I’m not sure whether you were as excited as I was yesterday, however at 12.01am a revolution in Australian dollar payments began as CUSCAL launched the New Payments Platform (NPP) on behalf of 40 Banks and Credit Unions. Launching under the Osko by BPay brand, the NPP will offer a genuine real-time payment system. In a world where all the hype is about blockchain, this significant investment in technology will put Australia at the forefront of real-time payments for many years to come.
I had hoped to be one of the first people to make a payment using the NPP, however not all ADIs were able to accept payments on day one so I had to settle for registering my PayID. A PayID allows both individuals and corporations to register an e-mail address, mobile phone number or even an ABN with a nominated bank account. Over time it will become commonplace to pay to a PayID rather than having to remember the BSB and account number of the bank account you wish to pay to.
As a non-executive director of The Mac (The Macarthur Credit Union) it was great to see an ADI with $250m+ of Assets launch this product ahead of many of the larger players in the financial services market. It appears that a Corporate Treasurer was not the only person who wanted to be part of the new technology with a significant number of The Mac’s Members embracing the NPP and making payments. Congratulations are due to not only the hard working team at The Mac, but also to all of the ADIs who launched the NPP yesterday.
Registering my PayID with The Mac’s online banking app was a very simple process to do. As your financial institution rolls out this functionality, you should consider registering your e-mail address and mobile phone number to a PayID. It might just encourage a mate to repay that long standing debt they owe you.
The question now becomes where can the financial community take the NPP too? The launch of the NPP is initially being done slowly with little fanfare. Howeve the speed of the rollout will increase over time as more ADIs make the functionality available to their customers. It is my opinion that eventually the NPP will supercede the two existing payment systems: electronic funds transfer and real time gross settlement (or as I’ve always referred to it – the world’s least real time, real-time payments system). The NPP offers faster settlement than both systems with significantly more functionality and will be significantly cheaper than RTGS.
There is one important piece of the jigsaw which is missing on day one. For the NPP to achieve universal acceptance among customers as the payment network of choice then it is vital for Corporate Australia to embrace the network. The best form of advertisement would be for corporations to migrate their payroll and creditor payments to the NPP.
It’s going to take a bit of time to do this. The larger financial institutions have only just begun providing specifications for electronic transfer of data and it will take time to upgrade software so that they understand PayIDs as well as bank account details. The big question however is still what will a corporation pay for a NPP payment? To accelerate the acceptance of the NPP it is vital that this be priced at a near equivalent rate to an EFT payment. I look forward to seeing where the larger ADIs elect to price this service in the future.
I end the day as excited as I was this morning and look forward to eventually making my first NPP payment…….
About the Author
Alistair McLean is a Non-executive Director of The Mac and Group Treasurer of Metcash Limited. As a corporate user of both the EFT and RTGS networks for the last 10 years, he believes that the NPP offers a bright new future for Australian dollar payments.
About The Mac
The Mac is a Credit Union with branches in Narellan, Camden, Picton and Tahmoor. From humble beginnings this proud mutual exists for the benefit of its 13,000+ members and the community, offering competitive rates on home and personal loans and deposits.
The opinions expressed in this article are personal and do not necessarily reflect the views of either organisation.