Australia’s payment systems will witness a major shift as from January 2018. Funds will now be transferred instantly, even if you are transacting with other institutions. People can say goodbye to the three-day waiting period as the new transfer system, a billion dollar infrastructure upgrade, makes its entry.
The current transfer system has become obsolete
Today, anyone making payment or transferring funds has to wait at least three days for the transaction to finalise. Why does it take so long? Mainly because banks work according to their business hours, and at the end of the day, most of them stop their operations, freezing every type of transaction that is being processed. With the new system, customers will be connected to a platform that allows transaction to be processed in less than 24 hours every day.
What is the New Payment Platform?
The NPP is an international payment structure that will be operational in Australia next year. The platform’s main function is that it will enable real-time clearing and settlement for both simple or complex payment whether you’re a business owner, consumer or government department. For banks, financial institutions and private companies, the new platform offer a strong base, giving them the chance to modernise their payment methods.
How does the new system work?
Actually, transfers occurring between two accounts of the same banks are done instantly. Now, transactions between two different banks will be processed immediately, without them having to wait for several days. Adrian Loveney, chief executive of the New Payments Platform, stated that “The core benefit at launch is the faster receipt of money in real time, and that will happen 24/7, 365 days a year. Through the weekend, public holidays, at 3 o’clock in the morning — funds will arrive in the recipient’s bank account in about 30 to 45 seconds.” However, there are some transactions that can be held for investigation if suspected of fraud.
Concerning transfer funds, change was inevitable
True, people always complained about the slowness of bank transfers. And it was only a matter of time before financial institutions adopted the change or risk losing customers. Back in 2014, in an interview broadcasted by ABC, ANZ’s Philip Chronican predicted that “the best way to compete is by making sure that your customers have what they need so that they’re not looking for other providers to provide services.”
Four major Australian banks are participants in the new system
The big four banks adopting the new transfer platform include the National Australian Bank, Commonwealth Bank, Australia and New Zealand Banking Group and Westpac. The other institutions that have signed up for this endeavour are the Reserve Bank of Australia, HSBC, ING Direct, Macquire and Citigroup. NPP also announced on its website that other “financial institutions will also connect to the infrastructure through one of the initial participants.”
What are the risks of the new system?
Back in 2008, a similar monetary transfer method resulted in a 132% increase in fraud as per audit firm KPMG. Even NPP has agreed about the risks of fraud when the new system becomes operational next year, although, they argue, the security setting will be the same as credit cards. Mr Lovney added that “We’re likely to see more biometric log-in and device fingerprinting, enhanced payment verifications steps, particularly for first time payments, as well as the use of Artificial Intelligence to monitor and detect unusual changes in payments behaviour.”
Artificial intelligence is going to be crucial for users’ and bank security
The use of artificial intelligence and machine learning will give bank the edge over suspicious transactions. The new system will make it easy to detect if a card has been double-swiped or notice unusually large payments. Banks will have better control over the monitoring of customer transactions when they pay their bills or make transfers on other accounts. Chief Information Officer of US-based Capital One says customers also will benefit from the new system as they’ll receive feedback and instant information about their transactions and affirmed that “We’re able to give them a notification in real-time, and therefore the customer is able to take some action and resolve that.” For instance, banks will be able to tell you instantly how much you spent at McDonald’s last month.
The NPP will become one of the most effective and beneficial payment methods
The main advantage of the NPP is that in a matter of seconds, financial settlements can be made in real-time. The new payment platform will be beneficial to financial institutions, businesses and consumers as it is going to speed up cash flows for all parties. In fact, the new system allows for more information to be conveyed with payments like the attachment of documents including invoices and receipts. The bottom line is that this new payment infrastructure will provide faster monetary transactions, data-enriched and with a simple addressing system.
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