available. This includes during system outages and natural
disasters, such as the floods in Queensland earlier this year.
Cash also supports an inclusive payments system – 1.5 million Australians still rely on cash to
make their everyday payments, including some older Australians and vulnerable members of society who may
have fewer available payment options than others.
And cash is a store of value for people, including in times of uncertainty. During the COVID-19 pandemic
period between 2020 and 2022, for example, we issued over $30 billion of banknotes, mostly
$50 and $100 notes, which tend to be held for precautionary purposes rather than for day-to-day
transactions.
For these reasons, the RBA and the Government are committed to ensuring that cash continues to be a viable
payment method for as long as Australians need or want to use it. To this end, the infrastructure
underlying the cash system needs to be as efficient, sustainable and resilient as possible.
The RBA plays an important role in the wholesale cash distribution system as the sole issuer of Australian
banknotes. We issue bulk quantities of banknotes to the major banks, mostly from our main distribution,
processing and storage site in Victoria. The banks then distribute these to the broader community. And we
support the availability of high-quality banknotes around the country through various incentive
arrangements.
Just as innovation has shaped digital payments, it has been important for meeting our objective to provide
banknotes that are secure and trusted by the community. The RBA pioneered the use of polymer (or plastic)
for banknotes in the late 1980s, introducing several groundbreaking security features, including a clear
window with a hologram. The greater security and durability of the polymer banknotes introduced in the
early to mid-1990s contributed to a sustained period of low levels of counterfeiting and longer
circulation life, leading to over $1 billion in savings.
As technology evolved in the 2000s and 2010s, we saw counterfeiting again begin to rise and so in response
the RBA further upgraded the security features of our banknotes between 2016 and 2020. A combination of
these new banknotes, and effective law enforcement, helped to reduce counterfeiting once more to low
levels – in 2025 you would have to handle, on average, over 165,000 banknotes before you
received a counterfeit, compared with approximately 32,000 banknotes in 2015.
While the RBA plays a key role as the issuer of banknotes, the movement of cash around the country and
into the hands of consumers and businesses relies on the banks, cash-in-transit companies and the broader
cash industry.
The decline in the use of cash for transactions has put the cash distribution system under pressure. We
are participating in discussions with the major banks, the broader industry and Government about how to
evolve the operating model to support the future viability of cash. In July, the financial regulators
issued a consultation paper on potential regulation to better manage risks in the cash distribution
system. 6
In
addition, the RBA has worked closely with government agencies and key participants in the cash
distribution industry on business continuity arrangements, in the event of a disruption to the supply of
cash services.
Work to support a more efficient, sustainable and resilient cash distribution system is ongoing, and will
require cooperation and a shared commitment to meeting community expectations for continued access to
cash services.
Conclusion
Bradfield gave us the Sydney Harbour Bridge – a connection built to serve generations of people he
would never meet. But he also dreamed of a different connection: a comprehensive underground rail system
in Sydney that didn’t come to life until decades after his death. His story is a reminder that
visionary infrastructure often takes time to realise, but its impact can last for generations.
Like Bradfield we must think beyond the present. Our payments system must remain safe, reliable, low-cost
and easy to use – but also innovative and future-ready. Any less would fall short of what
Australians have come to expect and limit our economic potential.
Maintaining and evolving our payments system is therefore not optional. It is an economic imperative. Just
as John Bradfield envisioned a nation connected through steel and stone, we must now envision a nation
connected through trust, technology and innovation.
Endnotes
I would like to thank David Emery, Sorcha Ingram,
Kasia Kopec and Grant Turner for excellent assistance in preparing this speech, as well as Duke Cole,
Greg Dicinoski, Samuel Evangelinos, Chay Fisher, Kate Green, Andrew Hauser, Brad Jones,
Kathryn Miegel, Chris Schwartz, Kylie Stewart, Chris Thompson and Faye Wang for their valuable
input and comments.
*
Jones B (2025), ‘
Anti-fragility and the Financial
System
’, Opening remarks to FINSIA: The Regulators, Sydney, 12 September. 1
See RBA (2025), ‘
Decommissioning
of the Bulk Electronic Clearing System: RBA Risk Assessment
’, March. 2
For further discussion, see Jones, n 1. 3
Readers might note the difference between the
5 million in daily average NPP transactions and 4 million in daily average FSS
settlements. This difference arises because there is no need for settlement via the FSS when the
payer and recipient use the same financial institution. 4
In Project Acacia – a joint experimental
research project the RBA is undertaking with the Digital Finance Cooperative Research Centre
– we have been exploring with industry partners the role that central bank and privately
issued forms of digital money could play in the development of wholesale tokenised asset markets.
For further details of this project, see RBA (2025), ‘
Project Acacia: RBA and DFCRC Announce Chosen
Industry Participants and ASIC Provides Regulatory Relief for Tokenised Asset Settlement
Research Project
’, Media Release No 2025-18, 10 July. 5
Council of Financial Regulators and the
Australian Competition and Consumer Commission (2025), ‘
Regulating Cash Distribution in
Australia
’, Consultation Paper, July. 6