Australia’s real-time payments platform represented a major step toward modernizing the country’s payments infrastructure and giving consumers and businesses faster, more convenient ways to move money. The selection of Swift to develop the platform, with support from Fiserv, demonstrated how established payments technology providers could help financial institutions transition toward immediate payments while adding capabilities such as routing transactions using mobile phone numbers or email addresses.
Financial messaging network Swift has been selected by theAustralian banking community to develop the country’s new payments platformthat will help the banking community provide real time payments and new andexciting features to tens of millions of customers. While the selection ofSwift is great news for the financial messaging network and Fiserv which willserve as the subcontractor, some of the leading banks have backed outtemporarily likely delaying the implementation by over a year.
Under the terms of the 12 year contract, Swift will supply adomestic messaging network and payments switch to orchestrate clearing andsettlement flows with Fiserv providing a proxy addressing lookup serviceallowing payment routing based on personal identifiers such as a mobile phonenumber or email address. The first deliverable, the real-time platform isexpected to go live in 2017.
Commenting on the announcement, Alain Raes, chief executive,of Emea and Asia Pacific at Swift, said, “Australia is one of a growing numberof countries looking to implement new domestic payments systems in order toachieve faster and more cost-efficient payments. This is a significant firststep for Swift in this space. We are very excited by the project and lookforward to partnering with the community on this initiative.”
With countries, including the United States closely lookingat investing in real time payment systems, the news and progress in Australiawill be closely monitored in the years to come. For more information on realtime payments and the prospect of their implementation in the U.S. see MercatorAdvisory Group’s Research Report, FasterPayments Coming Soon: The Path to Near Real-Time Payments in the U.S. released in November 2014.
The development of Australia’s real-time payments platform reflects a broader global shift toward faster, more flexible payment systems. Consumers and businesses increasingly expect money movement to match the speed and convenience of other digital services, creating pressure on financial institutions and payment networks to modernize infrastructure that was not originally designed for instantaneous transactions.
The planned use of proxy addressing is particularly important to the customer experience. Allowing payments to be routed using familiar identifiers such as mobile phone numbers or email addresses can eliminate the need for consumers to exchange complicated banking information. Combined with real-time clearing and settlement capabilities, these features could make electronic payments easier to initiate while opening the door to additional services and use cases.
However, building a new national payments infrastructure requires extensive coordination among banks, networks, technology providers, and regulators. Delays or changes in participation by major financial institutions can affect implementation timelines, demonstrating the complexity involved in achieving industry-wide adoption.
Australia’s experience with its real-time payments platform will therefore be relevant well beyond its domestic market. Other countries considering similar investments can learn from both the technology choices and the implementation challenges encountered along the way. For the United States in particular, Australia provides another example of how a modernized payments infrastructure could support faster transactions and new customer-facing services.
As demand for immediate money movement grows, real-time payments are likely to become an increasingly important component of national payment systems. Australia’s initiative illustrates both the opportunities involved and the substantial coordination required to bring that vision to market.
Overview by Tristan Hugo-Webb, Associate Director, International Advisory Service for Mercator Advisory Group
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