The speed and flexibility of the New Payments Platform will no doubt encourage more innovation and competition, to the benefit of Australian businesses and consumers.
The New Payments Platform – NPP – promises big things for financial services in Australia. Small businesses can look forward to instant transactions, along with a groundswell of innovation, making it easier to consolidate accounts and manage financial reports.
Driven by a committee of industry experts and well-known financial institutions, the NPP is slated for release in the second half of next year, bringing with it ‘close to immediate’ electronic-funds transfer for day-to-day transactions.
This move to near real-time payment, from our current ‘business day overnight’ timeframes, is a major upgrade to Australia’s payments infrastructure – and the final touches on the foundation for an efficient modern economy.
Instant payments mean better cashflow
No longer will we need to wait up to three business days for a payment to reach their account. Funds will become available almost immediately after they are issued, meaning improved cashflow for smaller players, enabling greater productivity and opportunities for growth.
Currently a small business may have to wait days to receive funds from a client before purchasing supplies needed to start a job. With the delay removed, this trader will be able to start and finish jobs sooner, then accept new requests for work.
Convenient payment options
The NPP is essentially a secure, centralised infrastructure through which banks and financial institutions can share transaction data. Data passing through this platform will be subject to more flexible standards and formats than current ones, allowing, for instance, bank accounts to be identified with more than just BSB and account numbers.
In theory, a business could be paid via its ABN or primary email address, offering its customers simpler and more convenient payment options.
Innovations and competitive development
Information-rich account and transaction metadata is just the beginning. The NPP is designed to support what the program calls ‘overlay’ services – custom enhancements, created by financial service providers, on top of the foundation platform.
Providers could leverage this multi-layered infrastructure by attaching invoices or more complex transaction details to every deposit. This type of service could cut out much of the manual tedium involved in reconciling payments, managing records and accounts, and reporting to the ATO.
With overlay services, we could see electronic transfers become as quick and easy as an old-school cash payment. A service business could send an invoice to a client’s mobile phone and, following acknowledgement from the client, see the funds appear almost instantly in their account.
The speed and flexibility of the coming platform will no doubt encourage more innovation and competition, to the benefit of Australian businesses and consumers.
NPP pilots start this year, with a roll-out projected for 2017. You can learn more about the New Payments Platform by visiting the Australian Payments Clearing Association website.
Grant Bissett, CEO, Pin Payments
