Amidst the deafening noise of Bitcoins and the whole bunch of Crypto Currencies, beating the drumrolls how some visionary investors are becoming multi-millionaires every day, let’s embrace the latest payment gateway scheduled to be launched in Australia later this month. The New Payments Platform is a major overhaul in Australian payment clearing system in years and was long overdue nevertheless a key milestone in achieving real-time payment transfer for individuals and businesses.
Costly, time-consuming and highly restrictive traditional payment transfer platforms in Australia such as Cheques, EFTPOS, RTGS, BPAY and other platforms have given rise to the crazy world of digital currencies which presumably would solve all the world’s money transfer woes in seconds!!! Well let’s not debate how they’d land up in next few years or so, and understand what we’ve got in hand now after years’ of hard work, deliberations, mutual agreement, with leading Banks’ and Central Bank’s active participation and support, industry initiative and developed by state of the art technology.
As is being propagated, “The New Payments Platform is a world-class platform for payments innovation which can turn the possibilities presented by new ideas into real progress for Australian consumers, businesses and institutions. It’s designed to support an economy that never sleeps, never tires and never slows”
It’d enable real-time clearing and settlement for simple or complex payment solutions, between two people or between many. It can simplify payments through an Addressing Service, as well offer the ability to include more information with payments, such as text or links to externally hosted documents.
Just like in US, where it’s available since ages, the remitters would be able send additional information related to payments, using the payment network itself. So hopefully in future, there won’t be a separate remittance advice sent by email and the relevant details can be sent out embedded with the payment itself.
The New Payments Platform would be using ISO 20022, which is an International Organisation for Standardisation (ISO) format used for electronic data interchange between financial institutions with an ability to move money and data. The benefit of ISO 20022 is that it is a global standard with messages able to convey more data than most other messaging formats.
Financial institutions regulated by the Australian Prudential Regulation Authority (Authorised Deposit-taking Institutions) can connect to the platform via SWIFT Payment Gateways. Some of these organisations will offer other organisations indirect access to the NPP.
NPP Australia Limited (New Payments Platform) was formed in December 2014 to oversee the build, operation and management of the platform and in September 2016, with Adrian Lovney appointed as the inaugural CEO.
The platform is being collaboratively developed by NPP Australia Ltd and is currently being supported by 13 financial institutions. However, later this year a large number of additional financial institutions will also connect to the infrastructure through one of the initial participants. Some of the key players who have championed the cause are RBA, Australian Settlements Limited, Big Banks such as CBA, ANZ, NAB, Westpac, Citigroup, Macquarie etc.
When the platform launches, it is anticipated that the majority of Australian bank accounts will be able to receive faster data-rich payments. This reach will gradually increase as more financial institutions and organisations connect to the platform over time.
The first innovative product delivered via the New Payments Platform will be Osko by BPAY. It will be a convenient and accessible service for consumers to send payments from an account at their financial institution, 24/7/365, to payees using easy-to-remember addresses such as a mobile phone number or email address, with fast availability of cleared funds, rich data and confidence in delivery.
So, where the current EFT and BPAY payments take anywhere between 1-3 days, going forward all such payments would be real-time or near real-time. How it might change the businesses is eliminating the necessity of using VISA, Amex and MasterCard Network in many cases and thereby removing costly transaction fees from anywhere between 0.4% to 3% for the merchants. This would open up a huge opportunity in the retail space where every dollar saved would count and our businesses would be able to compete with global peers more effectively.
In the recent years, there was another initiative called POLI payments which did not gather much response as you needed to remember and enter your Bank’s login ID and password in the third party websites (which seems scary to many probably, even though fully secure).
The best part of the platform would be that you don’t need to open a new account like a “Bitcoin” or other account and you simply would be required to create a Pay ID linking your existing Bank Account or use your current BSB-Account details. This new virtual id could be your email address, mobile number or even business name.
There’d be a plethora of opportunities in the Finance and IT sector as well, as the businesses would be required to update their E-commerce platforms, Invoicing systems, Customers’ and Suppliers’ data and processes along with developing new payment file formats from their ERP and accounting systems connecting the Banks.
If you’d like to know more about the New Payments Platform, please visit their website www.nppa.com.au which is very informative as I found. Some would argue it’s too little too late, I’d rather say better late than never.
By - Shantanu Sarkar
Shantanu Sarkar is a CPA from Australia and a Chartered Accountant from India. He is working for more than 13 years in designing ERP systems for large corporates in Oracle Financials systems. His interests include understanding financial and business related developments in Australia, India and globally.