Australia’s first electronic payments network eftpos has lured across the chief information officer of the local arm of international bank HSBC as it continues to muscle-up up its digital transaction capabilities amid shifting consumer preferences.
While an official announcement is understood to still be pending, it is understood Ben Tabell, currently HSBC Australia’s CIO, will start with eftpos in the new financial year, a hiring coup for the payments network as it prepares to launch its online transaction capability within 12 months.
Tabell’s appointment comes in addition to the creation of a chief digital officer position at eftpos, now held Paul Jennings, with both senior executive roles reporting to CEO Stephen Benton.
It is understood that eftpos’ major push into the digital payments space is being accompanied by a concurrent bolstering of its cyber and security capability as most payments providers and banks look to tokenize online card payments to wean merchants off keeping card details on file.
The most recent major success of eftpos on that front has been to port its functionality onto Apple Pay for ANZ and Suncorp's deployments of the app, which now lets their customers get access to cash at the checkout via the popular app.
Payments system regulator the Reserve Bank of Australia has been pushing payments providers hard to reduce ballooning scheme card (Mastercard, Visa and Amex) fraud rates in the online or ‘card-not-present’ segment that is approaching $500m a year in losses.
The volume of online fraud on scheme cards is now so large – 85 percent of local card fraud volume – it even snared Reserve Bank Governor Philip Lowe last year, leaving the signatory to Australia’s banknotes short on plastic after he was forced to cancel his cards.
International schemes, as well as the credit card issuing sections of some banks, have been trying to displace the eftpos proprietary debit network – which also provides the rails for bank ATM transactions – for well over a decade.
The most recent flare-up centred around the use of tokenization upgrades for bank-issued debit cards to try and boot eftpos routing on so called ‘combi-cards’ – cards that carry both eftpos and international card scheme functionality – from bank issued cards when their security was upgraded.
However the cheeky move by Mastercard and Visa backfired badly after both the Payment System Board and RBA gave short shrift to the move, firmly warning banks and international schemes not to try and game systemic security to their advantage.
Despite some conspicuous challenges arising from the historically early architecture of the eftpos network (it was first fired up in the 1980s and still can’t yet be used for online transactions) the RBA has repeatedly made it clear it is not prepared to sacrifice a lower and fixed cost domestic payments network in favour of interchange fee-based schemes.
The survivability of eftpos in the local market is also crucial to the RBA’s efforts to ensure genuine competition to keep the cost of payments to merchants and consumers at a reasonable level because it provides a bulwark against the double whammy of high interchange fees and forced routing.
The RBA recently introduced measures that will let merchants decide which rails consumers’ payment run on to check gouging on card fees, a move set to migrate online in coming months.