Efficiencies in credit management could soon receive a significant boost thanks to the upcoming launch of the New Payments Platform — new infrastructure for Australian payments being developed through a major program of industry collaboration. The New Payments Platform promises Australian consumers, businesses and government the ability to make near real-time payments, 24 hours a day, 365 days a year.

It will also allow more data to be sent with these payments, such as longer descriptions or attached remittance documents. The platform can also simplify the payments process through an Addressing Service, which offers users the ability to direct payments to accounts via an easy-to-remember identifier like a phone number, email address, ABN or organisational identifier. This service will be called PayID, and will be promoted closer to the time the platform launches.

According to CEO of NPP Australia, Adrian Lovney, the New Payments Platform was born from an industry that recognised the need to progress payments to meet the evolving demands of a digital economy. "Already the Australian public has embraced electronic payment methods — chip cards (contactless or “wave and pay”), BPAY, direct entry — and new technologies such as smartphones.

But for this evolution to continue, our basic payments infrastructure needed an upgrade to enable a shift to immediate payments. “At the same time businesses need to be able to improve their efficiency and costs, and the New Payments Platform offers the potential for payments to be reconciled more easily, make cash flow much more predictable, as well as improving the management and reconciliation of inventory and stock between suppliers,” Mr Lovney said.

How does the platform work?

There are three key components to the New Payments Platform infrastructure:

1. The Basic Infrastructure: This includes a network (which connects participants), a switch (which moves messages between participants via the network) and the Addressing Service (PayID) which enables transaction accounts to be identified by an easy to remember identifier such as an email address, phone number or ABN number.

2. The Fast Settlement Service: Provided by the Reserve Bank of Australia, it enables every single payment made on the platform, regardless of its size, to be settled in real-time in central bank funds, across each financial institution’s Exchange Settlement Account.

3. Overlay Services: This is name given to the payments related products or services, and that will use the Basic Infrastructure. These products or services could offer vastly different experiences, or similar experiences, and in many cases could compete with each other. This is where the New Payments Platform breathes life into innovation and competition. 

The future of payments

The first Overlay Service delivered via the New Payments Platform will be delivered by BPAY. With an entirely separate brand to BPAY, this offering will be the first consumer experience of the platform’s speed, convenience and data capabilities. Over time it’s expected that more innovators will leverage the platform’s features to offer more ground-breaking payments experiences to the Australian public. According to Mr Lovney, what these new experiences could look like is in the imagination of these organisations. “It’s likely that the transmission of data along with payments will mean business applications will be a key focus. As well as opportunities in industry verticals, such as funds management, in and around the stock exchange, or in the insurance and superannuation industry,” he said.

Who is involved?

While the platform is being collaboratively developed and funded by 13 participating financial institutions, a large number of additional financial institutions will also connect to the infrastructure through one of the initial Participants. You can see the list of Participants at the New Payments Platform website here: www.nppa.com.au

The history of the New Payments Platform The NPP came to life following a strategic review of the Australian payments system by the Payments System Board of the Reserve Bank of Australia (RBA) in 2012. This review identified a range of additional features which were desirable in the Australian payments system, principally the capability to make payments in real-time. From there, a number of industry players came together to form the Real-Time Payments Committee (RTPC) and submitted a proposal that highlighted how payments systems and schemes around the world are becoming more commercial and competitively oriented, and Australia must proactively adapt.

As a result the RTPC recommended a new layered business architecture for payments clearing and settlement, and a system that offered a range of new real-time payment services to consumers, businesses and government. Eventually this proposal evolved into the New Payments Platform. NPP Australia Limited (NPPA) was formed in December 2014 to oversee the build, operation and management of the NPP.

Adrian Lovney was appointed as the inaugural CEO of NPP Australia in September 2016.

When will the NPP be available?

On the platform’s availability, Mr Lovney said that like any project of this magnitude there is a complex and thorough testing regime to complete before a decision is made to make the NPP publicly available. Subject to this testing, the Australian public can expect to see services offered via the NPP ramp-up from October 2017.

For more information about the New Payments Platform visit: www.nppa.com.au