.svg)
The Australian Payments Network (AusPayNet), the self-regulatory body overseeing Australia’s payments system, has released a new policy report exploring the role of artificial intelligence (AI) in transforming the payments sector.
ճ emphasises AI’s potential to enhance fraud prevention, operational resilience and efficiency, while addressing long-standing challenges in the industry.
Payment service providers (PSPs) are increasingly using AI technologies, including machine learning, to analyse vast datasets, detect fraud and manage risks more effectively.
The report also points out that these capabilities can strengthen system resilience by identifying cybersecurity threats in real time.
However, emerging threats such as the misuse of generative AI for phishing, identity theft and malware attacks highlight the need for more advanced fraud prevention systems.
According to AusPayNet, the adoption of AI in the payments ecosystem has great potential, but faces several significant barriers.
Problems and solutions
Challenges related to data quality, accessibility and interoperability complicate the implementation of reliable AI systems, according to the report, and legacy systems, fragmented datasets and stringent privacy regulations exacerbate these issues.
Meanwhile, governance frameworks are introducing further hurdles. PSPs are struggling with model validation, transparency and risk management — and the sheer complexity of AI technologies and the lack of specialised expertise amplify these challenges.
The report also says that regulatory uncertainty surrounding AI usage creates hesitation among PSPs, as they navigate evolving laws on privacy, consumer protection and data sharing.
To address these issues, AusPayNet recommends adopting privacy-enhancing technologies (PETs) to facilitate collaborative fraud detection while ensuring data privacy.
It has also called for the establishment of knowledge-sharing initiatives to promote best practices in AI integration, compliance and innovation, as well as clear regulatory guidance to enable PSPs to adopt AI technologies confidently and responsibly.
The report concludes with a forward-looking perspective on AI’s transformative potential, suggesting that advancements in AI capabilities offer opportunities to enhance the safety, efficiency and resilience of the Australian payments ecosystem.
“From strengthening defences against increasingly sophisticated economic crime to improving operational resilience and efficiency, AI has the potential to address many of the industry’s long-standing challenges,” it states.
“However, realising these benefits will require overcoming a number of implementation barriers related to data, governance frameworks, and evolving regulatory requirements.”
AusPayNet has said that its Emerging Technology Experts Group will delve deeper into these recommendations in the coming months, with the aim of fostering an environment that supports the safe and responsible adoption of AI for the benefit of all participants in the payments ecosystem.
What could this mean for 2025?
AusPayNet's report on the role of AI in the payments sector highlights both the transformative opportunities and the critical challenges for PSPs.
AI presents significant potential for enhancing fraud prevention and operational resilience, allowing businesses to combat increasingly sophisticated cyber threats and economic crimes.
However, leveraging such capabilities requires substantial investment in advanced technologies, data infrastructure and skilled talent to stay ahead of criminal misuse of generative AI.
In times when budgets are increasingly tight, and job markets do not necessarily have the skills at hand, this is challenging for firms that want to get ahead without having the funding available to do so.
The report emphasises the importance of high-quality, interoperable data for effective AI deployment, making data management a crucial focus for companies if they want to prosper in this field.
Furthermore, early adopters of AI technologies that align with emerging regulations and best practices stand to gain a competitive advantage by delivering safer, more efficient and personalised services.
Regulation looms
On the regulatory front, in 2025 and beyond, the adoption of PETs could become an industry standard, enabling data sharing for fraud prevention while safeguarding customer privacy.
Data sharing for fraud prevention is becoming an increasingly pertinent topic for regulators around the world.
In the UK, for example, the Information Commissioner’s Office (ICO) said in a release in November 2024 that “data protection is not an excuse when tackling scams and fraud”, issuing new guidelines on doing so.
“We strongly support responsible and effective data sharing between organisations, which is key to staying one step ahead of criminals and preventing scams before they cause harm,” said Stephen Almond, executive director for regulatory risk at the ICO.
Australia could follow suit and harness AI to make the process more efficient and better protected.
Transparency and explainability requirements for AI models may also be mandated, particularly in high-stakes areas such as fraud detection and credit decisions.
Ethical AI practices aligned with frameworks such as the Australian AI ethics principles and UNESCO’s guidelines are also likely to influence future standards.
In addition, cross-industry collaboration on data sharing and robust governance frameworks for AI are expected to play a pivotal role in regulatory developments.
To navigate these changes, payments firms operating in Australia will need to implement strong AI governance frameworks that ensure accountability, fairness and transparency.
Investments in improving data quality, usability and interoperability will be essential, as will the adoption of industry-wide data standards such as ISO 20022, which has been gradually implemented by different jurisdictions since 2022.
Firms should also be aware of regulatory initiatives elsewhere, such as the EU, which has an incoming AI framework.
Although the legal framework is far from perfect, it could provide a blueprint for Australia's government and government agencies.
The EU is aiming to create enhanced AI oversight, as it has with other regulations such as the General Data Protection Regulation (GDPR) and the revised Payment Services Directive (PSD2).
Engaging in collaborative initiatives and aligning with AusPayNet’s recommendations can help businesses share best practices and foster innovation, while proactively preparing for regulatory changes by adhering to emerging ethical guidelines and ensuring model transparency will provide companies with a strategic advantage.
Meanwhile, active participation in discussions with AusPayNet and regulators is a must, and will help shape practical, effective standards that benefit the entire payments ecosystem.
