23 Oct Why you should embrace the New Payment Platform
Despite some attention-grabbing ads featuring a man sporting the head of a goldfish, the launch of the New Payment Platform (NPP) earlier this year failed to attract much attention. That’s regrettable given it is a game-changing innovation on par with the introduction of mass-market credit cards (1974), EFTPOS (1983) and BPAY (1997).
What’s new about the New Payment Platform?
The NPP was developed after the RBA published a 2012 review arguing it was high time Australia’s financial system was dragged into the 21st century. Six years later, a fast, user-friendly and ‘data-rich’ platform for making and receiving payments has finally gone live.
Thirteen of Australia’s financial institutions, including the Big Four banks, began offering their customers access to the NPP as soon as it launched in mid-February. The remainder of the nation’s banks and credit unions will likely have got with the program by the end of the year (or arranged to piggyback on another financial institution’s NPP infrastructure).
With the NPP, there’s no more waiting around for two or more financial institutions to send and receive payments during business hours. Payments are made in real time, or close to it, 24/7, 365 days a year.
The aspect of the NPP Australians are likely to be most impressed with is the speed with which it processes transactions. Cashflow-challenged SMEs have long been frustrated by the fact it can take several days for customer payments to show up in their account. With the NPP, there’s no more waiting around for two or more financial institutions to send and receive payments during business hours. Payments are made in real time, or close to it, 24/7, 365 days a year.
The NPP also means the end of business owners puzzling over why a deposit has not shown up on their account or a withdrawal made. It allows for much more data about payments to be provided instantaneously. The days of logging onto your business account to find thousands of dollars not added to or removed from it with a ‘Transaction details available next business day’ message are drawing to a close.
How PayID will change transactions
Arguably, the killer application – the one the goldfish-head ads were trying to convey – is that rather than needing to remember their account number and BSB, those using the NPP will have a PayID. This can be something simple to recall such as an ABN, phone number or an email address. Even someone with the memory of a goldfish can remember that, which removes a lot of the friction from transactions.
If you want to understand why this matters in the real world, consider the classic scenario of a group of diners wanting to split a restaurant bill. Rather than potentially losing customers by forbidding the practice, or tying up staff running multiple cards through an EFTPOS machine, the restaurateur can just put his PayID on the bill. Diners can then whip out their mobile phones and pay their share of the bill with a minimum of fuss (alternatively, one diner can pay the bill then be instantly reimbursed by their companions).