Published: 8th October 2018
The New Payments Platform (NPP) is a new Australian domestic payment system operated by New Payments Platform Australia (NPPA).
Until the start of 2018, domestic payments within Australia were settled overnight. Most transactions would take up to 24 hours to reach the recipient. However, sometimes this meant that a transfer made at 9pm Friday evening would be credited to the recipient late on Monday evening. Almost 72 hours later.
The Reserve Bank of Australia mandated that the domestic banks had to improve this service to their customers. At a cost in excess of $1 Billion AUD, the New Payments Platform was launch at the start of 2018. Banks have been slowly rolling out their offering to their customers as the months ticked over. So now, when a payment is made via the NPP, each transfer is settled “line by line”, and must be credited to the recipient’s bank account within 15 seconds of the bank receiving the funds. This happens 24 hours a day, 7 days a week.
Furthermore, it is possible to create a “PayID”, which is a unique and easy to remember name. An email, ACN or mobile phone number can be used, which then links with a BSB and Account Number. The recipient no longer needs to remember their BSB and Account Number – they just provide their PayID.
A recent development has been the release of the NPP API, created jointly by NPPA and Society for Worldwide Interbank Financial Telecommunications (SWIFT). The API allows external 3rd parties like Instant Global Payments to connect directly to the bank to check, create and settle transfers.
As we close out 2018 and start to plan for 2019, all NPP Participants, Third Party Service Providers and software developers are encouraged to use the NPP API for the development of their own API solutions for NPP.
Currently, after a transfer is booked, a domestic bank transfer needs to be processed from within the customer’s internet banking site. This is slow and manual. However, with the NPP, we are able to send a request to the customer’s mobile phone to confirm a payment from their bank account to ours. It removes one hurdle from the way that other payment providers operate, and ensures that we provide the most convenient way of sending funds globally.
Ms Bullock, the Assistant financial system governor at the RBA stated that “Fraud exists in all areas of financial transactions - and it has been noted that in a world of real-time payments, fraud can also be done in real time. Unlike the current system, where there is at least a few hours to review and halt a fraudulent payment, in a fast payment system the money can be expected to be gone.”
The UK had to deal with similar issues with the Faster Payment Scheme (FPS) released ten years ago. They are educating the public with a “Take Five” campaign, aimed at helping the consumers and business owners avoid being the victim of a scam. The campaign is asking everyone to help protect themselves from financial fraud by remembering some simple advice:
But, what happens if your account is compromised and a transfer takes place instantly to another customer ? Well, in the UK at least, if an unauthorised transaction is reported to the bank, they will investigate the circumstances. As long as you didn’t authorise the transaction yourself, have kept your details secure and have not been a knowing party to a fraud, your bank will refund you - including any bank charges incurred or interest lost as a direct result of the unauthorised transaction.
Here in Australia, the NPP has not created any new fraud opportunities - it has however forced the banks to improve the realtime fraud screening systems. Financial institutions that send NPP payments are expected to step up implementation of emerging and innovative technologies designed to prevent and detect fraud in realtime. These will certainly include behavioural biometrics, artificial intelligence machine learning and monitoring of customer payment patterns against dynamic customer profiling to help identify and stop unusual transactions with a higher fraud risk profile. Other tactics we might expect Australian financial institutions to deploy include holding NPP payments to a first-time payee, or imposing a daily limit or an individual transaction value limit on payments. If, despite these endeavours by financial institutions, an individual customer suffers loss due to an unauthorised transaction, common law and industry consumer protections are in place to protect and compensate where it is clear that the customer has not contributed to the loss (for example, by disclosing their secure banking credentials and passwords).