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NPP to streamline payments across financial services

by Alexandra Cain | 21 Feb 2018

The $1 billion National Payments Platform (NPP) is now live for 60 banks, building societies and credit unions. Adrian Lovney, CEO NPP

It is understood three of the four big banks have already started to roll out the new system, which is expected to be adopted across the financial services sector and by consumers.

The platform will revolutionise the way consumers and businesses transfer money between different financial institutions.

PayID is one of the first initiatives under the NPP, which offers a simple way to make a payment and to identify the recipient.

It makes payments simpler because customers don't have to know their BSB or account number to receive or send money.

With PayID, a mobile number, email address, ACN or ABN is linked to a bank or credit union account. So rather than giving people a BSB and account number to make or receive a payment, they get a PayID.

The added benefit when a consumer pays to a PayID is knowing the identity of the person who is being paid.

“If you’ve made a mistake, the payment won't go through. Over time people will become as used to sharing their PayID as they do sharing any other personal information. So when you start a new job, you might give your boss your PayID to pay your salary to,” says Adrian Lovney, CEO of NPP Australia,

Overall, Lovney says the response to the NPP so far has been extremely positive.

“We’re managing a carefully-controlled rollout and we estimate that within four weeks, 80 per cent of all Australian bank accounts will be connected to the NPP. It's exciting to see this go live. Banks have focused on their retail customer base first and business customers will follow,” he adds.

As a first step, consumers will receive an invitation to create a PayID. When a customer makes a payment through their mobile banking or internet bank using PayID, their payment will be automatically sent through a mechanism called Osko by BPAY, which is a tool that allows individuals to send payments to each other.

According to Lovney, 99 per cent of payments sent through Osko will be received in less than a minute. But Osko is just the start of a range of initiatives the NPP will be able to support.

“The NPP has been designed to integrate into financial institutions’ back offices, so it can be used to solve many industry-wide problems,” he explains.

These include making dividend payments, capital raisings, corporate actions and electronic conveyancing for real estate transactions.

“The power of the New Payments Platform, both in the technology sense but also in the regulatory sense, is that it's up to the ecosystem to decide how it wants to use it. It doesn’t have to be banks that use it. It could be a group of insurance companies or fintechs want to design a product to fix a particular issue in a market niche. They can use the capabilities of the NPP to resolve these problems,” says Lovney.

He says there are two main opportunities for businesses to make the most of the NPP. The first is overlay services, which might involve fintechs working with banks to solve a particular problem in the ecosystem. The other approach is to create new capabilities using the NPP to help funds travel more quickly through the financial services system.

Finally, he says the NPP is an opportunity for banks to explore how the new platform can make customers’ and businesses’ lives easier.

“Now it has been rolled out we’re expecting lots of conversations about how it will work across many industry segments,” he adds.


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