With the new payments platform (NPP) due to go live in the next few days in Australia, it’s a good time to explore what it means for small and medium businesses.
What is the New Payments Platform (NPP)?
The new payments platform (NPP) is a system to support payments between financial institutions in Australia. I hear you saying you already have credit cards, BPAY, PayPal, AfterPay, bank transfers and many others. What’s different about the new payments platform then?
Ability to make and receive low value payments outside business hours
Capability to send more complete remittence information
Simpler way to send and receive payments
The NPP aims to meet these requirements and Australia will be one of the first countries in the world to have such a platform. Other countries with similar systems include the UK and Singapore, major financial hubs. The best part of it all? It’s a free upgrade.
What improvements will the NPP bring?
Prior to the new infrastructure a bank transfer would take two to three days to complete, and transfers could only occur in business hours. Out Friday night with friends, any money transfers would have to wait until Tuesday. For a business, this meant waiting several days for income to reach the accounts. As a result, the new payments system ensures a 24/7 system that completes transactions in near real time.
Additionally, it brings a simpler method of transferring money. No longer will people need to remember arbitrary numbers associated with accounts. Instead, using a PayID, you’ll be able to select an option that means something to you or your customers. Furthermore, you’ll be able to include 280 characters in descriptions to make a customer’s life easier.
Finally, it could allow you to save money. For companies that currently are reluctant to use bank transfers due to the timing delays, but wish they could have the lower fees, the NPP will open this up. All of this comes with the same strong security of the previous platform.
London had increased fraud, should I be worried?
The downside in near instant payments is that you have limited time for recourse. While specific security around the NPP is a guarded secret, a number of financial institutions have made substantial investments in uplifting fraud detection. The benefit in not being first to market is Australia has had the time to learn from the first movers and improve the system.
Actually, not much. Your bank is likely to send you information on setting up a PayID. Follow the instructions to start taking advantage. Over time expect to see a number of companies offer additional opportunities through the NPP. Whether it is improved reconciliation processes or new means of receiving payments from customers. Watch this space because it will give businesses who do a fantastic way to lower their costs and be more customer friendly.