“For the next two to three years, the [payments] ecosystem in Australia is likely going to have to invest $2 billion a year to get us ready for that next evolution of innovation.
“That innovation has to come with the corresponding security so it’s not about reducing the fraud mitigations or the security investments that we’ve got today. It’s actually the next layer of investment that we need for tomorrow.”
Tranchini said one of those innovations was so-called “agent-led commerce” where a shopper could use AI to carry out mundane shopping practices.
Instead of a person heading to a supermarket to pick up a bottle of milk, AI would recognise a household is running short of the essential, order the product, pay for it and have it delivered.
“That seems like a really great experience. It gets delivered to my house without me even having to think twice,” she said.
“But there’s a lot that goes into making that experience happen to ensure it’s secure, to ensure that it’s authenticated, to make sure that the agents do what they said they were going to do.”
Tranchini said small businesses that used corporate credit cards may find it more difficult to access ongoing lines of credit if interchange fees were reduced too far.
Frequent flyer points are likely to be one of the casualties in the fight over interchange merchant fees.Credit: Sam Mooy
She said one option for the Reserve was to charge a different interchange fee for credit and debit cards.
The debate over interchange fees has also focused attention on the way big banks and other card providers woo customers by allowing them to earn frequent flyer points with their purchases.
In the past week, Qantas has reminded its customers that they can earn up to 120,000 points with a Westpac Altitude Qantas Black credit card.
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Bullock said cutting such incentives would be up to card providers, but argued that people earning frequent flyer points were being subsidised by consumers – usually lower income and younger people – who used debit cards for their payments.
“It’s funding people who are wealthier, higher incomes to get loyalty points. Who is paying those high prices? It’s the consumers that don’t use the credit cards, which are younger people, people [who use] debit cards,” she said.
In evidence to the same committee last year, Commonwealth Bank CEO Matt Comyn acknowledged that “more than 90 per cent of the economics” the bank receives from interchange fees were given back to the customer through points and “often through the purchase of frequent flyer points”.
Last month, the Australian Competition and Consumer Commission noted in a report on the nation’s airline industry that frequent flyer points were pivotal to consumers.
Up to 71 per cent of Australians claimed that frequent flyer programs were important in their purchasing decisions, with research out of the United States showing some people booked a flight simply to earn status credits.
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