An NPP Market Update

Since its public launch in February, the New Payments Platform (NPP) has had 50 million connected accounts perform an average of over 400,000 daily transactions. The system has also seen over 60 participating financial institutions get involved, including the Big 4, with many more to come.

Osko (by Bpay), the first product launched on the platform, is currently facilitating an average of 2.4 million weekly payments and has registered a total cumulative payments value of $40 billion.

On November 22, the FSC and its members were lucky enough to have Adrian Lovney, CEO of NPP Australia, present a detailed market update about the progress of the system in a morning boardroom session.

Adrian top-lined the platform’s key capabilities to open the presentation, including its 24x7 / 365 days availability and real-time movement of money functions – both of which aren’t available in Australia’s Direct Entry System, which Adrian described as the ’50 year-old workhorse of the Australian payment system’.

In its native form, the NPP is also allowing payments to be made with simpler addressing using the PayID function (BSBs and Account Numbers will still exist, but can be done away with) and data rich capability, which provides the ability for data to be carried with payments.

And although there is no hard deadline for financial institutions to get on board with the NPP, the open-access infrastructure that can take limitless amounts with real-time settlement is proving to be a powerful asset for those already connected.

Some other highlights covered in the presentation included:

NPP standards development - The development of data and message standards in high priority/volume areas - like superannuation, insurance and payroll, is an area that the NPP will work in conjunction with relevant industry participants to deliver. The plan here is to obtain some consistency so that sending or receiving participants have confidence that a particular data field will be located in a particular way, which means payments can be processed directly into a back-office system. In time, these functions could see the NPP become an authorised payments stream for SuperStream.

Role of APIs - APIs will play a critical role in helping to expand the eco-system to third parties to enable them to interact with the platform.  Third parties such as corporates, merchants and fintechs will be able to initiate payments via APIs, either via an NPP participant, or in the future, via connected institutions. The NPP has recently launched a sandbox capability to enable third parties to test and learn how these APIs work in practice.

Possible uses of the NPP - There are many potential use cases via the leveraging of the NPP’s available capability, such as topping up a stored wallet or domestic FX account, paying a small business, making payroll payments, making online purchases, sending invoices to customers, recurring payments - like gym membership fees - receiving an emergency insurance payout or receiving a 'request to pay’ prompt from another user or biller for instance, which is two-stage payment that’s set to be a game-changer for corporates, billers, or simply friends wanting other friends to pay them back.

Consent - The NPP will in future build-out capability to act as a central consent and mandate management service.  This will mean users can have a central record of all authorised debit authorities, rather than debit information being distributed and held by various merchants, for instance.

Lastly, the NPP was designed to allow third parties to initiate authorised payments from Australian bank accounts, authorisation from the account owner. This means the NPP is well-placed to support future iterations of Open Banking seen in other European jurisdictions (colloquially described as 'write access’). The NPP will seek to align accreditation of third parties with accreditation under Open Banking to enhance consistency across the eco-system.