Proposed Decommissioning of the Bulk Electronic Clearing System – RBA Risk Assessment | Media Releases

The Reserve Bank of Australia today released its risk assessment into the payments industry’s
proposed decommissioning of the Bulk Electronic Clearing System (BECS). The risk assessment concludes
that industry is yet to arrive at a shared vision of the desired features of account-to-account payments
in Australia and that there has been insufficient industry coordination, planning and certainty regarding
the transition.

BECS is Australia’s primary system for account-to-account payments. Australians rely on BECS for a
wide range of critical payments, including welfare, pension, salary, and bill payments. Given that a
disruption to BECS payments has the potential to cause economic harm, the RBA expects any transition of
these payments onto alternate rails to be orderly, safe and reliable.

The risk assessment makes a set of recommendations, with a number of these being considered as
‘foundational’. Industry should:

• define a vision for the target future state and strategic objectives for account-to-account payments
  in Australia, in collaboration with the Government and the RBA and with due recognition of public
  interest considerations
• comprehensively consider alternative options for achieving that target future state
• once a target future state has been agreed, establish a transition plan that includes appropriate
  mechanisms for coordination and stakeholder engagement.

These recommendations are steps that the RBA expects industry to address with priority and urgency. This
will necessitate some degree of reprioritisation to ensure the intended benefits of any transition in
account-to-account payment rails are achieved and contingencies are appropriately considered. Following
the recent meeting of the RBA’s Payments System Board, Assistant Governor (Financial System) Brad
Jones noted, ‘As a serious disruption to account-to-account payments has the potential to undermine
confidence in the financial system, any change program of this magnitude must be orderly and
well-coordinated. This requires industry to establish a clear vision of the future target state,
carefully weigh options for getting there, and incorporate end user needs and public interest
considerations right from the outset.’

The RBA acknowledges the progress that industry has recently made towards meeting these recommendations.
The RBA will provide ongoing oversight of transition activities, including by conducting assessments of
industry’s implementation of these recommendations. The RBA will also actively support the
modernisation of account-to-account payments by ensuring public interest considerations are reflected in
industry deliberations over the strategic objectives for the account-to-account payments system.

Background

While BECS has been in operation as a highly reliable system for more than 30 years, significant
changes are needed to keep it fit for purpose. Furthermore, alternative payment rails, such as the NPP,
potentially offer benefits for account-to-account payments. As a result, industry announced its intention
to decommission the BECS framework in 2023, identifying June 2030 as the conditional target date.

In its 2023 Strategic Plan for Australia’s Payments System, the Commonwealth Treasury expressed its
support for an industry-led, phased transition away from BECS. The Strategic Plan also
noted the challenges that industry would need to address in migrating bulk payments made by business and
government from BECS, and the need for large business and government users who have embedded BECS into
their processes to be supported.

In her 2023 speech, the Governor Michele Bullock
highlighted several significant challenges that will need to be addressed for the industry to
successfully transition all BECS payments to more modern payment systems, acknowledging that the setting
of a target end date by industry would assist in focusing industry attention, efforts, and planning.

The initial feedback which the RBA had received regarding the risk assessment was shared by Assistant
Governor (Financial System) Brad Jones in his December 2024 speech, who stated that, among other things,
‘there has been insufficient industry coordination, planning and certainty regarding the
transition’, and that ‘establishing a common vision of the features underpinning a desired end
state will be essential if a program of this scale is to succeed’.