RBA changes ESA Policy: will fintechs or tech giants benefit?

RBA changes ESA Policy: will fintechs or tech giants benefit?

Last month, following two cash rate cuts in as many months, the Reserve Bank of Australia (RBA) made yet another change to the nation’s monetary policy, this time the ESA.

On Friday 26th July, the RBA updated their Exchange Settlement Account (ESA) Policy, in what has been seen as a move to promote increased competition in the financial market.

The changes allow for a wider variety of non-ADI* lenders – including financial technology businesses (fintechs) – to compete directly with other entities in the Reserve Bank payments system.

However, what is yet to be determined is whether the smaller fintechs will be the beneficiaries of the policy update, or if international technology giants like Amazon, Google, Apple and Facebook will be the ones to profit.

What is an Exchange Settlement Account (ESA)?

To put it simply, an ESA is an account that all banks must have in order to make payments between each other within the Australian payments system. These Exchange Settlement Accounts are owned by the Reserve Bank of Australia, must have positive balances and are used to settle obligations that have accrued in the clearing process.


Jill owes Jack $20. Jill banks with Bendigo and Jack banks with Suncorp. When Jill transfers Jack his $20 from his Bendigo account, it will need to move through Suncorp’s ESA, before landing in Jack’s account.

ESAs are also used as a security measure, as the Reserve Bank commits to cover any gaps in payments between members, to ensure the Australian payments system functions at all times.

RBA changes to the ESA policy

Mandatory for Authorised Deposit-taking Institutions (ADIs) in Australia, the last major revision to the ESA Policy was in 1999 and allowed non-ADI providers to apply for an ESA, to settle clearing obligations with other payment providers.

Two decades later, the recent revision has made it easier for non-bank lenders and fintechs to join the Exchange Settlement Account arrangements, without getting regulatory licenses to become banks.

In what could be seen as a move to increase competition in a market dominated by the big four, the RBA has made it easier for non-bank lenders to use an ESA, announcing:

“The updated policy now also requires that any Australian securities settlement facilities that are determined to be systemically important in Australia, and that face Australian dollar liquidity risk from their settlement related activities, must use an ESA.”

Will the changes benefit fintechs or tech giants?

These ESA changes, whilst paving the way for fintechs to compete on a more even playing field, do not stipulate any restrictions on multinational technology giants.

This means the likes of Amazon, Google, Apple and Facebook could gain direct access to the Exchange Settlement Accounts payment system, settling their own transactions without needing the services of a bank per se.

The effect these changes will have on competition within the Australian financial industry is yet to be seen. However, what is interesting to note is the RBA’s reference in their 26th July Media Release, highlighting the ability to manage ESAs off shore.

“Australian-licensed clearing and settlement facilities may also apply for an exemption from the requirement to maintain management and resources in Australia, so as to be able to manage their ESA from an approved offshore location.”

Will this change in policy encourage international fintechs to make the move down under?

Only time will tell.

*ADIs are Authorised Deposit taking institutions, as granted by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959 (Commonwealth). ADI’s include banks, credit unions and building societies.

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Learn more about bank accounts

Can foreigners open bank account in Australia?

If you’re migrating, studying or working in Australia, you’ll be pleased to know that you can open an Australian bank account. For the most part, opening a bank account in Australia is a simple process which starts by comparing the types of bank accounts foreigners can open in Australia.

Once you’ve found a bank account that suits your needs, you can start the application process.

When you apply for the account, you’ll need to provide proof of ID which may include your passport, overseas ID or credit card. You may also need to provide a copy of your visa and proof of address in Australia.

Depending on the bank and the type of account you choose, you may be able to apply for the account online or over the phone before you arrive in Australia.

How do you open a bank account in Australia?

Opening a bank account in Australia is usually a straightforward process. Some banks give you the option of opening an account online, while others require you to visit a branch.

Different bank accounts offer different features, so it’s best to compare your options to find one that suits you.

All banks require you to pass an identity check to open a bank account. Australia uses the 100-point identification system, which means you’ll need to show a number of forms of ID that, together, add up to 100 points.

Common ID types include a driver’s licence, passport, Australian visa in a foreign passport, and Australian Medicare card. You’ll find out what types of ID are accepted when you go through the sign-up process online or at a branch.

Once your account is open, you’ll be given or sent a debit card that you can use to make purchases and withdraw money from your account.

How do I close a bank account?

Closing a bank account is one of those tasks that’s easy to put in the too-hard basket. There are quite a few steps involved, some which may require you to hang on the phone for a while.  

Here’s a handy checklist of items to tick off, so the job gets done quicker. If you don’t do your banking online, the following steps can also be done at a branch.   

  • Cancel any scheduled or recurring payments
  • Update your direct debit details (such as loan repayments) with creditors
  • Export your payee address book (to keep a record of saved third-party bank account details)
  • Transfer the balance of your account (to the new bank account)
  • Close your account online, or by calling the bank or visiting a branch

Can I close my bank account over the phone?

In most cases, you can close a personal or business bank account over the phone. In fact, this is the best way to ensure you’ve closed an account properly.

By speaking to a banking representative, you can capture and close out any pending transactions, or interest owing/payable on the account being closed.

In the instance where the account is a joint account, or you have multiple bank accounts you want to close, your bank may send you a form that you need to fill out and return.

Either way, you would be advised over the phone of the steps you need to take. Calling your bank ahead of closing an account is often a smart course of action.

Can British expats still open bank accounts?

As a British expat, you can open an Australian bank account, and you can apply for an account the same ways an Aussie would. You can even open an account online from the UK prior to relocating.

If you’re overseas, the bank you choose to open an account with may call you to provide you with our new account details beforehand. You can then have your ID verified within a branch once you’ve arrived.

And if you’re already living down under, the following list outlines the types of information required by most banks when opening an Australian bank account.

  • Australian residential address
  • Tax file number (TFN) or a TFN exemption
  • Identification (this can be your passport)

Can you open another account at the same bank?

Yes, you can open another account at the same bank if you already have an account there, but some banks place a limit on how many specific accounts you can open.

Generally, though, it is possible to have more than one everyday account, one personal account and one joint account, or have different types of accounts – such as a transaction account and a savings account.

Keep in mind that some bank accounts come with fees, so you could be charged twice for having two types of the same account at the same bank.

Also, if you have more than one high-interest transaction account at the same bank, only one account will be able to earn the highest rate of interest.

Can foreigners open bank accounts in Australia?

Many Australian lenders allow foreigners to open bank accounts in Australia. Often, this can be done before you arrive in the country – with no Australian address required. When you get to Australia, you can pick up your debit card, using your passport as identification.

How do I close my bank account online?

You can usually easily open a bank account online, but you often can’t close it online.

Many banks and credit unions will only let you close an account if you go into a branch or call them on the phone.

However, some banks will let you request to close the account via your internet banking. Check your financial provider’s website for details.

Just remember: If you still have funds in the bank account, transfer them to another account, or withdraw the cash. Also, if you have any payments like direct debits going in or out of the bank account, these will also stop when you close your account.

Can you find your bank account number online?

If your bank offers online services, you should be able to find your bank account number online by logging into your account on your bank’s website and checking your details there.

Keep in mind that each type of account you have with a bank comes with a unique account number. This means if you have a bank account as well as a savings account, for example, your bank account number and your savings account number will be different.

If you don’t have access to your bank account online or can’t login, you should be able to find your account number on a mailed bank statement, if you have one.

Alternatively, you can call your bank’s customer service number or visit a branch to retrieve your account number.

Can I open bank accounts for my children?

A common question for new parents is, ‘Can I open a bank account for my child?’

The short answer is yes – as a parent you can open a bank account for your child.

Once you’ve compared your options and found a bank account that suits your needs, the process is relatively simple.

As the bank account is for your child, you’ll need to provide some documentation such as proof of ID, including your tax file number.

You will also need a copy of your child’s birth certificate, and in some cases you may also need to sign a guarantee of indemnity.

Depending on the bank and whether you’re an existing customer, you may be able to open a bank account for your child online. However, you may still need to go into a branch to prove your identity.

How do you deposit change into your bank account?

One way to deposit change into your bank account is to visit a branch. Many lenders will also allow you to deposit your change through one of their ATMs.

Can I open a bank account in another country?

Despite having a bad rap for facilitating tax evasion, it is possible and legal to open a bank account in another country, also known as an ‘offshore account’.

Some people choose to open a bank account in another country to invest overseas, for higher interest-earning potential or to access foreign banking services.

The process for opening an offshore bank account differs depending on the financial institution and country in which you’re opening the account.

Typically, you will need to provide identification such as a passport, a local bank statement and a signed declaration proving the source of the money being used to open your account. Usually, deposits into offshore accounts can be made by international money transfer.

Can I have a PayPal account without a bank account?

You don’t need a bank account to send or receive money through PayPal. However, you do need a bank account if you want to withdraw money from your PayPal account.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.