29th January, 2018
Sick of the three day waiting periods on getting payments or having to give your BSB and account number to your customers? This is about to change.
The New Payments Platform (NPP) is on track to be available from February and will allow customers to send and receive payments in real-time using mobile numbers, email addresses or ABNs.
The current system of delayed transfers between banks has been in place for a very long time, and designed specifically to handle payments within business hours.
But as the definition of ‘business hours’ continues to lengthen, so does the need of businesses.
From next month, participating banks will be able to accept payments near real time, 24 hours a day, 7 days a week – and people can link their mobile phone numbers or email addresses to their accounts.
Imagine being able to pay somebody in real time using just their email address: that’s the dream, and now it’s (almost) here.
Like all new tech, it takes a while to be adopted and moulded through continual use.
The NPP is a framework which allows the near real-time settlement of transactions and the linkage of details like mobile phone numbers and email addresses to accounts – how this framework is used will change over time as people get a chance to ‘look under the hood’.
What we’ll start to see is more and more features, known as overlays, developed by certified NPP overlay providers.
Some of the potential overlays could be simpler invoice payments, faster payroll payments, superannuation and straight through BAS payments.
That is where business will really start to get the benefit, but it is likely that businesses will see very little change in the initial phases of the rollout.
The NPP is a separate platform to the current system, and the current payments infrastructure will still be active.
The NPP is an opt-in system, so you’ll need to talk to your bank if you want to access the new platform.
Here are a few things to think about if you want to give life on the NPP a go:
To accept NPP payments, you’ll need to work with your bank to check whether you’re eligible to be connected to the new platform.
Even then, if you want to pay somebody on the NPP, you’ll need to check that they’re on the NPP too.
Instead of transfers being processed in batches every few hours, payments will now be processed immediately.
Once a NPP payment is sent the receiving bank will respond with a clearing notification, which lets the payer know that the payment has been received by the payee’s bank.
The receiving bank will automatically raise a settlement request to move the funds to payees account – but the actual settlement may have some delay.
The good news is that this will be typically be less than a minute.
The other cool thing the NPP does is to allow more data to be sent through with the payment.
The ‘payment message’ will now be extended from 16 characters to 280 characters (including special characters and emojis!).
Depending on the bank, statements, transaction history and bank feeds may start to include this richer data, helping with reconciliation and understanding transaction history.
MYOB is currently working with the banks to manage any impact that enriched data will have on bank feeds.
The NPP has the ability to link your mobile number, email address, ABN and other identifiers to your account number.
This means all you’ll have to do is hand over one of those identifiers, and the payment will make its way to your account number.
Pretty simple, right?
Well, there is one complication you need to take note of.
You can only use your mobile number or unique identifier (whatever that is) for one PayID account.
For example, if you have registered your mobile as a PayID on your Commonwealth account and open a ANZ account – you cannot also register your mobile as a PayID on that second account.
You would need to deregister from Commonwealth first.
While this may seem inconvenient, the benefit is that it is very little disruption to your customers – no more having to provide them with updated BSB and Account details if you change banks.
It is possible to have multiple PayID’s pointing to one account which allows payments to your mobile and email to go to the same place, so your customers have options when choosing to pay you.
Curious? Start by talking to your bank.
You can find a list of participating institutions here.
You can also find out more about the platform here, and even follow NPAA on LinkedIn for more updates.