Australia's National Payments Platform (NPP) is a marathon, not a sprint

Australia’s National Payments Platform (NPP) is a marathon, not a sprint

Payments industry participants in countries about to embark on, or in the early days of, real-time and instant payments infrastructure projects should acknowledge that “it doesn’t all have to happen on day one”.

During a session on Australia’s New Payments Platform (NPP), Nigel Dobson, general manager, wholesale digital transformation at ANZ, advised banks to manage the scope of their individual projects very carefully.

“The management of the scope of what we would offer as banks was up to individual institutions,” he said. “However, over time there was convergence on scope as we banks recognised the degree of complexity that has to be managed.”

The NPP is a platform that will operate for between ten to 15 years, he added, and therefore all of the opportunities it affords have time to emerge. “If you communicate clearly with your customers about this, you won’t be penalised,” he added.

Earlier this month, the 13 local banks that set up the NPP announced that faster payments would start around the end of January 2018, after the Australia Day holiday. It is expected that four out of every five bank accounts will be eligible for faster payments, with some accounts held at international and smaller banks to qualify later.

Swift built the messaging infrastructure for NPP, which is based on ISO 20022 standards and will transport rich data along with payments.

Unlike most existing real-time payments systems, NPP will deliver real-time settlement in central bank money, rather than relying on netting. Rachel Slade, executive general manager, deposits and transaction services, National Australia Bank (NAB), said this aspect made NPP unique compared to other markets. The decision to use ISO 20022 was also a differentiator and “very forward-thinking in terms of future interoperability”.

The basic architecture of NPP is separate from an overlay services layer. Said Slade: “We are already thinking of the services we want to develop – and there is a lot of interest from fintechs, which makes this layer very exciting.”

Katrina Stuart, relationship manager at NPP Australia, the company formed to oversee the build and operation of the platform, said the overlay services will enable organisations – fintechs, the NPP participants themselves, or any others – to create tailored services. “We expect a wide range of services to emerge,” she said.

Greg Johnston, managing director of the Reserve Bank of Australia (RBA), said going forward, the central bank is hoping for overlay services that can slice and dice offerings for different customer groups. “This system offers the opportunity to design payment instruments and services that will meet the detailed needs of different customer segments.”

Preparing for NPP and real-time payments in Australia has required investment in the platform – which was shared by participants – but also in banks’ own payment stacks. Asked by session host Carlo Palmers, market infrastructures market manager at Swift, how they would recoup investment, both Dobson and Slade said NPP wasn’t about that.

“I wouldn’t say we think about it in terms of recovering investment. We think that what we have done will provide benefits beyond NPP and beyond NAB. We are modernising our payments infrastructure and will be able to deliver new services to clients,” said Slade.

Dobson agreed, adding that the industry is living in a new, real-time world that cannot be ignored if a bank wants to stay in business. Moreover, this is a fact for banks’ corporate clients, too. “Once instant payments are available, consumers and customers will know that a company has their money, so they will expect instant delivery of the service they have paid for. Everyone must prepare for this and take advantage of the features and functionality that will be available.”

Asked by Palmers if the RBA would have done anything different regarding its involvement in NPP, Johnston said no, before Dobson quipped: “You could have paid for it.”


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