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Summary
A well-functioning economy depends on effective and efficient methods for businesses to pay employees, suppliers and investors, for households to purchase goods and services, and for governments to collect taxes and make payments. The increasing adoption of information technology by businesses and households is broadening the choice of payments methods by creating the opportunity to make payments electronically.
Greater use of electronic payments has raised many issues. These include issues related to assessing and increasing the ability of consumers, businesses, governments, financial institutions, non-profit organisations and other economic agents to make payments with complete confidence. Security, privacy, identity and fraud-minimisation are often viewed as critical to preserve and even enhance the level of trust customers and businesses have in current and future electronic payment mechanisms.
There are many factors underpinning the interest in electronic payments. On one level, there is a fascination with new technology, and innovation. However, it is notable that products based on this factor alone do not appear to have been successful in the longer term. More attention is being paid to the opportunities to increase value for consumers and businesses and ultimately for the economy at large. Electronic payments can provide benefits, such as convenience in making payments quickly or with minimal effort, or by adding value with extra functions. It is often thought that by reducing the costs of a transaction electronic payment mechanisms would generate productivity and efficiency gains, leading to economic growth and increased levels of national prosperity.
There are also potential links to the development of the information economy at large. The effective functioning of the electronic transaction marketplace and the development of e-commerce depends critically on the development of a secure, trusted and lower-cost means of making payments.
The broad objective of this study is to investigate the future for electronic payments in Australia. In doing so it:
- reviews the changing nature of payments and the emerging role of electronic payments;
- assesses patterns of use of electronic payments by consumers as well as by businesses;
- identifies gaps in electronic payments;
- seeks to identify, what if anything, is acting as a barrier to the adoption of electronic payments;
- assesses the key economic implications of greater use of electronic payments; and
- identifies development pathways for actions that may be taken by business the community and government to encourage greater use of electronic payments in Australia.