Over the past few years, the banking industry in Australia has been developing the country's New Payments Platform (NPP), which will allow money to be transferred from one person to another in near real-time, using an email address or phone number, rather than the traditional BSB or account number process.
The Reserve Bank of Australia (RBA) has built the underlying settlements architecture that will allow the payments to occur, and as the House of Representatives Standing Committee on Tax and Revenue heard on Friday, the NPP is undergoing its final stages of testing, with public launch scheduled for early 2018.
Addressing the committee was Dr Anthony Richards, head of the RBA's Payments Policy Department, and David Emery, who is a senior manager within the same department. According to both representatives, the NPP has been designed as a platform for innovation that will benefit households, business, and government entities.
While the RBA has been building out the new platform for quite some time, the details have been lacking, despite the bank touting it as a significant project for the payments industry.
The committee heard that the NPP will be managed by New Payments Platform Australia Limited, which will have oversight of all of the transactions moving through the system. Its only source of revenue, the RBA explained, will be a small fee for a transaction.
With the new platform comes the ability to include much more data with the payment; up to 280 characters of information, as opposed to the 18 currently allowed by banks.
"Richer data will facilitate e-invoicing and straight-through processing, and is likely to offer enhanced functionality to government agencies," the committee heard.
It was told the extra space allows for the adding of data such as Goods and Services Tax (GST) information, hyperlinks to documents, or a field that triggers an overlay.
While NPP Australia is encouraging the development of overlays, including from fintechs, the RBA said many people won't need to become an overlay service as they will be able to take advantage of description field.
"Whatever extra data you want to include in the message will make it through to the recipient, and that will be able to call forth all different types of business flows," the bank said.
Although the RBA said the bigger banks needed persuading that the new platform was required, they will be ready for the first payments on the platform early next year.
There are 13 participants in the NPP, including three entities that are service providers for smaller institutions. The RBA said this means that when it goes live, there will be something like 50 smaller institutions ready from day one.
As the infrastructure provider for the platform, the RBA said it was important that it wasn't just going to be a "big banks club".
While the real-time nature brings with it a new level of convenience, it also brings with it the challenge of thwarting fraud, as there is a much shorter time frame to catch fraudulent transactions than at present.
"There is an aspect of the NPP which is called the addressing service, where you will be able to link an identifier like your mobile number or email address to your BSB and account number," the RBA explained.
"When you make the payment to someone else, you'll get a message back which will say, 'Do you want to pay' and it will give you the name associated with that account so if someone is trying to fraud you ... you'll get some notice of that."
Interested in the taxation elements of the NPP, the committee earlier on Friday heard from John Dardo, CDO of the Australian Taxation Office (ATO). Dardo said that while the new system has the capacity to allow the ATO to have a visual on transactions, the question about what it can or cannot collect from it, or how often it can collect it, is not something the ATO has formed a position on.
"The NPP, we see that it will be able to facilitate transactions [that benefit the ATO]; the overlay services that over the top of that -- and the identity requirements that sit within it -- that's something for government and/or industry to really work through," Dardo explained.
"If a bank chose to use the NPP and create an overlay service over the top of that for that bank or that bank's customers, that allows them to do a whole range of interesting stuff such as codifying at the point of sale the gross vs GST, and offering that as-a-service."
While he called the capability "cool", Dardo doesn't think the NPP is at a point where things are being mandated either on the identity or reporting front.
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