Consumers and business owners can now breathe a sigh of relief – there’s now a new way to send and receive online payments without having to swap account numbers and avoid the often antagonising weekend processing times.
Adapting to the needs of a 24 hour digital economy, the New Payments Plan is set to revolutionise the financial capabilities of Australians, making for more efficient spending, improved business performance, and a more streamlined approach to business operations.
Before jumping into the benefits of the New Payments Platform, let’s take a look at the old system of payment technology – and ask ourselves why it’s taken so long for a new system to be put in place.
When businesses were strictly 9-5 and operating on a Monday to Friday basis, the old payments system worked quite smoothly. People were prepared to wait out the weekend for any outstanding payments to be received, money was accepted as being in limbo over the weekend, three business days was the norm for transfers to take place, and businesses were dependent upon filing cabinets and organised folders of paperwork.
Fast forward to the rise of the internet and the ever expanding realm of technology, and there was something out of place. The old system of payment technology became a fast outdated method of money transferral. Instant transactions and 24/7 services were in consistently hot demand, and after national insistence, a solution was born.
In response to the changing needs of Australians, The Reserve Bank of Australia’s Strategic Review of Innovation in the Payments System set four key challenges for the financial industry: faster payments, 24 hour payments, data-rich payments, and simpler payment processes.
The New Payments Platform was developed to meet these objectives, whilst providing the infrastructure needed to support the digital economy of the future.
Currently, the New Payments Platform is owned by 13 financial institutions participating in the NPP: the ANZ, CBA, NAB, Westpac, Cuscal, ING Direct, HSBC, Macquarie, Bendigo and Adelaide Bank, Citigroup, Indue, Australian Settlements Limited, and the Reserve Bank of Australia.
Unveiled by a group of Australia’s major banks in February 2018, the New Payments Platform is a new infrastructure capability designed to improve the way people send and receive money using their chosen financial institution.
Under the NPP, clearing and settlements for payments between both individuals and groups can now be made in real-time. These payments can be simplified through PayID, an addressing service that enables you to make payments without the need to remember or share your BSB and account number.
Currently, the New Payments Platform is being facilitated by over 17 banks and financial institutions, and is quickly capturing the interest of consumers and business owners alike, looking for a way to streamline payment processes while saving time and money.
The New Payments Platform works in three parts:
1. The Basic Infrastructure
This infrastructure is comprised of a network (connecting users), a switch (transferring messages between users) and an addressing service (enabling accounts to be verified using certain information). The Basic Infrastructure of the NPP will be available on a 24 hour basis, all year round.
2. The Fast Settlement Service
Provided by the Reserve Bank of Australia, the Fast Settlement Service enables all payments made via the NPP to be settled in real-time across each financial institution’s Exchange Settlement Account. This real-time transferral takes place regardless of the transaction amount sent or received.
3. Overlay Services
‘Overlay Services’ is the term dubbed by the industry that defines innovation that can leverage the benefits of The Basic Infrastructure. These approved products, services or schemes can be deployed on The Basic Infrastructure, and offer value to those of a specific group of subscribers and users.
Keep an eye out for our next eWAY blog, where we discuss all things PayID.
NB. eWAY does not currently offer a NPP product, but we are currently looking at ways to incorporate the technology.