Australia’s New Payments Platform. Real-time payments will become a thing in 2017
Wouldn’t life be so much easier if you could just transfer money from one bank account to another in real-time, rather than the whole process taking a couple of business days for the recipient to receive your funds? Flirt with the concept for a moment and you’ll soon realise that the convenience of making fast payments 24/7 (like to your landlord or energy provider for instance) would indeed be a good thing to have.
Well the era of instantaneous payments may be closer than you think, with Australia’s biggest banks along with the Reserve Bank expected to roll out its New Payments Platform (NPP) in the latter part of 2017. Rumour has it that the turnaround time for payments could get reduced to as little as 15 seconds, thanks to the new platform so read on if you’re looking to learn more about the NPP:
What is the New Payments Platform?
It’s a technology in the works that will soon give all deposit-taking institutions in Australia the ability to make “data-rich” payments more quickly and efficiently. The NPP’s official site describes it as a payments infrastructure set to enable real-time clearing and settlement for simple and complex payments between two or more accounts.
The NPP will operate on an opt-in basis so there's no guaranteeing every deposit-taking institution will join the club. But as you’ll read below, there are heaps of popular banks who are spearheading the whole thing...
Which banks are building the NPP?
At the time of writing there are 13 financial institutions who have banded together to actually commission the product, which is being developed by the international payments provider, SWIFT. The list includes:
- Australian Settlements Limited
- The RBA
Plenty more banking providers are expected to join NPP, where they’ll become partners of the project or have access the platform indirectly via one of the providers listed above.
How will the New Payments Platform work?
Without getting too technical, the NPP uses ISO 20022, which is the global standard for electronic data interchange between financial institutions.
Once set up, banks will connect to the NPP via Payment Gateways, which are also linked to the Reserve Bank’s Fast Settlement Service. Whether or not you’re a tech whiz, you can probably see how big the launch of the NPP will be, considering it’s going to get hooked up to the RBA’s payment infrastructure.
How will it affect you?
Some technologies may sound good in theory, but then in real life they fail to impress (like the disappointment that followed the launch of the highly anticipated gadget, Google Glass). Well if all goes to plan and the NPP does what it says it will do, here’s how it’s going to improve your experience of financial transactions in different situations...
The banking customer: Let’s say you’re out for dinner and drinks on a Friday night with your friends and it’s time to split the bill. If you’ve foot the cost yourself and your mates transfer what they owe you via an online banking app right then and there, the funds probably won’t get cleared in your bank account until Monday or Tuesday.
But after the launch of the NPP, hopefully that will change and your funds will land in your account almost instantly, so you won’t be left out of pocket by the end of the night.
The employee: Monitor your balance on payday too often? It may please you to hear that if your employer’s business account is hooked up to the NPP (as well as your bank account and super fund’s), after the NPP launches your salary and super contributions will arrive in their respective accounts almost instantaneously.
The small business owner: If you run a small business, you can potentially look forward to those pesky invoices becoming easier to keep track of, because you’ll receive money from your clients more quickly once the NPP is introduced.
And if you’re a retailer, you’ll likely benefit in the form of your customers’ credit card transactions clearing into your business bank account almost immediately.
If you’re looking to ditch your bank account provider in favour of a more tech-savvy one, shop around for the right product for you at Mozo’s comparison hub.