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Aligning Systems

Australian Payments Clearing AssociationAnnual Report 2003

ACCC The Australian Competition and ConsumerCommission.

ACDES Australian Cash Distribution and ExchangeSystem. A system for the exchange andsettlement of ‘wholesale’ cash.

APCS Australian Paper Clearing System. A system for the clearing and settlement of paper items.

BECS Bulk Electronic Clearing System. A system for the clearing and settlement of direct entrytransactions.

BSB A number used as a code to identify financialinstitutions in the clearing and exchange of items.

CECS Consumer Electronic Clearing System. A system for the clearing and settlement of ATM and EFTPOS transactions.

CLS Continuous Linked Settlement.

EFTPOS Electronic Funds Transfer at Point of Sale.HVCS High Value Clearing System. A system for the

exchange and settlement of RTGS payments.MICR Magnetic Ink Character Recognition. The form

in which the codeline is produced on chequesand other paper instruments.

RITS Reserve Bank Information and Transfer SystemRTGS Real Time Gross Settlement. Settlement

arrangements in which each payment transaction is settled individually at the time of the transaction.

SWIFT Society for Worldwide Interbank FinancialTelecommunications.

SWIFT/ SWIFT Payment Delivery System. The delivery PDS system used to relay payments from one financial

institution to another in the HVCS.

Glossary

Australian Payments Clearing Association Limited ABN 12 055 136 519

Note: Unless otherwise stated, reference in this report to a ‘year’ is the year ended 30 June.

01 About APCA02 Chairman’s Report03 Year in Review04 APCA’s Position in the Payments System06 Operations06 – APCS07 – BECS08 – CECS09 – HVCS10 – ACDES11 – Cross System12 Advisory Councils14 Payments Statistics15 Industry and Community16 Management17 Corporate Governance18 Board of Directors20 Owner Members and Clearing System MembersIBC Corporate Information

The Australian Payments ClearingAssociation sets, manages and developsregulations, procedures and standardsgoverning payments clearing and settlementwithin Australia.

APCA’s members are banks, buildingsocieties, credit unions and other institutionsand companies participating in APCA’s five payments clearing systems. APCA’smembership is open, inclusive andresponsive to the dynamic paymentsenvironment.

APCA’s rules and technical standardsprovide a framework for efficient andeffective cooperative regulation of thepayments system. By bringing members’payments clearing and settlement systemsinto alignment, efficiencies are producedwhich benefit the wider community.

MissionAPCA’s mission is to achieve and maintaininternational best practice in the operation of the Australian payments clearing system.

ObjectivesAPCA’s role is to manage and develop theAustralian payments clearing system so as to:• preserve the integrity of the system;• identify and control settlement risk;• improve the effectiveness and efficiency

of the system;• ensure principles of equity and

competitive neutrality are applied indetermining participation in the system;

• facilitate coordination of paymentsclearing arrangements among providers of payment services; and

• assist the community to understand thesystem and ensure that public debate is well informed.

‘APCA’s roles work in harmony’Robert Challis – Chairman

Aligning Systems 01

About APCA

APCA’s new constitution came into effect on 17 August 2002. As I referred to in lastyear’s annual report, the new constitutionmakes APCA’s membership boundaries more flexible and inclusive and thereforemore responsive and attuned to the dynamicnature of the payments marketplace.

A progressive review of each clearing system’sregulations is underway to ensure that eachclearing system is modeled on the constitution,particularly in respect of having open andinclusive membership. CECS, ACDES andHVCS are for the most part already in goodshape. Amendments will need to be made to APCS and BECS. Most of the work onAPCS has been done. BECS will follow.

APCA is an industry self-regulatory bodyoperating within Australia’s co-regulatorypayments environment. In this role APCAhas regard to a wide range of stakeholdersand to the community in general in pursuingits objectives. At the same time, APCA is a vehicle used by its members to bringbenefits to them in terms of efficiencies and cost savings in clearing processes.These roles work in harmony because APCA is outward looking and is guided by good corporate governance principles and practices. This would be less likely the case if APCA’s boundaries were rigidand excluded relevant stakeholders.

The twin roles that APCA has were evidentduring the year in the range of projectscompleted, underway and begun.

For example, in the paper clearing system(APCS), we continued to consider andimplement measures to reduce the number of cheques which have to be exchangedphysically for value rather than electronically.Improvements here save costs for APCA’smembers but also allow the speedierclearing, which electronic presentmentbrings, to apply increasingly closer to 100% of cheque deposits.

Within the direct entry system (BECS), an investigation was conducted into thegrowing practice of financial institutioncustomers providing authorities to directlydebit their accounts via the internet and by telephone. Further work is scheduled to consider the worth of guidelines in this area.

A number of important projects areunderway within the clearing systemcovering EFTPOS and ATM interchanges(CECS). Among them, we are continuing to make sound progress in upgrading theencryption standards for the EFTPOS andATM networks to ensure their continuingintegrity into the future as computer powergrows. We have also begun to address theconstruction of standards and rules tofacilitate access to the EFTPOS network.

Importantly across these projects and others,we have invaluable involvement and supportfrom the APCS, BECS and CECS advisorycouncils. Because of the broad focus that theybring, advisory councils are a vital component

of ensuring that APCA fulfils its self-regulatoryrole as well as its more internally focused roleof benefiting its members.

Payments clearing is at the core of thefinancial system and APCA sees that it has a responsibility to provide a level of education and information. We do this through liaison with other industryassociations, through our associate membersand through publications and the website. For the coming year we have allocatedresources to see how we might extend therole APCA plays in education both inside and outside the payments industry.

This has been my fourth year as chairmanand I was pleased to accept an invitation by the board to extend my term for a furthertwo years when my current term expires in October 2003.

I would like to thank all directors who servedon the board during the year, and all thoserepresentatives of APCA’s members and alladvisory council members who contributedtheir time, energy and skills to APCA. I would also like to acknowledge the effortand commitment of APCA’s chief executiveofficer Peter Smith and his team.

Robert N ChallisChairman

Chairman’s Report

02 APCA Annual Report 2003

High Value 0.1%

EFTPOS & Credit Cards52.2%

Direct Entry31.0%

Cheques 16.7%

Proportion of Payments by Number(as at May 2003)

Trends in Type of Payments by Number(as at May 2003)

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99

20

00

20

01

20

02

20

03

20%

40%

60%

80%

100%

Cheques

Direct EntryEFTPOS & Credit Cards

During the year, APCA:

• Put in place the new company constitution.

• Instigated a review of the APCSRegulations to ensure membership is open to all organisations that areengaged in paper clearing.

• Co-ordinated measures to reduce thenumber of cheques failing the electronicpresentment process.

• Held workshops on cheque printer approval procedures.

• Reviewed the emerging practices inBECS with a view to ensuring the currentrules adequately cover direct debitrequests made over the internet.

• Applied for the re-authorisation of CECSand began separately to address thedevelopment of new rules to facilitateaccess to the EFTPOS network.

• Made further good progress in upgradingthe encryption standards for the ATM andEFTPOS networks.

• Commenced a review of the standards for chips on debit cards.

• Developed industry testing strategy and plans to support SWIFTNet FINmigration in HVCS.

• Revamped the company’s website and published user-friendly chequeprinting guidelines.

• Completed a detailed preliminaryinvestigation of payments systemresilience to major disruptions.

• Broadened and deepened the company’srole in assisting members to combatpayments fraud.

• Extended membership to PioneerPermanent Building Society (APCS),Australian National Credit Union (APCS & BECS), CLS Bank International,Fortis Bank S.A./N.V. (HVCS) andSuncorp-Metway Limited (ACDES).

Aligning Systems 03

Year in Review

APCA has a pivotal position in the operation of the Australian payments system. Itsprimary objective since establishment in1992 has been to oversee and manage the development and operation of open,inclusive and competitively neutral paymentsclearing arrangements in Australia. While at the same time, preserving and enhancingthe efficiency and integrity of thesearrangements. APCA’s objectivesencompass the commercial objectives of its members and public policy objectiveswithin Australia’s co-regulatory paymentslandscape. APCA has a track record ofachieving its objectives, of assisting itsmembers in meeting commercial objectivesand at the same time of meeting itsresponsibilities as an industry self-regulator.

The Australian payments system comprisesthe infrastructure and associatedarrangements which support the initiationand delivery of payments messages and transfer of funds from one account to another. It is underpinned by effective and efficient payments clearing andsettlement arrangements. APCA has specific responsibility for rules governing the following five key parts of paymentsclearing and settlement:• Clearing and settlement of cheques and

other paper items through the AustralianPaper Clearing System (APCS);

• Clearing and settlement of direct entrypayments through the Bulk ElectronicClearing System (BECS);

• Clearing and settlement of ATM and EFTPOS debit card transactionsthrough the Consumer Electronic Clearing System (CECS);

• Clearing and settlement of high valuepayments through the High Value Clearing System (HVCS); and

• Exchange and settlement of wholesalecash through the Australian CashDistribution and Exchange System(ACDES).

Open and Inclusive Membership APCA is an industry owned associationlimited by guarantee. Owner and clearingsystem members of the company currentlycomprise 79 institutions and companies,which operate within Australia.

Owner members of the company appointmembers of the board. The board currentlycomprises the chairman, ten non-executivedirectors and the chief executive officer.

In accordance with the company’sconstitution, the board is required to establish a management committee for each of APCA’s clearing systems. Acting under delegated authority from the board, management committees areresponsible for the efficient operation and management of each clearing systemand the development, implementation andoversight of governance and procedural rules. Members of a management committeeare appointed by participating members of the clearing system concerned.

Following the introduction of APCA’s newconstitution on 17 August 2002, rights to appoint directors and managementcommittee members (and accompanyingvoting entitlements) are largely determinedon the basis of clearing system volumesrather than institutional status. Rights of representation at the board have beenseparately retained by credit unions andbuilding societies, as have their rights of representation on the managementcommittees of APCS, BECS, CECS and HVCS provided they participate in thesesystems. Credit unions and building societieshave these rights largely in recognition of their long standing role in providingpayments services. The Reserve Bank has also retained rights of representation at the board and on all managementcommittees, in recognition of its regulatoryrole in the payments system.

APCA’s Position in the Payments System


Peter Smith – Chief Executive Officer

ACDESHVCSCECSBECSAPCS

Corporate Structure

Board of DirectorsBoard of Directors

Management CommitteesManagement Committees

APCS Advisory Council

APCS Participating Members

BECS Advisory Council

BECS Participating Members

CECS Advisory Council

CECS Members HVCS Participating Members ACDES Members

Owner Members

Chief Executive Officer & Management

Associate Members

Categories of MembershipOwner MembersOwner members must be constitutionalcorporations within the meaning of thePayment Systems and Netting Act 1998and must be either a participant, or eligibleto participate, in at least one of APCA’sclearing systems or an industry associationrepresentative of such participants. (The existing owner member industryassociations are Credit Union ServicesCorporation Limited and CreditLink ServicesLtd, which together represent most creditunions, and Australian Settlements Limited which represents all building societies.)

Participating MembersParticipating members (or clearing systemmembers) are institutions that participate on a day-to-day operational basis in one or more of APCA’s clearing systems.Participating members need not be ownermembers but are encouraged to join in that capacity.

Separate participating membership exists for each clearing system, so that membershipis divided into five classes based on APCA’sfive clearing systems. Within each of thesefive classes there may be different categoriesof participating membership depending on whether a member clears and settlesdirectly or indirectly. A participating member’srights and obligations on clearing andsettling payment instructions are dependenton its particular category of membership.Each clearing system has rules in placesetting out these rights and obligations, and detailing operating procedures requiredin the system.

Advisory Council MembersAdvisory councils comprise organisations(appointed by the board for a one year term) that participate in, or have an interestin, payments instruments or transfers relatedto a particular clearing system (but areotherwise not entitled to join that system as a participating member).

Councils have been established for APCS,BECS and CECS. Advisory councils werenot established for HVCS and ACDES as it was determined that there was an insufficient level of interest.

Associate MembersAssociate members are individuals ororganisations interested in payments systemmatters that wish to be kept informed of developments within APCA (and theAustralian payments system more generally).No specific membership criteria exist, but an associate member may not be an ownermember or a participating member.

Aligning Systems 05


APCS governs the exchange andsettlement of cheques and other paper items.

Cheques have continued to gradually declineat a rate that reflects a partial correlationwith the growth in direct entry transactions.This year, the number of cheque transactionsfell by 8% while the number of direct entrytransactions increased by 11%.

Review of APCS Regulations APCA is reviewing the APCS regulations to bring them into alignment with the newconstitution and to ensure membership of the system is open to all organisationsthat issue or collect cheques.

Reducing ‘For-value’ ExchangesMeasures have progressively been put inplace to reduce the high number of chequesfailing the electronic presentment processand which, as a result, have to be physicallyexchanged ‘for-value’. For example, newprocedures have been introduced to ensurefinancial institutions manually key in theMICR codeline details on damaged cheques,wherever possible, so that these chequescan then continue through the electronicpresentment process.

All told the measures put in place since workbegan in 2001 have significantly reduced ‘for-value’ exchanges. When the projectcommenced in 2001 there were more than 70,000 paper items, mainly cheques,exchanged ‘for-value’ each day. This numberhas fallen by some 90% to 7,000, savingcost for members and allowing speedierclearing for the cheques involved.

Improving Cheque Printing As part of a strategy to combat fraud and to improve processing efficiency, APCAconsidered introducing a scheme to improvecheque quality by accrediting chequeprinters, along the line of a similar scheme in the United Kingdom. However a costbenefit analysis of the proposed schemeshowed that it would be less effective thanan alternative proposal to improve chequequality directly by extending APCA’s chequestandards. In part this was because chequeprinting in Australia is less concentratedthan in the UK. The focus now is onassessing the potential of introducing new standards applying, for example, to such things as toner adhesion and securityfeatures and on improving communication with the banking and printing community in relation to cheque standards.

Information SharingBefore cheques are issued they need toundergo approval processes as set out inAPCA Publications 11.5 and 3.3. To assistoperations staff of APCS members and theprinting industry in maintaining knowledge of these processes, workshops were held in Sydney, Melbourne, Brisbane and Perthduring the third quarter of 2002.

A new set of cheque printing guidelines,offering a non-technical guide to chequedesign and printing, were also developed and published on APCA’s website. Theseguidelines are particularly designed to assistcompanies that print their own cheques ratherthan using the services of a printing company.

Countering FraudStandards for new cheque designs werechanged during the year to include a‘warning band’. The warning band will list the security features of the cheque, forexample, the incorporation of a watermark.This will allow the recipient of a cheque to verify that the feature described in thewarning band is in fact present, which, in turn, offers increased assurance that the cheque is not counterfeit.

Financial institution cheques (including bankcheques) are not as good as cash but theyare used in commerce with a high degree of confidence. To help preserve thatconfidence, and counter fraud, APCA has established a register on its website of contact points at financial institutions.Receivers of financial institution chequescan use these contact points to check withthe issuing institution whether a particularcheque has been reported lost or stolen or whether it might be counterfeit.

Countering fraud effectively means stayingahead of the fraudsters. Under the auspicesof APCA’s fraud committee, the APCSmanagement committee has established a working group to look in detail at the lifecycle of a cheque, to identify the scope forfraud, the measures currently in place tocounter fraud and the feasibility and worthof enhancing or adding to those measures.

New Fallback ProceduresFallback procedures assist members and add to the integrity of the system by ensuring so far as possible that clearingcontinues if for one reason or another the primary means of exchanging filesbecomes inoperable.

New fallback procedures were developedand agreed. Members are scheduled toimplement the procedures later in 2003. The new procedures require members toupgrade their fallback arrangements fromphysical means (eg. magnetic tape) to anelectronic communications method. Theminimum fallback requirement will be theexchange of files by email. Members arerequired to conduct annual bilateral testingof their fallback arrangements.

OperationsAustralian Paper Clearing System

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03

3.2

3.1

2.7

2.5

2.3

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20

03

12.3

9.7

8.3

7.6

7.2

Average Number of Cheque Transactions per Day(in millions)

Average Value of Cheques per Day(in $ billions)

Aligning Systems 07

BECS governs the exchange andsettlement of direct entry debit andcredit payments.

For the most part these payments are lowvalue and recurring. For example, direct creditincludes wages and social security paymentsand direct debit premiums of various kinds.BECS members exchange payments in bulk.One of the features of direct entry is itsrelative low cost because volumes are high,payments are batched and the system hasretained simplicity of structure.

Direct entry payments have shownconsistently strong growth. This year, thenumber of organisations using the directentry debit system increased by 15% andthe number of direct debit transactions grew 13%. The number of direct entry credit system users grew by 10%, as did the number of direct credit transactions.

Reviewing RegulationsThe review of BECS Regulations to bring them into alignment with the newconstitution was put on hold pending the completion of the review of the APCSRegulations. The intention is to begin the review in the coming year.

Emerging PracticesAPCA is reviewing emerging practices in the direct debit system. Of particular focus is the practice of lodging direct debit request(DDR) forms over the internet and the needto ensure this is done securely.

Generally, organisations using the systemobtain their customers’ direct debit authoritiesin written form as a paper DDR. The reviewfound that some are also offering the internetand telephone as alternative means for theircustomers to lodge DDRs. As this is oftenconvenient, it is likely to grow and becomemore widespread.

While there is no evidence of misuse at thisstage, particularly identity fraud, considerationis being given to the development of customeridentification guidelines. The objective is toensure that the risk of fraudulent DDRs doesnot increase as electronic means of lodgingDDRs becomes more prevalent.

New Fallback ProceduresAs in APCS, APCA developed new fallbackprocedures in BECS to enhance the integrityof the system and, at the same time, to assistmembers experiencing a processing disruption.The new procedures require members to upgrade their fallback arrangements, from physical medium (eg. magnetic tape) to an electronic communications method. This may, for example, be a leased line or it may as a minimum consist of theexchange of files by email.

Phased implementation of the fallbackarrangements has continued during the year and is scheduled for completion by late 2003. Members are required to conductannual bilateral testing of their fallbackarrangements to ensure their continuingcurrency.

OperationsBulk Electronic Clearing System

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03

103,

244

124,

638

142,

850

158,

955

175,

295

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20

01

20

02

20

03

4,49

9 5,7

26

7,27

2 8,82

0 10,1

44

Number of Direct Entry Credit Users(as at 30 June 2003)

Number of Direct Entry Debit Users(as at 30 June 2003)

‘Payments clearing is at thecore of the financial system’


CECS is the system governing the exchange of ATM and EFTPOS transactions.

Growth in the number and value of EFTPOStransactions and ATM withdrawals hasleveled off somewhat in the last year havingexperienced strong growth in recent years.

The number of EFTPOS terminals (433,640as at end June 2003) increased over theyear in line with recent trends. The figurereported for ATMs (21,603) includes all third party terminals for the first time andtherefore depicts stronger growth thanwould have actually occurred.

Re-authorisation of the SystemAPCA lodged an application to the ACCCfor re-authorisation of the system. Theexisting authorisation, determined in August2000, is due to expire in September 2003.As the circumstances have not changedmaterially since the system was authorised,the re-authorisation process should proceedsmoothly.

New EFTPOS Access Rules InvestigatedAPCA commenced investigating the potentialfor developing rules to facilitate access to the EFTPOS network by new members. A working group, drawn from CECS memberstogether with representatives from the CECSAdvisory Council held workshop meetings in April and May 2003. Already out of thisinvestigation it has been decided to expandthe CECS Manual to ensure that newentrants have a single body of technicalstandards to meet as against a multiplicity of standards. Alongside this work, APCA is giving priority in the coming year todeveloping practicable and equitable EFTPOS access rules. The precise nature of the outcome is uncertain at this stage.More clarity will come as the issues areworked through.

New Encryption StandardsExcellent progress was made on upgradingthe encryption standards for the ATM andEFTPOS networks to ensure their integrityinto the future. The new standard mandatesthe use of double length keys and theencryption of transaction data using tripleDES encryption. When the project iscomplete, all ATM and EFTPOS terminalsand all interchange communication links willconform to this new standard. The projecthas a progressive implementation date andis targeting the end of 2005 for completion.

Device Evaluation FacilityCurrently acquirers evaluate and certifydevices before deploying them. Centralisedevaluation would avoid duplication andpotentially bring efficiencies and cost-savingsto acquirers and to device suppliers. APCAis assessing the feasibility of establishingcentralised evaluation.

Chip (EMV) Cards StandardsEMV (from Europay, MasterCard and Visa) is a specification for interaction betweenchip cards and the terminals. Assessmentwas made of the potential impact ofintroducing EMV chip based debit cards in the current ATM/EFTPOS environment. It was found that conversion to chip cardswould best be progressed in two phases. In the first phase the objective is to ensurethat chip cards provide the same functionalityas do magnetic stripe cards in terms ofmessage formats and content. In the secondphase the impact on debit cards of the widerfunctionality of chip cards will be assessed.

New Program Management ApproachA number of the projects mentioned above,and others planned for the coming year, haveinterdependencies. To provide consistencyand improve coordination across projects, a CECS Program Management SteeringCommittee was established in June 2003.

OperationsConsumer Electronic Clearing System

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20

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10,0

89

11,8

19

13,2

89 16,3

98

21,6

03

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20

01

20

02

20

03

278,

238

333,

739

375,

883

415,

167

433,

640

Number of ATM Terminals(as at 30 June 2003)

Number of EFTPOS Terminals(as at 30 June 2003)

Growth in the number and value of EFTPOStransactions and ATM withdrawals has leveledoff somewhat in the last year, havingexperienced strong growth in recent years.

Aligning Systems 09

HVCS encompasses and governs theexchange of SWIFT PDS payments.

Each payment is settled individually on a real time gross settlement (RTGS) basisusing the Reserve Bank Information andTransfer System (RITS).

HVCS had another year of growth in bothpayment volumes and payment values. Thetotal number of transactions within HVCSfor the year increased by close to 10%, to just over 4.5 million and the total value of transactions by more than 7% to$22,285 billion. The average value of atransaction was approximately $5 million.

Continuous Linked Settlement (CLS)CLS is a multi-currency arrangement withinwhich both parts of a foreign exchangetransaction are settled simultaneously acrossCLS Bank accounts. This eliminates foreignexchange settlement risk for such payments.

Last year’s report explained the preparationsmade in HVCS to extend membership to CLS Bank. CLS Bank commencedoperations in HVCS in September 2002.CLS transactions have been increasingsteadily. In June 2003 they accounted formore than 3% of the value of transactionswithin HVCS.

SWIFTNet FIN MigrationDuring the year, SWIFT announced aprogram to migrate FIN messages from thecurrent X.25 network to its new IP networkSWIFTNet. SWIFTNet is SWIFT’s IP-basedmessaging protocol for the communicationof financial information and transaction data.

APCA established a joint working group withthe Reserve Bank to ensure a coordinatedapproach to Australia’s migration efforts. The working group has developed a testingstrategy, covering both Australian andinternational based connections to SWIFT, to provide guidance to HVCS members.Migration for Australian based connectionscommenced in July 2003 and is scheduledto conclude by the end of October 2003.Overseas-based connections will have until October 2004 to complete migration.

OperationsHigh Value Clearing System

The total number of transactions withinHVCS for the year increased by closeto 10%, to just over 4.5 million.


ACDES – APCA’s new clearing system – was established in December 2001 to govern the exchange anddistribution of wholesale cash.

Focus has been on efficiency gains duringthe system’s first full year of operation.

New MemberThe system is open to all financialinstitutions and companies participating in cash distribution activities of the kindencompassed by ACDES rules. Suncorp-Metway became the first new member to join the system’s initial members, when its membership application was approved in December 2002.

Reducing Cash HoldingsPhysically moving cash once bought or soldtakes time and is demanding logistically.Because of this, members hold precautionarybuffer stocks of both notes and coin. A principle objective within ACDES is tominimise the overall quantity of cash held as a buffer – because of its carry cost –while at the same time ensuring that theright amounts and denominations of cashare in the right place at the right time.

During the year, APCA investigated possibleways that the overall holding of notes mightbe reduced while ensuring that cashdemands are met. In addition to assessingthe current model for managing cashholdings, based around separately ownedcash pools, a number of possible alternativearrangements were assessed based aroundmanaging cash as one logical pool. It wasfound that while efficiencies could beachieved in a number of ways, the mostpractical and cost-effective was to fine-tunethe current model. Members have establishedimproved communication and informationsharing processes. The outcome has been a better understanding of note usage trends,which has contributed to more effective note distribution and a reduction in overallnote holdings.

Achieving similar efficiencies in relation to the distribution of coin will be a priority for ACDES in the coming year. This will be particularly challenging due to thedifferent demands for coin in differentgeographic regions as well as the logisticsof moving coin.

Improving ProceduresACDES procedures cover a range of mattersto do with the storage, handling, distributionand exchange of cash. Documentationrequirements, hours of operation, the timing and process for settlement betweenmembers, the quality of notes, the packagingof notes and coin, allocating liability for latedelivery, methods for dealing with cashdiscrepancies, audit requirements and cash movements are all covered.

Ongoing work is occurring to improve and streamline the procedures to ensurethey provide a best practice framework. This also includes consideration of fallback arrangements to specifically deal with disruptions to trading, settling and moving cash.

OperationsAustralian Cash Distribution and Exchange System

Aligning Systems 11

Payments Fraud PreventionIdentifying and preventing fraud in APCA’spayment systems is the job of APCA’s fraudcommittee. Currently, it is giving particularfocus to cheque and debit card fraud. Twofraud risk assessment working groups havebeen established to carry forward the work.

Potential fraud risks and the effectiveness of existing mitigation measures at eachstage in the ‘life cycle’ of a cheque and a debit card are being identified andassessed to determine the likelihood and impact of the fraud occurring.

This work will assist in ensuring thatindustry-based standards and proceduresplay their part in containing, countering and preventing fraud.

ResilienceAPCA made some preliminary investigationsinto members’ payments clearingpreparedness in the event of a majordisruption occurring through accident or deliberate act. The investigations found that there was a high degree of preparednessfor an event causing a short-lived singlepoint of failure of payments clearingoperations. However, concentration risk and external dependencies make thesituation more problematic for widespreadand/or prolonged disruptions. Thisundoubtedly applies also to other industrysectors. Because of this, the AttorneyGeneral’s Department has established

a cross industry ‘Trusted Information SharingNetwork for Critical Infrastructure Protection’forum. APCA is represented on the bankingand finance group operating within thisforum. The group’s role is to considergeneric threats to critical banking andfinance infrastructure and to formulatepreventative measures.

Failure To Settle (FTS) APCA intended to construct new FTS rulesthis year but consultation and engagementwith the Reserve Bank on the form of therules took longer than anticipated. However,the outcome has provided a reasonabledegree of confidence that the work can be brought to completion this coming year.

The important role of FTS rules is to ensurethat settlement can occur following an instance of default and that the paymentssystem can continue to operate fairlyseamlessly.

The new FTS rules will be built aroundextracting the defaulter’s position from the multilateral deferred net settlementfigures and proceeding in a timely way with a revised settlement without thedefaulter. Each survivor will settle bilaterallywith the defaulter outside of the revisedmultilateral settlement. Deemed dishonour of cheques drawn on the defaulter and the ability to cross system net will assist in protecting survivors’ positions andpreventing contagion.

Once FTS rules for APCS, BECS, CECS and HVCS have been finalised they will besubmitted to the Reserve Bank for approvalunder the Payment Systems and Netting Act.

StatisticsAPCA has been collecting statistics onpayments activities (see table on page 14)since 1994. These figures are compiled once a year and present a picture ofpayments activities during the month of May. Over the years, this has developed into a useful time-series that gives a general picture of changes in payments trend in Australia.

In July 2003, the Reserve Bank released its monthly collection of data on retailpayments activities. Although there are some differences in coverage, the ReserveBank data overlap to a large extent thosecollected by APCA. In addition, the ReserveBank data is available monthly. In the coming year, APCA will review its statisticalcollection to ensure it complements ratherthan duplicates data collected by theReserve Bank.

OperationsCross System


‘Advisory councils bring a broad focus’

The advisory councils were established inlate 1999 to widen consultation by takinginto account the views of organisations witha significant role in each applicable clearingsystem, but which did not clear and settlepayments in their own right.

The input of the different perspectives and expertise that advisory councils bringstrengthens the deliberative and decision-making processes in APCA. Decision-makingis better informed, more attuned to theinterests of all clearing system stakeholders,and more attuned to the changing paymentssystem environment.

Since their inception, advisory councils haveprogressively operated in a more integratedfashion with management committees.APCA has measured progress in thisrespect by conducting an assessmentexercise over the past two years, the mostrecent of these being during the thirdquarter of 2002.

The latest assessment found that across the three clearing systems in which advisorycouncils had been established – (APCS,BECS & CECS), both the advisory councils’and management committees’ satisfactionwith the councils’ overall performance hadsignificantly increased compared with theyear before. While this was a pleasing result,it raised the issue of what more could bedone to raise the bar in the coming year.

APCA conducted an internal review toassess whether the current model continuesto be the most appropriate and whatimprovements might be made.

The review found that the current modelcontinues to add good value but that a number of refinements would beworthwhile. These included holding a jointsession of the advisory councils and theirmanagement committees once each year to provide an opportunity to set clearobjectives and priorities for the coming year.

Joint sessions were held during May andJune 2003 to coincide with each clearingsystem’s operational planning process. A key component of the joint sessions wasidentifying how the advisory councils couldparticipate in projects that were planned for the coming financial year. The sessions,which proved to be a valuable exercise, will be held annually.

Participation and AdviceCouncil members continued to participate in,and add value to, a number of projects beingconducted by the management committees,many of which had been commenced in partthrough the initiative of the councils.

The APCS Advisory Council proposed thedevelopment of a fraud ‘map’ that traces the lifecycle of a cheque. This will assist in assessing the likelihood of fraud at eachstage of the process (cheque printing,personalisation of the cheque, delivery of cheque books, issuance and negotiation of cheques and so on) and developingmitigation strategies. The council isrepresented on the working group broughtinto play to focus on measures to countercheque fraud.

The BECS Advisory Council supported the investigation of current and emergingpractices in direct debit, including the reviewof the rules and practices concerning on-linedirect debit requests over the internet andby telephone. The council is represented onthe working group progressing the review.

The CECS Advisory Council highlighted the need for consistency and coordinationacross projects involving similar timeframesand deliverables. In part response, themanagement committee established aprogram steering committee to oversee all new CECS projects. The council has also had a close interest and involvement in the project within CECS to establish a central device evaluation facility.

In general, advisory council representativeswill participate in working groups across a number of projects included in the APCS,BECS and CECS operational plans for thecoming year.

Advisory Councils

Aligning Systems 13

Council Members

\ APCS Advisory Council \ BECS Advisory Council \ CECS Advisory Council

Barbara Lindorff Prismac Systems Christine Morris CITEC Michael Aaron IBM (Chair) (Chair) (Chair)

George Pantic Australia Post Keith Finkelde ASFA Tim Wildash ATM Solutions

Harry Asquith Australian Taxation Office Harry Asquith Australian Taxation Office Daniel Vorster Caltex Australia

Michael Israel Carreker Corporation Brian White Cardlink Services Richard Brooks Council of Small BusinessOrganisations of Australia

Glenn Tattersall Certegy Australia Rod Tweddle Cashcard Australia Brett Thompson Eracom

Tony Kurtz EDS Lynette Seeto Centrelink Erik Andersen First Data Resources

Robert Chesney Lithographic Institute Salil Narayanan Global Technology Warren Scheuber Hypercom

Marlene Mills Security Printers’ Association Keith Hallett IFSA Peter Wardrop Intellect Australia

Ken Carville TeleCheck Australia John Finnin MYOB Australia Tem Elliott Keycorp

Gregory King Travelex Bruce Quick Pegasystems Wayne Jorgensen MasterCard

Alasdair Unisys Australia Gary Bigelow Prismac Systems Anne Henry NCR Drummond

Mike Box Unisys Payments Services Tony Nguyen Secure e-Solutions Anne Ferris Shell Australia

Arthur Frost Xplor Asia Pacific Mark Bezzina Standards Australia Brian Saville Visa

Penny Winn Woolworths

01 02 03

01 Barbara Lindorff02 Christine Morris03 Michael Aaron


Payments Statistics

Source 1999 2000 2001 2002 2003

Number of payment transactions and ATM withdrawalsBusiness day average for month of May – millions of items Cheques APCA 3.2 3.1 2.7 2.5 2.3Direct entry credits APCA 2.1 2.3 2.7 2.7(b) 2.9Direct entry debits APCA 0.8 0.9 1.1 1.2(b) 1.3

Monthly total for May – millions of itemsATM withdrawals APCA 41.9 48.4 64.0 65.4 62.9EFTPOS (a) RBA 48.6 52.0 57.5 69.4(b) 72.5Credit cards (a) RBA 42.9 61.9(b) 67.8(b) 84.1(b) 85.6

Value of payment transactions and ATM withdrawalsBusiness day average for month of May – $ billionsCheques APCA 12.3 9.7 8.3 7.6(b) 7.2Direct entry credits APCA 4.9(b) 6.5(b) 9.1(b) 10.3(b) 11.2Direct entry debits APCA 3.7(b) 5.0(b) 7.0(b) 8.1(b) 8.6HVCS transactions (c) RBA 65.5(d) 72.6(d) 83.2(d) 80.9(d) 85.7(d)

Monthly total for May – $ billionsATM withdrawals APCA 6.8 7.3 9.4 11.0 11.1EFTPOS (a) RBA 2.8 3.1 3.5 4.3(b) 3.9Credit cards (a) RBA 4.3 7.0(b) 8.0(b) 11.2(b) 11.7

Number of accounts/cardsMonthly total as at end of May in millions Customer payment accounts APCA 26.9 27.1 32.7 28.1 29.4Debit cards APCA 15.7 17.8 19.4 19.7 20.6Credit & multifunction cards APCA 12.1 13.2 15.6 16.7 18.5

Number of ATM and EFTPOS terminalsAs at end of JuneATMs (e) APCA 10,089 11,819 13,289 16,398 21,603EFTPOS (e) APCA 278,238 333,739 375,883 415,167 433,640

Notes(a) Figures for 2003 and those indicated as ‘revised’ were taken from figures published in the July 2003 issue of the Reserve Bank

of Australia Bulletin Table C1 and Table C2 (EFTPOS purchases). Other figures are from earlier issues of the Bulletin but may not be comparable with those published in July 2003. See Explanatory Notes in Reserve Bank Bulletin for definitions and coverage.

(b) These figures have been revised.(c) HVCS figures are values exchanged and do not include ‘own items’ (ie intra-bank items). Note also that a full picture of RTGS transactions

would require HVCS transactions to be supplemented by Austraclear and RITS transactions that are not captured in these figures.(d) From Reserve Bank figures showing Real-time Gross Settlement Statistics each month, (Table C.4 of the Reserve Bank of Australia

Bulletin). APCA HVCS transactions figures are taken from the SWIFT PDS column of Table C.4.(e) Figures for 2003 include limited service terminals and white label terminals. EFTPOS terminals prior to 2003 have been adjusted

to include limited service terminals and white label terminals. ATM terminals prior to 2003 have been adjusted to include limited service terminals only, so there is a break in the ATM figures between 2002 and 2003.

Industry IssuesFraud is very much on the public agendaand on APCA’s agenda. APCA participatesin industry wide efforts to combat paymentsfraud by taking an active role in industryassociations and other wider forumsfocussed on fraud prevention.

APCA is a member of the Australian Bankers’Association’s (ABA’s) Fraud Taskforce. This taskforce has identified skimming, stolenidentity and internet fraud as particular risksfacing financial institutions and work is beingundertaken to mitigate these risks.

APCA took part in the ATMIA (ATM IndustryAssociation Australasia) meeting to considerATM related frauds. Participants agreed thatthere was a need for vigilant self-regulationof the ATM industry to maintain consumerconfidence in ATMs.

APCA representatives (together withrepresentatives from industry and governmentagencies) met with Senator Chris Ellison,Minister for Justice & Customs to considerinitiatives to deal with card skimming andidentity fraud. A national approach to the improved collection, analysis anddissemination of intelligence on skimmingand associated frauds and the developmentof further intelligence links between industryand law enforcement was supported by themeeting. APCA agreed to share paymentsfraud data and expects more initiatives toflow out of this forum in the year ahead.

Industry RepresentationAPCA participates in a number of StandardsAustralia and ISO working groups andcommittees developing technical standards. • Standards Australia Committee IT/5,

developing standards for financialtransaction systems.

• Standards Australia Working GroupIT/5/4, developing standards forauthentication and security.

• Standards Australia Committee IT/5/3,developing standards for message formats.

• ISO/TC68/SC6/Working Group 6,developing standards for security in retail banking.

• ISO/TC68/SC6/Working Group 11,developing international standards forbanking and related financial services inparticular triple data encryption algorithms.

Keeping our Community InformedInteracting with stakeholders outside ofAPCA’s members is part of APCA’s role.Management meets regularly with industrybodies and associations and participates in external conferences and other forumsboth in Australia and overseas.

A key focus for APCA is ensuring thatstakeholders are kept informed throughcommunications and education initiatives.APCA holds information sessions andworkshops on industry related matters.Associate member briefing sessions areheld twice yearly to provide updates oncurrent industry activities and projects.

The quarterly publication Payments Monitorand member newsletters are produced toinform members and interested parties ofpayments clearing developments. This yearAPCA published cheque printing guidelinesoffering a non-technical introduction to thedesign, printing and quality control standardsassociated with the production of cheques.

During the coming year, consideration will be given to how APCA’s education activitiesmight be extended both inside and outsidethe payments industry.

WebsiteThe APCA website is often the first port of call for those wanting to know more. It provides comprehensive information on the payments system and featurespublications, regulations and procedures,press releases and cheque printinginformation.

During the year, the website was revampedto make it more informative and easier to use. This included an extensive review of the content and a new look for the site. A new search facility has been incorporatedin the site to assist in accessing specificinformation quickly.

‘APCA is outward looking’

Aligning Systems 15

Industry and Community

Management


Chief Executive Officer

Organisational Structure

Board of DirectorsBoard of Directors

Peter Smith

Phil TimmsIda Turner

Corporate Affairs

Stephen HallidayRob Cirotto Rhonda HunterHayley Lock Trish McGinness

Secretariat & Member Services,Information Management

Stephen HillsKimberley Chan

Legal Services

Oksana DlougatchGavin BollardJane HendersonKaren LeeRebecca Silcock

Financial Control, IT Support & Administration

Michael ForeyAllison KeoghDavid LeongAngelina MauriceJacqueline MellorSuzi MildernDavid Ryan

Project Management & Operations

Management at APCA is geared toestablishing, amending and maintainingclearing system rules, to managing operationsand projects, and to interacting with andinforming a wide set of stakeholders and the community as a whole. As an associationAPCA works through committees of itsmembers, supported by management. In addition to the board, five managementcommittees and three advisory councils,more than thirty committees, sub-committeesand working groups were active during theyear. In the order of thirty projects of variouskinds and sizes across all clearing systemswere on foot during the year.

The objective of management is to retain itsleanness and to contain costs by continualimprovements to systems and ways of doingthings while at the same time providing a highquality service and ensuring the companymeets its corporate compliance obligations.

Enhancing Project ManagementAPCA has a strong track record in managingindustry projects. One of the keys to this is continually reviewing the methodologyemployed to ensure it remains current and

appropriate. The interdependencies of anumber of current projects suggested that amore formalised approach to accommodatingthis interdependence would be beneficial.

This new approach involves appointing a program steering committee to overseethe progress of projects, to address projectrisk and issues, and to ensure a level ofcoordination between projects, particularlywhere there are interdependencies. It wasfirst put into effect in June 2003 with theestablishment of a program managementsteering committee in CECS. Its applicabilityto other clearing systems will be assessed in the coming year.

Improving Risk ManagementIntegral to APCA’s project managementmethodology is managing risk. Bringing it into closer accordance with AustralianStandard AS/NZS 4360:1999, theframework applied to managing risk wasfurther developed. This framework has beenapplied to the management of risks acrossprojects and also to the analysis of fraudrisks in each clearing system. It is, as well,being applied to the management of internal company risks.

A comprehensive review is underway of thecompany’s internal risk management policiesand procedures to ensure they are adequateand to put in place additional measures ifappropriate. Already out of this review it hasbeen decided to carry out an annual audit of APCA’s IT procedures and systems and to put in place ongoing cover for the keypositions of IT manager and financialcontroller.

Corporate ComplianceA committee comprising senior managementfrom the company’s legal, finance, andmember services areas oversee compliancematters. Business practices are regularlyreviewed to ensure compliance with legalobligations and company policies.

The Board of DirectorsThe board is responsible for setting thecompany’s strategic direction and forcorporate governance matters. The boardcomprises an independent chairmanappointed by directors, the chief executiveofficer and non-executive directorsappointed by APCA owner members.

The rights of APCA’s owner members to appoint directors are set out in thecompany’s constitution. The term of each of the non-executive directors expires everysecond year following their appointment.Each non-executive director, other than the chairman, is a nominee director.

Chairman of the BoardThe chairman is a non-voting director andholds office for two years from the date of appointment. The current chairman, Mr R N Challis, has been appointed to office until 21 October 2005.

Chief Executive Officer (CEO)The CEO is a board-appointed, non-voting,executive director. The CEO manages thecompany’s affairs under the broad guidanceof the board.

The board determines the CEO’sresponsibilities. The board, in consultationwith the CEO, agrees the CEO’s goals foreach year. The CEO’s performance againstthese goals is assessed on an annual basisby the board.

Board CommitteesManagement committees, which supervisethe company’s five clearing systems, arecommittees of the board. They exercisepowers delegated by the board.

The board has also established two otherpermanent committees. These are theFinance and Audit Committee and theRemuneration Committee. The board is also empowered to establish othercommittees as it sees fit to assist inmanaging the company’s affairs. At presentit has established a fraud committee and a committee to deal with implementing new clearing system failure to settle rules.

Finance and Audit CommitteeThe Finance and Audit Committeecomprises a number of non-executivedirectors and the CEO.

The Finance and Audit Committee’s primaryfunctions are to review the company’sinternal financial practices and audits’ results, monitor the effectiveness of thecompany’s financial practices and controlsand administrative policies, monitor variousrisk exposures and statutory compliancematters, and review the company’s budgetand monitor expenditure against it.

Remuneration CommitteeThe Remuneration Committee’sresponsibilities are to establish remunerationpolicies and practices for the companygenerally and to recommend remunerationlevels and contractual arrangements for the CEO. The Committee comprises thechairman and the members of the Financeand Audit Committee.

Strategy and RiskThe board approves annually the company’sbudget and operational plan, allowing it tomonitor the strategic direction the companyis taking and to evaluate operational risk andensure such risk is identified and effectivelymanaged. In addition to the annual financialaudit, the company has an annual externalextended audit to test adherence toaccounting policies. The board reviewsreports of both audits.

Codes of ConductAll directors, management committeemembers and senior executive staff mustcomply with a Directors’ and Officers’ Codeof Conduct. The Code was developed usinga model from the Australian Institute ofCompany Directors.

Additionally, all APCA staff are required to adhere to a code of conduct which covers such matters as confidentiality,conflict of interest and standards ofbehaviour in business dealings.

Financial StatementsThe company’s financial statements arepublished separately from its annual report.Remuneration of the chairman, the chiefexecutive officer and senior executives, isdisclosed in the usual manner in the notesto the financial statements.

Aligning Systems 17

Corporate Governance

The names of APCA directors in office at the date of this report are set out below, together with particulars of theirqualifications, experience and specialresponsibilities.

Board ChangesAll non-executive directors resigned andwere reappointed, in accordance with the terms of the new constitution, when it came into effect on 17 August 2002.

There were a number of changes to theboard of directors during the year. Mr SteveBryant joined the board in November 2002,following the resignation of Mr Donald Gregg.Mr David Ingham became a director inJanuary 2003 following the resignation of Mr Mark Genovese. Mr Chris Campbelljoined the board in April 2003, replacing Mr Damian Banks.

Mr R N Challis Dip Bank, FAIB, ABINZChairman (Non-executive director) Over forty years banking experience with the Australia and New Zealand BankingGroup Limited. Retired in 1997, havingoccupied a number of general managerpositions and directorships on several ANZ subsidiary companies. Chairman ofAustraclear Limited 1990 –1994. Appointedas a director and chairman of the companyin October 1999. Chairman of theRemuneration Committee.

Mr G L Bebbington BE(Hons)(Non-executive director)Head of Payments Policy, National AustraliaBank. Over 20 years experience in financialservices in business and technology related roles as both a senior executive and internal/external consultant. Currently a director and chairman of the BankcardAssociation of Australia. He is also a director of BPAY Pty Ltd. Appointed by National Australia Bank as a director in May 2002. Chairman, ManagementCommittee of the Australian CashDistribution and Exchange System.

Mr S P Bryant(Non-executive director) General Manager, Sales and ServiceSupport, St. George Bank Limited. Overtwenty years experience in the bankingindustry including branch banking,operations and strategy. Appointed by St. George Bank Limited as a director in November 2002. Member of Finance and Audit Committee and the Remuneration Committee.

Mr C G Campbell BEc, MBus(Finance)(Non-executive director)Senior Manager, Industry, Westpac Banking Corporation. Over 10 yearsexperience in banking and economics,including payments policy, productmanagement and related areas. Currentlyalternate director of Cardlink Services Ltd and of BPAY Pty Ltd.

Appointed by Westpac Banking Corporationas a director in April 2003. Chairman,Management Committee of the AustralianPaper Clearing System. Member of theManagement Committee of the BulkElectronic Clearing System, the ManagementCommittee of the Consumer ElectronicClearing System and the ManagementCommittee of the High Value Clearing System.

Ms L A Clarke(Non-executive director)Vice President, Global Markets, State StreetBank and Trust Company. Over seventeenyears experience in the banking industry in Australia. Appointed by the OB OwnerMember Electoral Group (formerly known as ‘B’ class redeemable preferenceshareholders) as a director in November2001. Chairman, Management Committee of the High Value Clearing System. Memberof the Finance and Audit Committee and the Remuneration Committee.

Mr D A Ingham BEc, MBA(Non-executive director)Head of Payment Services, Credit UnionServices Corporation (Australia) Limited.Over ten years experience in the financialservices industry across a number oforganisations. With experience in consulting,service delivery, channel and productmanagement and other related disciplines.Appointed by the Credit Unions OwnerMember Electoral Group (formerly known as ‘D’ class redeemable preferenceshareholders) as a director in January 2003.

Board of Directors


01

02

03

04

05

06

Mr P A Inglis BEc(Hons)(Non-executive director)Head, Payments Industry Liaison,Operations, Technology & Shared Services,Australia and New Zealand Banking GroupLimited. Over sixteen years experience in the banking industry in payments andeconomics; five years in government service,including Federal Treasury. Appointed by the Australia and New Zealand BankingGroup Limited as a director in July 1998.Chairman, Management Committee of the Consumer Electronic Clearing System.

Mr B F Munro BBus, FAIB, MFTADeputy Chairman (Non-executive director)Executive General Manager, Working CapitalServices, Institutional and Business Services,Commonwealth Bank of Australia. Over twenty years experience in banking,including financial and capital markets.Current position is focussed on providingworking capital solutions, including paymentsand related services, to small, medium, andlarge businesses and financial institutions.Chairman, CBFC and CBFC Leasing PtyLimited. Director, Commonwealth Fleet LeasePty Limited. Appointed by the CommonwealthBank of Australia as a director in May 1998.Chairman, Management Committee of theBulk Electronic Clearing System, Chairman of the Finance and Audit Committee, andmember of the Remuneration Committee.

Dr P R Smith BEc(Hons), PhD, FAICDChief Executive Officer (Executive director)Thirteen years experience in the bankingindustry prior to joining APCA, two years in government service in Papua New Guinea, and academic appointments in the Universities of Western Australia andAdelaide. Chief Executive Officer since the company started in February 1992 and appointed as executive director in April 1992. Member of the Finance and Audit Committee and the RemunerationCommittee.

Mr J N Toms BComm(Non-executive director)Chief Executive Director, AustralianAssociation of Permanent Building Societies Incorporated and Chief ExecutiveOfficer, Australian Settlements Limited. Over eighteen years experience in areas of industry policy, particularly paymentssystems. Director of National CustodianLimited. Appointed by the Building Societies Owner Member Electoral Group (formerly known as ‘C’ classredeemable preference shareholders) as a director in December 1992. Chairman of the Fraud Committee.

Dr J M Veale DipEd, BA(Hons), MEc, PhD(Non-executive director)Head of Payments Policy Department,Reserve Bank of Australia. Ten years inacademic positions in Australia and theUnited Kingdom, and over nineteen yearsexperience in Australian central banking.Appointed as a director in January 1998.Member of the Finance and Audit Committeeand the Remuneration Committee.

Mr T P Wasmund MBA, FAIB(Non-executive director)Manager, Payments and Banking Services,Suncorp-Metway Limited. Over twenty yearsbanking experience with Suncorp-MetwayLimited, including payments, foreignexchange, lending/credit and bankingoperations management. Appointed by theRB Owner Member Electoral Group (formerlyknown as ‘A’ class redeemable preferenceshareholders) as a director in August 2002.

Aligning Systems 19

07

08

09

10

11

12

01 Mr R N Challis02 Mr G L Bebbington03 Ms L A Clarke04 Mr C G Campbell05 Mr J N Toms06 Mr D A Ingham07 Dr P R Smith08 Mr T P Wasmund09 Mr P A Inglis10 Mr S P Bryant11 Dr J M Veale12 Mr B F Munro

ABN AMRO Bank, NV* •Adelaide Bank Limited* • • • •AMP Bank Limited* • • •Arab Bank Australia Limited* • • •Australia and New Zealand Banking Group Limited* • • • • •Australian Settlements Limited (ASL)* • • • •Bank of America National Association* • • •Bank of China* • • •Bank of Queensland Limited* • • • •Bank of Tokyo-Mitsubishi (Australia) Limited* • • •Bank of Western Australia Limited* • • • • •Bank One National Association* • • •Barclays Bank PLC* •Bendigo Bank Limited* • • • •Citibank Pty Limited* • • • •Commonwealth Bank of Australia* • • • • •Credit Union Services Corporation (Australia) Limited (CUSCAL)* • • • •CreditLink Services Ltd* • •Deutsche Bank AG* • • •HSBC Bank Australia Limited* • • •HSBC Bank plc* • • •ING Bank (Australia) Limited* • • •JP Morgan Chase Bank* • • •Macquarie Bank Limited* • • •Mizuho Corporate Bank Limited* • • •N.M. Rothschild & Sons (Australia) Limited* •National Australia Bank Limited* • • • • •Oversea-Chinese Banking Corporation Limited* • • •Reserve Bank of Australia* • • •Royal Bank of Canada* •St. George Bank Limited* • • • •Standard Chartered Bank* •State Street Bank & Trust Company* • • •Suncorp-Metway Limited* • • • • •United Overseas Bank Limited* • • •Westpac Banking Corporation* • • • • •*Denotes owner members

ABS Building Society Ltd •Australian National Credit Union Limited • •B & E Ltd • •Bananacoast Community Credit Union Limited •Bank of Cyprus Australia Pty Limited • •BNP Paribas •

Cashcard Australia Limited •CLS Bank International •Coles Myer Ltd •Credit Suisse First Boston •Dresdner BankAG •First Australian Building Society Limited • •Fortis Bank S.A./N.V. •GIO Building Society Limited •Greater Building Society Limited • •Heritage Building Society Limited • •Home Building Society Ltd •HSBC Building Society (Australia) Limited • •Hume Building Society Limited • •Hunter United Employees’ Credit Union Limited •IMB Limited • •ING Bank N.V. (Sydney Branch) • • •IOOF Building Society Limited • •Laiki Bank (Australia) Limited • • •Lifeplan Australia Building Society Limited •Mackay Permanent Building Society Limited • •Maitland Mutual Building Society Limited • •Members Equity Pty Limited • •Newcastle Permanent Building Society Limited • •Pioneer Permanent Building Society Limited • •Police Association Credit Co-Operative Limited •Queensland Police Credit Union Limited •Queensland Professional Credit Union Limited •Queenslanders Credit Union Limited •Rabobank Australia Limited • • •Rabobank, Australian Branch (Co-Operative Centrale Raiffeisen-Boerenleenbank B.A.) •Taiwan Business Bank, Sydney Branch • •The International Commercial Bank of China • • •The Rock Building Society Limited •The Toronto-Dominion Bank •Victoria Teachers Credit Union Limited •WestLB AG •

Wide Bay Capricorn Building Society Limited • •

APCA Members Clearing System Member(as at 30 June 2003)

APCS BECS CECS HVCS ACDES

Owner Members and Clearing System Members


APCA Members Clearing System Member(as at 30 June 2003)

APCS BECS CECS HVCS ACDES

Company OfficersPeter Smith Chief Executive OfficerOksana Dlougatch Financial ControllerMichael Forey Director Project Management

& OperationsStephen Halliday Director Member Services,

Secretary to the Board Stephen Hills General Counsel, Company SecretaryPhil Timms Director Corporate Affairs

SolicitorsMallesons Stephen Jaques, Sydney

AuditorsPricewaterhouseCoopers, Sydney

Registered OfficeLevel 2425 Bligh StreetSydney NSW 2000Tel +61 2 9221 8944Fax +61 2 9221 8057www.apca.com.au

Company Meetings• The Annual General Meeting will be held

on Thursday, 16 October 2003 at 9.30am.

• The Annual Meeting of APCS will be held on Wednesday, 19 November 2003 at 9.30am.

• The Annual Meeting of BECS will be held on Tuesday, 11 November 2003 at 9.30am.

• The Annual Meeting of CECS will be held on Thursday, 20 November 2003 at 9.30am.

• The Annual Meeting of HVCS will be held on Thursday, 27 November 2003 at 9.30am.

• The Annual Meeting of ACDES will be held on Wednesday, 26 November 2003 at 9.30am.

APCA Publications• BSB Numbers in Australia

Issued quarterly and available in either book form or on computer diskette. Can be purchased directly fromCraftsman Publishing Pty Ltd (prices on application).

Craftsman Publishing Pty Ltd125 Highbury RoadBurwood Vic 3125Tel +61 3 9926 1200Fax +61 3 9926 1291

Available from APCA• Design Specifications for Cheques and Deposit Forms

(Publication 11.5)• Guidelines for Personalising Cheques• Guidelines for MICR Encoding Cheques• Guidelines for Paper Used for MICR Encoding• MICR Magnetic Ink Character Recognition (Publication 3.3)• Payments Monitor

A quarterly publication for members and interested parties that provides an update on payments clearingdevelopments.

Also available:• APCA Position & Layout Gauge (hand held device

for verifying positioning of MICR encoding)

RegistersAPCA maintains registers relating to cheque printingstandards to help printers, APCS members and theircustomers comply with the standards in publications 11.5 & 3.3. • Printer Registration Database. This database contains

organisations that print, design and MICR-encodecheques and deposit forms.

• Register of Paper for MICR Encoded Documents.Manufacturers or suppliers of paper may submit results of tests of their paper against the ‘APCA paper standard’for review by APCA. Where review of test results showscompliance with the standard, the paper is included on the register.

• Register of MICR Printing Systems. APCA evaluatesMICR encoding equipment to determine whether it produces encoding of an acceptable standard. This standard and the processes for evaluation are set out in the MICR Magnetic Ink Character Recognition publication.

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Corporate Information