The Reserve Bank of Australia (RBA) has confirmed that a new payments platform will allow for near real-time funds transfer between bank accounts, regardless of who people bank with.
Addressing the House of Representatives Standing Committee on Economics on Thursday, RBA Governor Dr Philip Lowe explained that all a user will require to perform an "instantaneous payment" with the forthcoming system will be the recipient's email address or mobile phone number.
"The payer will no longer need to give their bank account number or their BSB; just the mobile number or the email address will do," Lowe said.
While building the infrastructure to allow for the real-time funds transfer between financial institutions, the RBA is taking on another project at the same time which will see it renovate its existing banking infrastructure.
"The Reserve Bank is the main transactional banker for the Commonwealth government," Lowe said. "Like other financial institutions, we need to keep investing in technology so that we can provide a high level of service to our customers."
As part of that work, Lowe told the committee that the RBA is developing systems that the government can use quickly and efficiently in providing payments to the community.
When using the new payment platform, Lowe said that users will be able to send much richer remittance information along with their transaction.
"You will no longer be restricted to just sending 14 characters if you go onto your internet bank to make a payment," he said. "You will be able to send whatever information you like with your payment."
The payments project is a cooperative effort between the bank and the payments industry to modernise key parts of our electronic payments system, which has been actioned under the guidance of the RBA's Payments System Board.
The RBA kicked off the project in 2012 when a review of its internal innovation capabilities laid out "strategic objectives" for the Australian payments system.
These included the ability for users to make real-time payments; send more complete remittance information with payments; address payments in a relatively simple way; and make and receive payments outside of normal business hours.
The RBA then invited input from industry to determine the most effective way of delivering on those objectives.
In July last year, the RBA published an expression of interest (EOI) for the provisioning and implementation of the solution. At the time, the bank said it wanted a complete overhaul to help it deliver an improved banking service for its customers with a more contemporary architecture and programming platform.
The EOI specified that the platform would be used to support payments systems that process in excess of 320 million payment and 25 million collection transactions per year.
Mandatory technologies for use was also specified and included using either a Microsoft SQL Server or an Oracle database server; Microsoft Active Directory for identity management integration; and use technologies such as Secure FTP, secure assured messaging technology like MQ messaging, and web services-based integration.
Lowe confirmed Thursday that the new payments platform will be ready come late 2017.
According to technology consultants Capgemini, Australians made AU$8.7 billion in non-cash payments in 2014-15, putting Australia in the world's top 10 cashless payment markets by volume, and in the top five countries for cashless payments per person.
With the recent growth of digital wallets, PayPal, ApplePay, and other electronic and mobile payments, cards are becoming less relevant for Australian consumers, and more costly products for banks to service, they said.
With Australians opting to use cards and other technology instead of the traditional notes and coins, Capgemini suggests that cash is on its way out and cards could soon follow.
As smartphones are deeply entrenched in the Australian market, Capgemini also predicts there will likely be stronger collaboration between banks and financial technology companies, particularly in the development of digital wallets.
"Australia is poised to enter a period of digital wallet transformation, as seamless payments begin to change the way we pay," Capgemini Australia banking practice lead Phil Gomm said.
"There will be the shift from the concept of card present transactions, where the card is presented physically at point of sale, to the new idea of card holder present, confirmed through the use of smart device access verification via biometric and PIN options."