Today, fund transfers typically take one to two days to be processed. By next Australia Day, this processing speed will become instantaneous.

This change will be made possible with the New Payments Platform (NPP), a new payments infrastructure developed by NPP Australia Ltd together with 13 financial institutions. Its implementation in Australia will mean customers of the “big four” and 50 smaller banks will reap the benefits.

The financial institutions that are facilitating this innovation include:

• ANZ
• ASL
• Bendigo/Adelaide Bank
• Citigroup
• Commonwealth Bank of Australia
• Cuscal
• HSBC
• Indue
• ING Direct
• Macquarie Bank
• NAB
• RBA
• Westpac

In addition to bringing near-instant transfers of money from one bank account to another, other benefits of NPP include more data-rich payments. This allows for consumers to include a longer description to their payments for easier tracking.

However, NPP is also an enabler for further innovative solutions to be built upon.

For example, there are already three overlay services built on NPP by BPay, which have more business logic and exploit the potential of ISO20022 message standards upon which NPP is built on. There are even features like linking your phone number or email ID to your bank account for even greater ease in making transfers that are already in development.

NPP will begin in November with a limited release, typically to staff from banks involved in the development of the platform. The full service will be available to the Australian public early next year, expected to be around Australia Day or January 26.

This means many participating Authorised Deposit-taking Institutions (ADIs) will start off by internally testing the NPP platform and associated services. By adopting a soft launch in November, banking staff will have the opportunity to process limited controlled volumes of transactions and familiarise themselves with the new system.

A safer way to transact

The instant nature of the payments can raise questions about fraud and crime pitfalls. After all, the benefit of slower transactions has often allowed banks to investigate or cancel any transactions they deemed suspicious or illegal.

However, the banks involved in rolling out NPP are confident their fraud and crime detection processes will keep any malicious activity at bay. Not only has the platform been built from the ground up with very high security standards, all ADIs are also bolstering their fraud detection systems to cope with high volumes of online transactions.

Based on current evidence, the new NPP platform is as safe as any other payment schemes we currently have, if not more. Since NPP is both new and complex, it may take a very long time, if at all, before fraudsters invent ways to exploit it.

Financial institutions have already bought in to the NPP with their implementations well underway with their and the benefits for consumers are clear. But what will determine the success of the new platform is customers’ willingness to let go of the old ways to transact. As we have seen in the past, it took a long time for people to move away from writing checks and banking at branches to transacting online.

From a quality perspective, any significant failures or errors in the system may lead to a bad perception by the public, and that could be detrimental for NPP. That’s why Planit has been working diligently with financial institutions such as Cuscal and Indue to ensure that their NPP implementations are both stable and secure.

Ensuring your NPP success

In the lead-up to the NPP launch, we are running an invite-only event in Sydney on 19 October that will bring together NPP project leads and department heads to share their experiences and learn from one another. I will be presenting alongside of technology leaders from Westpac and Cuscal, discussing the challenges faced in implementing NPP.

For more information about the event and how to attend, please visit our Events page.