What changes will your business see with the New Payment Platform?
- What changes will your business see with the New Payment Platform?
- What is the New Payments Platform?
- What’s in it for me and my business?
- Which banks are using NPP?
- How does the NPP work?
- Is the NPP safe?
- What are the advantages for my business?
- What are the opportunities for businesses with NPP?
- The NPP and Payroll processing
- Does my business need to prepare for the NPP and other things to consider?
- Further reading
Do you hate having to wait overnight or days for payments and cheques to clear from suppliers, frustrated with lack of information on bank statements, or tired of entering BSB and long account numbers for new suppliers – well it’s all about to change!
The New Payments Platform (or NPP for short) gives Australian businesses and consumers access to a quicker, more useful, data-rich payments system.
When fully functioning, the NPP will be as disruptive to the Australian banking industry, as Uber was to the Australian taxi industry.
What is the New Payments Platform?
Launched in February 2018, the New Payments Platform (NPP) is open access infrastructure for fast payments in Australia.
It was developed with industry collaboration to enable households, businesses and government agencies to make simple addressed payments, 24 hours / 7 days, in near real-time funds availability to the recipient, with richer remittance information.
The NPP infrastructure has the ability to support the independent development of ‘overlay’ services to offer innovative payment services to end-users.
What’s in it for me and my business?
- Near real-time funds availability to the recipient – never wait overnight or days for payments again.
- 24/7 access to payments – make and receive payments any time of the day or night.
- PayID – BSB and account numbers will be a thing of the past. Users will set up their bank account details under their mobile number or email address and this will become their PayID to receive payments.
- A payment message extended to 280 characters (including special characters and emojis!) – depending on who you bank with, this will help with matching payments and the ability for improved transaction history searches.
Which banks are using NPP?
On launch day, the NPP was available at up to 60 financial institutions, including National Australia Bank, Westpac and Commonwealth Bank, enabling the instant sending and receiving of payments between participating banks.
More and more providers have been coming on board as the platform rolls out. Check with your bank or financial institution when they will be moving over the NPP.
How does the NPP work?
The Platform is like a secure set of rails between participating financial institutions so they can send payment messages in real-time, with real-time line by line settlement via the Reserve Bank of Australia. This set of rails enables funds to be transferred between accounts instantly.
The funds transferred between accounts will be accessible almost as soon as the payment has been made, even between two different banks or financial institutions.
The platform will also allow services to run on top of the NPP – like Bpay’s Osko.
What is Osko?
Osko by Bpay, is the first overlay service available using the NPP. It allows for the payments to be made using a BSB and account number, a mobile phone number or an email address in real time, 24 hours a day, 7 days a week. The other useful feature of Osko is the payment can be sent with a description of up to 280 characters.
Is the NPP safe?
The biggest concerns for the banking industry is detecting fraudulent activity in real time. This is the major reason why some banks are hesitant to implement the NPP into their systems.
“The important thing to know about PayID is that it can only be used to put money into your account — it can’t take money out of your account,’’ said Adrian Lovny, NPP Australia’s chief executive officer when asked about whether the platform will be secure from fraudsters and a safe way to transact.
The NPP taskforce has been able to take advantage of the lessons learnt from overseas payment models such as Faster Payments currently available in the UK.
What are the advantages for my business?
The new Payments Platform will have the potential to significantly improve the speed and convenience of payments through participating Australian banks.
Improved cash flow
Faster payments have the potential to help businesses manage its finances better, look ahead and plan for cyclical periods. With access to 24/7 payments, payments can be received and paid at any time regardless of the Australian time zone, or location of suppliers and customers.
Better cash flow could also reduce the need for businesses to use its working capital for day to day transactions.
Up to date accounts and speedier bank reconciliations
With more information attached to payments, bank reconciliations are faster and lead to accurate accounts. Debtors can be monitored in real time and outstanding payments followed up promptly. Accounting software can be integrated into the NPP to reduce manual transactions.
Better customer service
The speed and reliability of payments will improve service, with faster payments, customer fulfilment is quicker, and payments can be processed at any time of the day or night.
What are the opportunities for businesses with NPP?
With its unique layered open access design, the NPP allows for diverse entities to leverage the platform’s functionality in a different way. Innovative businesses can build upon the platform’s capabilities to develop and launch overlay services to the platform.
This could include new experiences for customers when they make a payment, or the creation of an in-house application to enable significant departmental efficiencies.
Other innovative ideas could be the government making immediate emergency payments to those caught in a natural disaster. Think – no more bank cheques when purchasing a new car or a smoother payment process between banking institutions and government departments when purchasing a new house or apartment.
The NPP and Payroll processing
Until all banks and financial institutions are functioning under the NPP, payroll processing under the NPP will be a little complicated.
For employers banking with an NPP enabled bank and employees who use PayID, they will get a fast payment of their wages and salaries whilst those employees not set up will have to wait the usual time for their pays.
Does my business need to prepare for the NPP and other things to consider?
The first thing to do is check with your bank or financial institution if they have transferred their banking system to the NPP. If so, they can direct you in setting up your banking, so you can start taking advantage of the NPP.
Other points to consider include:
Managing customer expectations
Now that banking is fast, perhaps your clients are expecting fast response from your company? Are your systems set up to match these expectations?
Are your current business systems set up to cope with the NPP? Some payments will now be using the extra characters for remittance, can your software accept this information?
What other ways can your business use this data for new opportunities or to streamline its processes?
The NPP is presenting a huge opportunity for innovative businesses in Australia to improve and create efficiencies around customer service and internal processes.
If you want to know how the NPP can transform your business, schedule a free consultation with Penguin Management. We would love to help you explore the real-time value add the NPP can have on your business.
Got a quick question? We would love to hear it – simply post it below and we’ll answer it for you.
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