Innovation and the Future of the Payments System

Speech

Notes

Resilience, Innovation and the Future of the Payments System Brad Jones Assistant Governor (Financial System) AusPayNet Summit 2025 16 December 2025
– Sydney
Audio 34.1MB Q&A Transcript Watch video: Speech delivered by Brad Jones, Assistant Governor (Financial System), AusPayNet Summit 2025, Sydney Introduction Let me begin by acknowledging the tragic events in Bondi over the weekend. Our thoughts and condolences go
out to anyone who has been affected. Thank you to AusPayNet for the opportunity to join you all here at the annual Summit. Though this forum
has been running for less than a decade, it has emerged as a centrepiece on the calendar for both
industry and regulators. I suspect that at least some part of the reason we have a world-class payments
system in Australia is because we have opportunities like this where a range of big ideas for the future
of the system can be thoroughly debated. Long may this spirit of engagement continue. It is difficult to think of another time where developments in the payments and digital money ecosystems
– in Australia and abroad – were more fascinating than now. There are big structural forces
reshaping the operating environment, technological change and geopolitical disruption among them. This
change is amplifying both risks and opportunities. As Governor Michele Bullock observed in her Bradfield
Oration, our collective challenge is to manage both in a way that improves the lives of all
Australians. 1 The key question I will address in my remarks today is this – in a period of profound structural
change, how can we build an ecosystem for payments and market infrastructure that is both highly
resilient and highly innovative? One that is not just able to weather storms, but as I discussed
recently, ‘anti-fragile’, in the sense that it stands to benefit from change and
disruption. 2 It is no accident that the twin themes of resilience and innovation underpin the RBA’s refreshed
payments policy strategy out to 2027. This strategy has recently been endorsed and published by the
Payments System Board (PSB) to assist industry in their prioritisation efforts. 3 Conscious that
industry already has plenty on its plate, the RBA’s contribution to the implementation plan of the
Council of Financial Regulators (CFR) ‘Better Regulation Roadmap’ will also shortly be
published to provide industry with additional visibility over the sequencing of our wider priority set.
The bottom line today is that I am optimistic our system is up to this twin challenge, but it will
require everyone involved – industry and regulators – to prioritise somewhat differently to
recent decades. Why resilience, why now? If we step back for a moment and consider the properties of resilience that could apply to any technical
system – not just payments – and one whose operating environment is changing in material
ways, quite a few possibilities spring to mind: interoperability, diversity, redundancy and adaptability.
Each of these brings pros and cons on their own of course, and how they interact is critical – as a
case in point, if diversity simply translates to duplicating systems with limited interoperability, there
may be more costs than benefits to the wider system. But in the years ahead, I suspect that concepts like
these will feature more prominently in the design of our payments system and associated infrastructure. To move from the conceptual to the concrete, a safe and resilient payments system underpins economic
activity in Australia. Every day, the average daily value of payments settled at the RBA through our
real-time gross settlement system is equivalent to more than 10 per cent of Australia’s
annual GDP. The size and interconnectivity of our payments system means that major disruptions could have
systemic consequences – for financial stability, economic activity and, in extreme cases, social
cohesion. This is a sobering reality. Three themes stand out here, all structural rather than cyclical in
nature. The first relates to our deteriorating strategic circumstances. As the Director-General of the Office of
National Intelligence recently reminded us: the pace and gravity of strategic change is accelerating, our
region is now the epicentre of global systemic rivalry and our operating environment is one where
coercion below the threshold of conflict is becoming normalised. This makes for a less forgiving and less
predictable world. 4 The potential for external shocks to threaten the
provision of critical financial services is rising, and the risk of coordination failure is larger for
adverse geopolitical scenarios compared with more traditional financial risks. This realisation has been
informing a program of work overseen by the CFR for some time now. The second source of structural change relates to technological transformation. Increasing digitalisation
is yielding substantial efficiencies for the financial system and making new functionality possible. At
the same time, it is expanding the attack surface for cyber intrusions and making the potential
consequences of operational disruptions more severe. Applications of artificial intelligence (AI) reflect
both sides of this coin. The financial system is contending with accelerating waves of distributed denial
of service attacks, and the commercialisation of cybercrime on the dark web is becoming big business. A
concentrated group of key third-party technology providers are increasingly performing critical
functions, such that a major disruption in one could have ripple effects across the entire system. Last
year’s Crowdstrike episode, and the Amazon Web Services outage a couple of months ago, are just a
couple of recent reminders. A third and related challenge is that interdependencies between the payments system and other critical
national infrastructure are coming into sharper focus. It can be taken for granted that the functioning
of our financial system, and the payments system within it, is dependent on the smooth functioning of the
electrical grid and telecommunications network. But these core services are increasingly experiencing
their own resilience challenges, which can have downstream impacts on the broader economy. A recent
example was the April 2025 blackout of the Iberian Peninsula that affected 50 million households and
saw daily economic activity and electronic retail payments in Spain decline by approximately half. This
disruption could easily have been worse, had the geographical span of the outage been different and cash
not been readily available as a means of payment. Recognising it is insufficient to just admire these problems from a distance, let me turn now to several
related priorities in the RBA’s forward work program. A common theme here is the importance of
payments infrastructures investing in their governance, risk management capabilities and operational
resilience to meet not just regulator expectations but also those of the wider community. System-wide interdependencies One element is a stepped-up focus on system-wide interdependency and concentration risk. We are conscious
that individual entities may have limited visibility over the extent to which their vulnerability to
third-party providers or single points of failure is mirrored elsewhere and could amplify disruptions if
a large shock were to occur. As a result, the RBA has embarked on a program of analysis and outreach with
industry and other arms of government. The scope of this work ranges from high-value payments through to
retail point-of-sale and account-to-account (A2A) transfers. We are actively engaging with CFR agencies,
the Department of Home Affairs, national security agencies, overseas central banks, other non-financial
regulators and industry, in order to develop a more holistic system-wide mapping of vulnerabilities. A notable example where our collaboration with industry is spurring both increased resilience and
innovation is through the Industry Resilience Initiative. Here, the RBA and the Australian Prudential
Regulation Authority (APRA) are working with banks, Australian Payments Plus and AusPayNet to enhance
existing contingency capabilities so that payment services can continue to operate, even if in a reduced
form, in the event of a significant shock like a major institution ‘going dark’ for some time. Another area where we see the concepts of system-wide resilience and innovation coming together is in
quantum computing. The brute-force computing power enabled by quantum computing offers intriguing
possibilities – it will unleash capabilities in the financial system that are not currently
possible, especially when coupled with AI. At the same time, these advances could pose first-order data
security risks and so compromise the integrity of the financial system. We know that threat actors are
already capturing data with the expectation of breaking current encryption down the track – a
strategy known as ‘harvest now, decrypt later’. As a result, the PSB strongly supports industry efforts to migrate card payments to the Advanced
Encryption Standard (AES). AES is viewed as a quantum-safe solution, should advances in quantum computing
undermine the secure exchange of payment details. Some European countries are already there. The PSB
expects industry to progress migration with sufficient urgency to enable the readiness of AES for use by
2030 and has agreed to consult around the middle of next year on using the RBA’s standard-setting
powers under the Payment Systems (Regulation) Act 1998 (PSRA) to support the migration. Cash distribution Another element of our work on payments system resilience relates to cash access. Not only does cash
remain an essential part of the payments system – 1.5 million Australians still rely on it to
make everyday payments – cash also provides a backup for localised disruptions (e.g. floods and
fires) when digital payments are unavailable. In this sense, physical cash is an ‘all hazards’
digital hedge. In discussions with my international counterparts, I am increasingly struck by how uniform
the view has become about the critical contingency role cash can play in the economy. Sweden is one
example, where authorities are now requiring cash distribution entities to maintain a heightened level of
crisis preparedness and a public campaign has been launched to advise the community to maintain personal
cash holdings in preparation for crises. The RBA fully supports the Government’s commitment to ensuring that Australians retain adequate
access to cash for as long as they wish to use it. Accordingly, the RBA, CFR and the Australian
Competition and Consumer Commission (ACCC) have consulted on regulatory arrangements for the cash
distribution system that are designed to ensure the system remains on a strong footing far into the
future. In seeking to promote system-wide resilience, the framework embeds crisis readiness and
resolution powers as key features. 5 Promoting an innovative and resilient payments system Ensuring our payments system can withstand extreme-but-plausible disruptions should not mean innovation
grinds to a halt. Quite the contrary. Australia has always been up around the front of the pack regarding
innovation in the payments system. 6 In the context of our national productivity challenge,
it is important that this remains so. And as I have stressed before, there are big opportunities ahead of
us if we can harness innovation in ways that not only enhance efficiency but also resilience –
there need not be a trade-off. 7 To help play our part in fostering an innovative payment system, we have several initiatives underway. Project Acacia and the Future of Money One is Project Acacia, the centrepiece of our Future of Money program this year. Working alongside
industry, regulators and our research partners at the Digital Finance Cooperative Research Centre, we are
exploring how new forms of digital money and financial infrastructure could support the development of
tokenised asset markets in Australia. This is also a growing area of interest for central banks and
industry globally. We’ve taken the step of issuing pilot central bank digital currency onto external
digital ledger platforms to better understand how new forms of money and tokenised assets could more
seamlessly interact on the same ledger. This includes where trading and settlement are synchronised into
a single function – obviating the need for clearing or tying up of collateral for days. The project
has also explored the role that private digital money, in the form of tokenised bank deposits and
stablecoins, could play in tokenised asset markets. It has been pleasing to see Acacia draw strong interest from a wide cross-section of industry, from large
banks to smaller fintechs to technology companies. Across more than 20 use cases, a range of
real-world assets have been tokenised: government bonds, money market securities, mining royalties and
repurchase agreements among them. We’ve deliberately not been prescriptive about these use cases, as
we have wanted to hear from those on the front line of industry innovation where they think the largest
potential benefits could be for the Australian financial system. The experiments will be wrapping up shortly. I will have more to say about Acacia and our related
strategic priorities on the Future of Money at the end of March, and shortly thereafter the Acacia
project report will be published. But for now, I’d like to thank all our project partners for their
contribution to the project – it has been a leading example of how the public and private sectors
can collaborate on important policy issues arising from the application of frontier technologies. Future of account-to-account payments Let me now turn to a topic I addressed at last year’s Summit that also sits at the intersection of
innovation and resilience – the future of Australia’s A2A payments system. At that time, and
as our risk assessment of the decommissioning of the Bulk Electronic Clearing System (BECS) later set out
in detail, the feedback we received from a range of stakeholders suggested that a foundational element
was missing in the migration to modern payment rails – a shared vision among industry on the
desired features of the future system. 8 We shared industry concerns that loading more risk onto
modern rails that had higher outage rates than the legacy bulk system was going to be problematic if
contingency arrangements were not also significantly uplifted. To support strategic planning by industry, RBA staff published a Public Interest Framework in July. 9 The framework
outlines technology-agnostic principles that prioritise the reliability of the payments system through
robust contingency arrangements, alongside new functionality spurred by competition and innovation. As an
example, we view interoperability – the ability for different payment systems to connect to each
other – as integral to promoting resilience, competition and efficiency. In good times, end users
will have greater choice over their providers; when systems go down, contingency options will be
available. Fast forward to today, and I am pleased to say that industry has made important progress, including in
establishing a new coordination forum and completing an end user consultation to inform the future vision
for A2A payments. At the same time, there is still a big lift ahead: key outstanding issues include the
processing of large volumes, the account reach of the New Payments Platform (NPP) and contingency
arrangements. We want to thank industry for engaging in the A2A reset over the past year. We recognise it has not been
easy. As we have said all along, if it takes industry a little longer than originally envisaged to come
to a shared understanding of the system’s central features, then it should be time well spent. For
our part, RBA staff will continue to engage with industry via the A2A Roundtable and in March 2026 we
will publish an update on the risks associated with the migration. We are all striving for the same objective – that Australians can benefit from the features that
modern payment systems such as the NPP can provide. These include 24/7
real-time payments, richer data, confirmation of payee and real-time verification of payment. To achieve
this, we need everyone in the ecosystem to continue engaging – payments service providers (PSPs),
and corporate and government end users. Modernising the RBA’s settlement system to support innovation Ensuring that Australia’s financial infrastructure is fit for the future is a key focus of ours. This
can be seen not only in our involvement in initiatives like Project Acacia and the modernisation of
Australia’s A2A system, but also in the RBA’s forthcoming strategic modernisation of
Australia’s high-value real-time settlement system – the Reserve Bank Information and Transfer
System (RITS). The last major innovation in RITS occurred in 2018, with the public launch of the Fast
Settlement Service. This system enables real-time, 24/7 settlement of NPP
transactions and currently processes about four million transactions per day – most in under a
second. The RITS modernisation project will explore a range of options to ensure our critical settlement
infrastructure can support the evolving needs of the financial system well into the future. Enhancing cross-border payments Under the G20 roadmap, Australia is committed to supporting the international effort to address
challenges in cross-border payments. A priority for the RBA in recent years has been engaging with
industry over the adoption of richer data and new capabilities in Australia’s cross-border payments
infrastructure. Next year, we will be examining ways to enhance wholesale cross-border payments,
including as it relates to our RITS modernisation project and research on the role of digital money. We
are also collaborating with central bank partners on a second phase of the BIS Innovation Hub’s
Project Mandala. 10 This project explores protocols to automate regulatory
compliance processes in cross-border payments using new technologies like digital ledgers. The aim here
is to make cross-border payments more transparent, faster and safer. Supporting national reform priorities In light of the Government’s efforts to modernise Australia’s payments regulatory framework, the
RBA also has a number of initiatives in train. First, following the recent amendments to the PSRA, the RBA will publicly consult on the PSB’s
regulatory priorities in mid-2026, taking into account these amendments and technology modernisation in
the payments industry. The focus will extend to regulatory issues beyond those addressed in the Review of
Merchant Card Payment Costs and Surcharging. The consultation will include efficiency, competitiveness
and safety issues with mobile wallets, three-party schemes, buy-now-pay-later providers and e-commerce
platforms. We look forward to your input. Second, the RBA will be reviewing its policies for accessing Exchange Settlement Accounts to support
competition and innovation in payments. We expect to commence this review in the second half of 2026,
once the first tranche of the Government’s PSP licensing reforms has passed Parliament and work on
the second tranche has begun. This second phase includes the proposed common access requirements. This
framework would involve APRA setting proportionate regulatory and supervisory arrangements for non-bank
PSPs seeking to directly access Australian payment systems. In the meantime, we are engaging with our
peer central banks to better understand how they see the competition and financial stability implications
from stablecoin issuers holding funds in central bank deposits. We note the regulatory framework for the
licensing and prudential supervision of issuers of Australian dollar-denominated stablecoins is an
important pillar of the Government’s approach to developing responsible innovation in the Australian
digital asset industry. Third, to support responsible innovation in the wider financial system, the RBA will be providing input
into the review of Australia’s Enhanced Regulatory Sandbox (ERS). Similarly, as a result of its
learnings from Project Acacia, we are examining whether and how a dedicated digital securities sandbox
could further support the development of tokenised markets and complement the general purpose ERS. We are
looking closely at the experience in places like the United Kingdom, euro area, Switzerland and others to
guide us here. Update on the Review of Retail Payments Regulation Before I close, it would be remiss not to provide a brief update on the current Review of Merchant Card
Payment Costs and Surcharging, which includes a package of proposed reforms: reductions in ‘downstream’ consumer payment costs via changes to the surcharging regime for
eftpos, Mastercard and Visa networks reductions in ‘upstream’ payment costs incurred by Australian merchants, via their service
provider, in the form of lower interchange rates on card transactions increased disclosure of fees charged by acquirers, and collection and publication of wholesale fees
charged by card networks, to help ensure savings from lower interchange are passed through to
Australian merchants. We received more than 170 submissions from a broad cross-section of stakeholders, including
merchants, issuers, acquirers, PSPs and the card networks. It is fair to say that each of these
stakeholders come at the issues from different perspectives, so we are carefully weighing the balance of
the various arguments as they relate to our mandate. Given the reforms will inevitably result in some
redistribution of costs and benefits across the system, we recognise it won’t be possible to please
all stakeholders. But when the PSB publishes its conclusions and an implementation timeline for any
regulatory action by March 2026, I can assure you that a huge volume of information, consultation
meetings, requests for further information, and so on, will have been channelled towards landing on a
package that we believe most promotes the public interest. The PSB is also aiming to ensure that
decisions on issues like the scope of surcharging and the extent of interchange cuts will not be affected
by the recent amendments to the PSRA. Conclusion Let me conclude. We should all aspire for a payments system that is safe and resilient – one that
Australians can rely on – and one that is a hotbed of innovation and competitive efficiency.
I’ve set out today a number of the opportunities we see here. They are reflected in our priorities
that span regulatory reform, the Future of Money and tokenisation, A2A payments, the Industry Resilience
Initiative, cross-border payments, quantum-safe encryption standards, physical cash and the modernisation
of RITS. As we realise that the sequencing of priorities is always a challenge, my colleagues at the RBA
and on the PSB are more committed than ever to working constructively with AusPayNet and the wider
industry. There is much to celebrate in the Australian payments system, and we all want to ensure this
remains the case far into the future. Thank you, and I look forward to taking your questions. Endnotes 1 Bullock M (2025),
‘ Building Bridges in the Digital Economy:
Modernising Australia’s Payments System ’, The Daily Telegraph’s Future
Sydney: Bradfield Oration, Sydney, 24 October. 2 See Jones B (2025),
‘ Anti-fragility and the Financial
System ’, Opening Remarks to FINSIA: The Regulators, Sydney, 12 September. 3 See RBA (2025),
‘ Payments
System Board Annual Report 2025 ’, pp 3–4 . 4 Office of National
Intelligence (2025), ‘Senate Estimates – December 2025’. 5 The development of a
regulatory framework for cash distribution complements other policy measures to support the cash
ecosystem, including the Government’s draft regulations to require providers of essential
goods to accept cash as a form of payment (up to a specified amount). 6 Bullock, n 1. 7 See, most recently,
Jones, n 2. 8 RBA (2025), ‘ Decommissioning
of the Bulk Electronic Clearing System: RBA Risk Assessment ’, March. 9 RBA (2025), ‘ Public
Interest Framework for a Successful Account-to-Account Payments System ’, July. 10 For further
details, see BIS (2025), ‘Project Mandala: Shaping the Future of Cross-border Payments
Compliance’, November.