Australia’s New Payments Platform is bringing real-time payments to the country’s banking system, allowing consumers and businesses to transfer funds within seconds. Developed with support from the banking industry and encouragement from the Reserve Bank of Australia, the NPP introduces new payment infrastructure designed to support faster transactions and future financial services. Features such as PayID also simplify transfers by allowing consumers to send money using familiar identifiers such as mobile phone numbers and email addresses rather than traditional bank account details.
Australia is launching a real-time payments solution today called New Payments Platform (NPP). As with many other faster and real time platforms around the world, this capability was created centrally, under the auspices of the government. The Aussies spent $1 billion AUD or about $800 million USD on their new payment rails.
One feature of this platform is the ability to identify an individual’s banking credentials through their mobile number, email or other identifier called PayID. A consumer registers their PayID with their bank and then will have the ability to transact without knowing checking account detail. Financial institutions and Fintech organizations will have the opportunity to build solutions on top of NPP to provide an array to services. Bpay is offering a money transfer service called Osko that uses the new payment rails and the PayID system.
Australia’s real-time payments platform goes live today, with customers of three of the country’s big four banks able to transfer funds in seconds.
The New Payments Platform (NPP) will enable customers of Commonwealth Bank, National Australia Bank and Westpac to send money via a service called PayID, which requires users to enter only the recipients’ mobile phone number or email address. Other financial institutions, including ANZ, will follow.
The billion dollar project is being run by NPP Australia, which was set up by the industry in late 2014 in response to cajoling from the country’s central bank, eager to catch up with the likes of the UK in the faster payments arena.
The launch of Australia’s New Payments Platform represents a significant modernization of the country’s payment infrastructure. With an investment of roughly AUD$1 billion, the platform provides new payment rails capable of supporting real-time transactions while giving banks and fintech companies a foundation on which to develop additional services.
PayID could be particularly important to consumer adoption. Allowing customers to associate their bank accounts with identifiers such as an email address or mobile phone number removes the need to exchange detailed banking information when making a payment. This could make account-to-account transfers easier and more intuitive for consumers accustomed to using mobile devices for everyday financial activities.
The introduction of Osko also demonstrates how services can be built on top of the NPP infrastructure. As additional financial institutions connect and more products are developed, the platform has the potential to support payment experiences beyond straightforward person-to-person money transfers.
Australia’s approach also provides an important example for other markets considering how best to implement faster payments. Building centralized infrastructure can create common standards while allowing individual financial institutions and fintech companies to compete through the products and services they develop on top of those rails.
As Australia’s New Payments Platform becomes more widely available, its success will depend on financial institution participation, consumer adoption, and the development of useful services. Its launch nevertheless marks an important step toward making real-time payments a standard part of Australia’s banking system.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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