The New Payments Platform

Key Implications for Business and Consumers

5 March 2018

Payments Leaders Discuss Key Benefits of New Payments Platform

At the Australia-Israel Chamber of Commerce’s New Payments Platform (NPP) briefing on 5 March, a panel of leading payments experts discussed the implications of this ground-breaking development for business and consumers. Moderated by Herbert Smith Freehills Partner Damien Bailey, the panellists were Dr. Leila Fourie, Chief Executive Officer of the Australian Payments Network; John Banfield, Chief Executive Officer of BPAY Group; Michael Eidel, Executive General Manager Cash-flow & Transaction Services, Commonwealth Bank; and Rachel Slade, Executive General Manager, Deposits and Transaction Services at National Australia Bank.

This Event was proudly sponsored by: Herbert Smith Freehills

Key Advantages for Business, Consumers

John Banfield nominated the ability to make instant payments in under a minute, which previously would have taken two to three days, and the ISO 2022 standard compliance, enabling attachment of 280-character messages to payments in multiple languages. Leila Fourie outlined that the NPP’s flexible architecture, volume and complexity of data, and ability to add new overlay services in a rapidly-changing world have enormous business potential and open up great opportunities for new solutions.

Rachel Slade predicted that the NPP would prove transformative for businesses with a lot of outbound payments, acting as a replacement for cheques, enabling businesses to quickly and easily determine who a payment is from, and what it is for, and enabling them to accelerate the digitisation of their back offices. John Banfield outlined how over time, additional services were likely to be added to the NPP, such as payment of company dividends and staff salary and superannuation payments.

For Commonwealth Bank’s Michael Eidel, the flow-on effects from the NPP provided an opportunity for banks to collaborate with fintech firms to create great new customer experiences. He also pointed to the synchronised flow of data and money reducing problems stemming from back office manual errors, and significantly reducing the likelihood of fraud.

When asked what lessons had been learned from equivalent services offshore, Leila Fourie commented that it doesn’t help if your solution is super-fast but not scalable – platforms can become white elephants if it becomes too hard to introduce additional solutions. The key advantage of the NPP, she said, was its layered architecture, which enabled new solutions to be added easily.

Discussing early take-up trends, Rachel Slade outlined that the majority of customers were setting up their PayID numbers on their mobile phones, in line with expectations, and that people were using emoji characters in their payment messages. Michael Eidel commented that Commonwealth Bank was signing up around 10,000 customers a day for its PayID service, and that the amounts being transacted were higher than initially anticipated. John Banfield noted that financial institutions were still slowly ramping up the launch process, which was an effective way of ensuring that the customer experience was a good one and that consumers have faith in the platform from the outset.

Implications for Card Scheme Providers

The panellists were asked for their views about the NPP’s implications for Visa, Mastercard, and other card scheme providers. Rachel Slade did not expect to see significant impact in the near term, but as payments become more tokenised through wearable devices, could foresee a time when the NPP was used as the underlying infrastructure for these payments. The challenge then, she said, was which provider had the most compelling value proposition.

Interaction with Blockchain and Cryptocurrencies

Panellists were also asked how the NPP complemented or interacted with blockchain technologies and cryptocurrencies. The NPP was not currently able to connect with blockchain or process cryptocurrencies, Leila Fourie said, and had not been developed on blockchain because there were very few existing technology environments that were using true distributed ledgers. In her view, however, “there are plausible opportunities for an infrastructure like the NPP to connect to distributed ledger technologies”. Cross-border transactions was another area where it was potentially possible to integrate the NPP with blockchain technologies, Rachel Slade commented.

Security and Governance Standards

The panellists were also asked about the NPP’s data security and governance standards. Leila Fourie outlined how the data security standards were run by an international global best practise company, and that the architecture had been designed to meet global ISO, card security, and related cyber-security standards. Rachel Slade noted that a beneficial by-product had been the uplift in the participating institutions’ capabilities in cyber and fraud detection. Leila Fourie also outlined a shift towards real-time fraud detection and remediation, and the development of increasingly sophisticated fraud prevention solutions such as Global Positioning System-based tracking – financial institutions were applying as much innovation in security as in product development, she said.