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Pay away: NPP’s $1bn milestone just the start

02:47pm November 01 2019

Westpac’s Peter Pallister discusses the bank’s rollout of the NPP. (Josh Wall)

When floods devastated the Townsville area earlier this year, assistance and support was understandably a priority for all. 

Thankfully, the nation’s new real-time, 24/7 payments infrastructure meant funds flowed quicker than otherwise after welfare agencies trialled the platform to distribute more than $2 million in Australian Government Disaster Recovery Payments, cutting waiting times from days to just seconds. 

This is just a sign of things to come from the New Payments Platform (NPP), with emergency payments just one example of how it is making payments faster and more efficient for governments, businesses and consumers.

About 18 months since its launch, the NPP recently reached a milestone of moving $1 billion in payments in a single day. Operator NPP Australia this week also released a roadmap giving further insight into its future capability and participation of users within the wider payments ecosystem.

While still small in the overall scheme of things, the platform is clearly at a tipping point in terms of its scale and ubiquity as banks roll out the functionality and more customers come on board. 

At Westpac, we’ve now switched on more than nine million accounts across consumer, business and institutional customers, including at St.George Bank, Bank of Melbourne and Bank SA, allowing people to move money in a matter of seconds in most cases. We moved 40 per cent, on average, of the market value each day in September, giving us a uniquely informed view of how individuals and businesses are benefiting from leveraging its capabilities and exploring future possibilities.

Consumers are experiencing a world that was hard to imagine not that long ago. 

With the NPP, eligible customers can now move money in a matter of seconds, rather than the previous norm of up to three days. Unsurprisingly in the digital age, most are using it on the go, with around 75 per cent of current payment flow coming via a Westpac digital application. 

To ensure payments are processed in the fastest possible way for customers with eligible profiles, Westpac decided to default both consumer and business customer payments via its retail online banking channel to Osko, the first of the so-called overlay services that the NPP supports (which means payments clear end to end almost instantaneously). Whether on a desktop or mobile device, consumers can seamlessly switch between making payments via PayID – such as a phone number, ABN/Organisation ID or email address – or the old structure of providing account and BSB details.

A sizeable investment has been made in protections from the risk of financial and cyber crime when delivering the NPP capability to ensure the security of our customers is absolutely paramount. Hence, it was rolled out in phases, across difference brands and divisions of the bank.  

However, people must always be vigilant. 

Things like opening "phishing" emails designed to steal identity details or entering customer details into a hoax site are increasingly common. As a bank, we spend a lot of time educating customers and the broader community to build awareness around how to avoid scams.  

For corporations and small businesses, it’s important to rethink the opportunities from the NPP and redefine customer journeys. More broadly, with "Open Banking" being rolled out and application programming interfaces (APIs) and eCommerce models continuing to evolve, the NPP offers a real catalyst for changing the way payments and the exchange of value are made in developing ecosystems.

Already, businesses can manage payments more efficiently by leveraging the use of funds that were historically locked down for up to 72hrs, whether for payroll, rebates, payouts or supplier instalments. For example, the speed at which a customer receives an insurance payout or medical rebate could have a significant impact on Net Promoter Scores, or advocacy.

The NPP also enables improved payment accuracy by instantly understanding if an account is reachable and utilises enhanced data. In terms of efficiency, real-time payments mean businesses needing to make time critical payments will not be required to have multiple accounts with multiple banks, making life easier.

Westpac, as one of the country’s largest billing facilitators, is working hard to bring new receivables products to market that enhance business and institutional companies’ ability to improve their customer experience. We’re also working with treasurers on cash management and liquidity so they can manage money flows over weekends and public holidays, and eyeing opportunities to develop new overlay services with the fintech community through our venture capital firm Reinventure.

Working closely with small business and institutional customers in preparation for switching on the NPP, there’s clearly a range of readiness required to take advantage of the new capabilities, especially the 24/7 operability and richer data messaging. 

Digitally aware consumers are embracing the platform’s new PayID service, in particular. The fact that these payments are fast and are part of their online banking platform has been a real eye-opener, given no one likes to think their money is in limbo. E-markets and e-commerce exchanges are looking at the Osko overlay experience very seriously because of the ability to do instant transactions. 

Looking ahead, instant payments enhance the opportunity to leverage API connectors that create real time pipes and improved security protocols. In addition, overlay services enabled by the NPP will provide a fabric that will let banks and fintechs leverage their complementary strengths to improve customer services in a way that previously could not have been achieved if they worked on this on their own. 

Over a year since the platform’s launch, it is still maturing and hasn’t been without hiccups. 

However, faster payments are clearly at a tipping point for consumers while businesses and governments are increasingly thinking differently about how they enact their payments. 

It’s a safe bet that customers will be even more impressed with what’s coming down the pipe than what they’ve experienced so far. 

Peter Pallister is Head of New Ventures and Digital at Westpac’s Institutional Bank. A business and technology executive specialising in product development and optimisation of financial markets, treasury and transaction banking, investor services, consumer and retail. Peter has over 25 years global banking experience with recent focus in payments, particularly cross boarder and domestic faster payment solutions.

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