RBA seeks feedback on New Payments Platform

The Reserve Bank of Australia (RBA) launched a consultation this week seeking feedback on issues related to the functionality of, and access to, the New Payments Platform (NPP), which was developed by a consortium of 13 financial institutions to facilitate instant, cross-institutional transfer of funds on a 24-hour basis.

The central bank said that, with the support of the Australian Competition and Consumer Commission (ACCC), it will assess whether the strategic objectives of the NPP have been met; address the concerns raised by some entities that the services offered through the NPP do not meet their needs; and discuss the NPP-related recommendations presented by the Productivity Commission in its final report on competition in the Australian financial system, including imposing an access regime and identifying ways to improve the functionality of the NPP to boost competition.

The RBA admitted that the roll-out of the NPP has been slower than expected, which assistant governor for financial system Michele Bullock said in August she was “disappointed” with, but she noted that the big four banks are now providing NPP payments for a majority of their retail customers, and increasingly, their business customers.

Further, 70 smaller institutions have connections to the NPP, despite not being shareholders in the organisation established to oversee the development and operation of the platform, NPP Australia, according to the central bank.

As of September this year, more than 2 million PayIDs had been created and over 35 million payments worth around $30 billion had been transferred through the NPP.

“These figures suggest that the adoption of the NPP is proceeding at least as quickly as occurred for other fast payment systems in some other countries,” the RBA stated.

Currently, the eligibility criteria for “direct participants” (those connecting to the NPP using their own payment gateway) and “indirect participants” (those connecting to the NPP using a direct participant’s payment gateway) include that they be authorised deposit-taking institutions (ADIs) or restricted ADIs (RADIs), hold an exchange settlement account at the RBA and become shareholders in NPP Australia.

“Identified institutions” (such as smaller banks, credit unions and building societies) connect to the NPP using a direct participant’s payment gateway, with payments to be cleared and settled by the direct participant on behalf of the identified institution. They are not required to be ADIs or RADIs, hold an exchange settlement account or be NPP Australia shareholders.

These requirements also don’t apply to “connected institutions” using their own payment gateway to connect to the NPP. However, they need to be financially solvent and meet technical requirements.

The RBA noted that while BPAY’s Osko is the only overlay service provided for the NPP, it expects other payment services to be developed by different parties.

NPP Australia and SWIFT said that they would be developing an NPP API sandbox for third parties to build and test applications.

NPP Australia is also reportedly planning to enhance the functionality of the platform, including by developing a central “consent and mandate service”, which would store payment authorisations by consumers and businesses.

[Related: RBA ‘disappointed’ by banks’ delay to roll out NPP]