Lenders, including the big four banks, are set to enable their customers to send and receive funds in real time through the New Payment Platform (NPP), which has begun rolling out to customers after the launch of the PayID system.
Following the announcement of the NPP roll-out, Minister for Revenue and Financial Services Kelly O’Dwyer said: “The NPP will enable real-time payments, send more complete remittance information with payments and address payments in a relatively simple way, generating new avenues for competition and innovation.”
Bank customers were first contacted by lenders to set up a PayID code last weekend.
According to Treasurer Scott Morrison, the NPP was designed and built by 13 key financial institutions, including the Reserve Bank of Australia.
“Bank customers will be contacted with details of when and how they can access the new services and asked to nominate a PayID code — such as a phone number, email address or ABN — that will identify you,” Mr Morrison said.
Australian Bankers’ Association CEO Anna Bligh believes that the NPP is the “biggest thing to happen in the industry since the inception of internet banking”.
The former Queensland premier believes that the bank-funded, $1 billion investment could “transform” the banking experience in Australia.
“Customers have long told banks that the old system of delayed payments between banks was a hindrance and inefficient in a digital world where everything is expected to occur instantly,” Ms Bligh said.
“This new system will transform the way people bank by abolishing the three days wait for transfers between accounts of different banks.”
RateCity money editor Sally Tindall echoed Ms Bligh’s remarks, claiming that the cross-institutional PayID system is a “major step forward” for the industry.
“Being able to pay a tradie in real time or instantly send money to your kids in a time of crisis is a major step forward,” the money editor said.
“For many Australians, it also means receiving your wages sooner. Gone are the days of waiting one, two, sometimes even three days for your pay cheque to clear. It will now go straight from your employer’s account to yours, in less than 60 seconds.
“The platform also allows people to include transaction descriptions of up to 280 characters, with the added artillery of emojis, for anyone who felt cramped by their bank’s merciless word limits.”
Ms Tindall added that while over 60 banks have signed up to the NPP, its success is dependent upon the entire banking sector’s integration of the system.
“There’s no point signing up to PayID if the person you want to transfer money to can’t receive the money because their bank isn’t playing ball,” Ms Tindall said.
“The entire banking community needs to take part in this new system for it to be a success.
“At present, there are over 60 banks signed up. However, a number of them are not ready to roll out the service and there are still some notable organisations missing.”
The money editor also advised customers to consult their bank to check if there are fees involved, adding that she hoped lenders would “put customers ahead of profits”.
Ahead of the NPP launch, some commentators expressed concern over potential risks of the system, with 77 per cent of finder.com.au’s panel voicing concerns that under the instant payment system, banks would have lesser time to check for fraudulent transaction activity.
“Consumers need to be vigilant with their data once we have ubiquitous instant payment in place. Keep your details private, and never click on any links received by email that appear to be from your financial institution,” finder.com.au insights manager Graham Cooke said.
Despite these concerns, Ms Bligh reassured customers that the NPP is safe.
“Customers can rest assured that this new innovation is safe, with banks as always taking strong measures to protect personal information,” the ABA CEO said.
Ms Tindall added that the Australian banking sector is playing a “game of catch-up” and that this real-time payment system is long overdue.
She said: “While the banking sector should be congratulated for pulling this off, it really is the start in a game of catch-ups.
“The UK have been transferring money in real time for 10 years now, and here we are, just starting to sit at the grown-up’s table.”