Westpac Institutional Bank
Wellington, October 5, 2018
Government services will be among the big winners under the New Payments Platform initiative that enables faster payments and smarter use of consumer data.
Imagine flood victims getting emergency payments from government in a matter of seconds.
Such a scenario is now more than just a pipe-dream.
Revolutionary Change
A revolutionary change in payment processing is underway in Australia, courtesy of the New Payments Platform (NPP), which allows government departments and businesses to deliver faster and more efficient payments.
The NPP can be considered as one of the most important pieces of public infrastructure in Australia’s history – right up there with the Snowy Hydro scheme.
Westpac General Manager (Global Transaction Services) Di Challenor said that the NPP marks a massive change in Australia’s payments industry and offers significant opportunities to improve the efficiency of payments for governments, businesses and citizens.
“With the NPP, we are moving from a norm of up to three-day payments to payments in real-time, with close to immediate funds availability to the recipient. The feedback so far has been extremely positive,” she said.
What is the NPP?
Launched earlier this year, the NPP is a world-leading platform for payments innovation that represents the culmination of years of collaboration and investment from 13 Australian financial institutions, including the Reserve Bank of Australia and Westpac.
It has been designed to drive a fast, flexible and data-rich payments system for Australian governments, businesses and consumers to meet all their payments needs, and follows – but improves upon – similar initiatives previously launched in markets such as Singapore and the United Kingdom.
Key Feature
A key feature of the NPP is the use of a PayID whereby customers link an easy-to-remember identifier, such as an email address, mobile number or ABN, to their bank account so that they can receive payments without using a BSB and account number.
If they change their bank, all they have to do is transfer their PayID to their new bank account.
Westpac New Ventures and Digital Peter Pallister sad that he and his colleagues are proud to have played a key role in developing the NPP.
“The focus to date has been on seamlessly switching to the new platform and enhancing anti-fraud capabilities. All of this has meant we have a very secure and capable service for our customers. It has very much been a team effort,” he said.
New opportunities for overlay services
The platform’s capacity for ‘overlay services,’ which allow third parties to deliver new tailored payment services using the infrastructure’s capabilities – is one of the innovative hallmarks of the NPP, Ms Challenor said.
This provides the ability to innovate over time and differentiates the Australian platform from others around the world – and the rollout of overlay services will be watched closely by overseas payment providers.
Osko Payment
BPAY Group’s Osko Payment is the first overlay service on the platform. Australia’s first instant account-to-account payments service, it lets customers transfer money to another party in real time and around the clock.
Osko also enables users to include a 280-character description of their payment, up from a maximum of 18 characters with the old systems, to enhance clarity around payments, while businesses are able to capture and use such data.
As of early September, Osko had recorded 25 million payments worth a combined A$19 billion. “These overlay services will give customers new levels of personalisation and innovation not seen before in Australia,” Ms Challenor said.
Data-rich potential
Government services are set to be revolutionised through the NPP. Some examples of potential areas include (a) allowing government agencies to make emergency payments – after floods or bushfires, for instance, in seconds (b) enabling emergency welfare assistance payments, coordinating health-benefit payments across government agencies and private providers.
NPP Australia Chief Executive Adrian Lovney, which oversees the platform, explains that while payment speed is important, the NPP’s data capability is where its full potential can be found.
“From simpler invoicing to automatic reconciliation across core processes, as government departments and businesses continue to digitise their back offices we believe the New Payments Platform will be a key enabler to moving Australia to a more efficient and innovative digital economy,” he said.
Ms Lovney is confident the platform will deliver process improvements for the Commonwealth, “as both a recipient of funds but also in sending faster, data-rich payments to Australians, anytime of the day or week”. He reminds entities that they do not have to be directly connected to the platform to use it. Businesses and individuals can use the NPP to make and receive payments via their usual banking channels, provided their bank is participating in the NPP.
Government uptake
Mr Pallister anticipates many practical examples of government initiatives to simultaneously improve service delivery and boost the citizen experience through the NPP.
For instance, when emergency services volunteers respond to droughts, fires and floods, they often have to manage costs around the delivery of food and other provisions to a crisis zone.
“With fast payments through the NPP it will be a far easier process than having to scramble around with procurement cards or one-off credit cards. And the ability to be able to accurately track it all with rich data means that, once the emergency is dealt with, the administration of reconciling all the balances, tracking all the money and ensuring provisions have been delivered in the correct way becomes far simpler.”
Another example would be Service NSW accepting immediate payments for fishing licences through the NPP, meaning that recreational fishers would not have to find a place to obtain a licence if they make a last-minute decision to toss in a line.
“It is all about simplifying the customer journey,” Mr Pallister said.
Government outlets
Government retail outlets are among the key areas in which the platform is expected to transform traditional payments regimes.
Using ISO 20022 electronic data messaging, government retail and technology providers can overcome many of the shortcomings associated with legacy payments systems.
For example, quick payments can be made without chargeback risk in the event of a disputed transaction; there is reduced handling of money in traditionally cash-intensive environments, reducing security risks; and the platform could assist with self-checkout’ or ‘no checkout’ frictionless shopping experiences.
The NPP also is expected to play a major role in overhauling outdated invoicing processes within government departments, allowing e-invoices to be sent, received and stored in an electronic format, without the use of paper-based invoices as tax originals.
New era in payments
Ms Lovney said that while the NPP is designed to meet the domestic needs of Australia from a payments perspective, it also responds to gaps that have been identified in some international systems.
“These observations and learnings were applied to the platform’s design, resulting in infrastructure that is truly world-leading. As a result of this, the NPP has now become the reference model for other international real-time payments solutions,” she said.
At Westpac, Ms Challenor has no doubt that the NPP will complement other digital payments solutions that the bank has developed to help customers make payments more seamlessly and efficiently.
Recently, the Bank introduced voice-activated banking through Amazon’s Alexa; PayWear payment chips attached to a watch or wristband; Fitbit Pay that is paired with a Westpac MasterCard; and iMessages as a shortcut to make payments when texting on iPhones.
“So, depending on where people are in their own digital journey, they can enact and track those payments and cash-flow movements much faster than historically has been possible. This is really going to enrich opportunities for governments, consumers and corporations,” Ms Challenor said.
Learn more about how data and payments are driving transformational opportunities for governments, businesses and customers.
Notes:
Fast or real time payments are sent and received using Osko by BPAYTM and can be addressed to either a PayID or a BSB and account number.
Real time payments require both the payer and payee to have Osko enabled accounts.
Payments may take longer in some instances, such as where there is a technical interruption to the service, there is a payment to a first time payee or when the payment is caught for additional security screening.
BPAY® and Osko® are registered trademarks of BPAY Pty Ltd ABN 69 079 137 518.
